Bloomberg News

Fisker Seeks to Lift Karma Sales to Move on From Loan Scrutiny

December 29, 2011

Dec. 22 (Bloomberg) -- Fisker Automotive Inc., a California maker of plug-in hybrid sports cars, wants to put scrutiny of a federal loan to build rechargeable vehicles behind it as the company ramps up U.S. deliveries of $102,000 Karma sedans.

Shipments of Karmas have begun, with 225 sent to dealers so far and 1,200 units “in the pipeline,” Chief Executive Officer Henrik Fisker said in an interview. The $529 million low- interest loan Fisker got in 2009 drew criticism in Congress this year after the failure of solar panel maker Solyndra LLC, recipient of a U.S. Energy Department loan guarantee.

“We’ve moved on from that,” Fisker said yesterday at the company’s Anaheim, California, headquarters. “We’re here to make cars, not politics. All the DOE money that we’ve drawn down has been used here in the U.S. and has created jobs here in the U.S.”

Fisker, like fellow California startup and loan recipient Tesla Motors Inc., wants to create a market for luxury cars that use little or no gasoline, relying instead on lithium-ion battery packs for propulsion. Karma sales began behind schedule after U.S. certification delays, making it unlikely Fisker can reach an earlier goal of 3,000 deliveries this year.

While Karma assembly is being done under contract in Finland, Fisker received its loan to develop and build a lower- priced model, the Nina, at a plant in Delaware.

Loan Criticism

The Energy Department provided loans to Fisker, Tesla, Ford Motor Co. and Nissan Motor Co. to develop and produce rechargeable cars at U.S. factories. Critics, including Republican U.S. presidential candidate Mitt Romney, say those loans are wasteful and politically motivated.

“I think that the decision by the White House to basically give massive loan guarantees, hundreds of millions of dollars to various enterprises, some of which were big Democratic contributors, whether this is Fisker, the automobile -- electric automobile company, Tesla, the electric automobile company, Solyndra or others, it doesn’t look right,” Romney said in a Nov. 17 interview on Fox Business News, according to a Congressional Quarterly transcript. “It doesn’t smell right.”

No Fisker Automotive senior managers have made donations to political parties, said Roger Ormisher, a company spokesman.

The U.S. program was intended to spur production and sales of advanced vehicles and Fisker Automotive is following through on that, Henrik Fisker said.

“The DOE loan and what we have done here, the achievement we have, really, is the fact that engineers right here in the U.S. have developed the most advanced technology in a car currently on the market,” he said.

Fisker Fundraising

The Karma is rated by U.S. regulators as getting the equivalent of 52 miles per gallon using both its battery pack and gasoline engine. It qualifies for a $7,500 federal tax credit that was created to spur purchases of rechargeable autos.

Closely held Fisker this week doubled the amount of private equity investment sought in its latest financing round, lifting the target to $300 million from $150 million, seeking funds to increase production. Total private investment is more than $766 million, Ormisher said.

The company hasn’t announced plans for an initial public offering, and Fisker declined to say when that might occur.

“Any car company, on a long-term basis, to be sustainable around the world, needs eventually to become a public company,” he said.

Fisker Hires

Fisker this month also hired Tom LaSorda, Chrysler LLC’s former president, as vice chairman and executive adviser. Chrysler reorganized in a U.S.-backed 2009 bankruptcy as Chrysler Group LLC, which is majority owned by Fiat SpA.

Richard Beattie, previously executive vice president for marketing and sales for Jaguar North America, also joined Fisker this month as chief commercial officer to oversee global sales and marketing.

Fisker estimated his company has already created “more than 2,000 jobs here in the U.S,” including at dealerships and part suppliers.

Karma production is now 25 units a day and may rise to 60 a day next year, said Fisker, 48, a vehicle designer who has styled cars for Aston Martin and Bayerische Motoren Werke AG’s BMW.

He declined to say how many Karmas will be delivered in 2012.

“We’ve built just over 1,000 cars, and are up to a pretty steady run rate of 25 cars a day,” he said. “Next year we’ll start taking that up higher as sales build up.”

Along with getting cars to its 44 U.S. dealers, the company this month also began shipping Karmas to dealerships in Europe. In 2012, Karmas will also be sold in China and the Middle East as Fisker Automotive boosts global distribution, he said. Beattie was hired to oversee that, Fisker said.

Delaware Factory

Fisker paid $20 million last year for a shuttered plant in Wilmington, Delaware, once operated by the former General Motors Corp. GM reorganized in a 2009 U.S.-backed bankruptcy, emerging as General Motors Co. The Wilmington plant was one of the assets GM shed as part of the bankruptcy.

Fisker Automotive in 2009 said it would use its federal loan to buy and revamp the 3.2 million-square-foot factory to produce its Nina model, a car that will sell for less than the Karma.

Pricing and features of that model haven’t been revealed. Along with the Nina, Fisker also plans to sell both a plug-in convertible and a crossover utility vehicle in 2013 derived from the Karma platform.

The company has hired about “100 people” in Wilmington so far, Fisker said. After production of Nina vehicles for retail sale begin in 2013, the factory will employ “thousands,” he said, without elaborating.

Fisker’s investors include Kleiner Perkins Caufield & Byers, Palo Alto Investors LLC, and A123 Systems Inc., a lithium-ion battery maker.

--With assistance from Andrew Herndon in San Francisco. Editors: Bill Koenig, Jeffrey Tannenbaum

To contact the reporter on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net


Toyota's Hydrogen Man
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus