Fisker to convert a GM plant in Delaware to build plug-in hybrid cars

Posted by: David Welch on October 26, 2009

Out with the old, in with the new. California electric-car startup Fisker Automotive will announce plans tomorrow to turn an old General Motors plant in Wilmington (Dell.) into a hybrid electric-car plant, says a source with knowledge of the announcement. Fisker plans to use the 52-year-old factory to build its $48,000 Project Nina plug-in hybrid starting in 2012.

Readers will recall that I have been pretty skeptical about electric cars and high-mileage plug-in hybrids. It’s not that the technology isn’t great. It is. But the economics still don’t work so well. Fisker wants to use the plant, which until recently assembled the Saturn Sky and Pontiac Solstice roadsters, to build a mid-sized plug-in hybrid. With a $528 million credit line coming from the Department of Energy, Fisker should have the cash to get the project off the ground.

My question is about sales. Even after getting a $7,500 tax credit, a Nina buyer (that won’t actually be the car’s name, it’s a code name right now) will cost $40,000. That’s at least a $12,000 premium over a mid-sized family car. A 26-mpg Chevrolet Malibu costs $1,500 a year to gas up at today’s fuel prices. If Fisker’s car gets over 100 mpg, it would save about $1,200 a year at the pump. That means the owner needs to drive it for a decade to get the savings back. That’s one hurdle for CEO Henrik Fisker’s and his mission to sell 100,000 copies of Project Nina a year. He does want to sell half the volume overseas, where the business case is better. But it’s still going to be tough for these expensive fuel savers to hit big sales numbers.

Mr. Fisker does make another case for his cause. Nina and his company’s first car, the $88,000 Karma sports car, will both be upscale. The Karma will actually be a luxury sports car. So there’s more to it than just selling fuel economy, he says. And he makes a good point. Fisker thinks his selling point will be a green alternative for luxury buyers. Prius owners have high incomes and can afford much more than their $25,000 hybrid. So there may be some willing buyers.

There will also be a lot of competition selling expensive greenery. Tesla Motors makes the same pitch as Fisker. GM will have the Chevy Volt, Toyota will be selling plug-in Priuses priced around $50,000 and Nissan also has an electric car coming. Ford will have some high-tech alternatives coming.

Fisker will fine some buyers, no doubt. But will the company find enough to make its bold plan work? I’m still skeptical.

Reader Comments

law stud

October 26, 2009 11:43 PM

Great, Competition!!! Reminds me of the Tucker car story where the government through GM/Ford went after them through the SEC. Whoopie, let the little guys compete with those big boys!

I'm glad the government isn't trying to kill them and is instead helping out!

Prediction, GM gets some cash when profitable and then takes an interest in Fisker!

qin

October 27, 2009 7:22 AM

Thanks a lot.i like your articles vaery much,well work.

Christopher Mims

October 27, 2009 8:06 AM

Of course, if gas goes to $5 a gallon or even just back to $4 a gallon, the economic case is much easier to make. (Remember that all demand growth is now in non-OECD countries.)

Combine that with the drop in price that will come as batteries continue to get cheaper (an effect that will happen as a result of economies of scale that are independent of Fisker's sales) and you can see why the DOE is willing to take a chance.

Richard

October 27, 2009 11:07 AM

Well, like they said, it will be an upscale car. People still see cars as an extension of their personalities and therefore, an attractive car like the Nina will be more desirable than any GM car. I'm a guessing the Nina will be nice looking because the Karma was. Remember for many years people bought $40K and $50K SUV and they didn't make any sense either. Status is how you justify Nicer more expensive cars.

KH

October 27, 2009 11:40 AM

How about this? The car has an awesome design and still provides the performance that many people like.

Everybody associates green with cheap and money saving. Why not "No compromises"? Low Emissions...Gas Sipping...Stylish...Solid Performance.

Maddie

October 28, 2009 3:11 PM

I wonder if GM will be a silent partner?

andrew

January 4, 2010 8:12 PM

i think it is fantastik that delawere was picked to be the location for the plant because i can drive 5 minuts from greenvill de to see the old gm plant now i will see a new electeric car plant and delawere is going to be a state that will be a leeding enviromentelly frendly one.

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Want the straight scoop on the auto industry? Our man in Detroit David Welch, brings keen observations and provocative perspective on the auto business.

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