Bloomberg News

Fisker Considers Overseas Options for Building Second Car

April 04, 2012

A prototype of Fisker Automotive Inc.'s Atlantic plug-in hybrid vehicle. Photographer: Peter Foley/Bloomberg

A prototype of Fisker Automotive Inc.'s Atlantic plug-in hybrid vehicle. Photographer: Peter Foley/Bloomberg

Fisker Automotive Inc., maker of plug-in luxury cars, is considering building its second model overseas instead of following through on a U.S.-backed plan to use a Delaware plant, Chief Executive Officer Tom LaSorda said.

The former General Motors Co. plant in Wilmington remains the company’s first choice for production of the new model, now called the Atlantic, LaSorda said late yesterday at a news conference in New York.

The company will make a decision at the end of the summer, LaSorda said. It will be a business decision based on “what’s best for the company,” not on the outcome of negotiations to get the rest of its U.S. Energy Department funding that was cut off last year, he said.

“We’re going to run this company as if we’re on our own,” LaSorda said.

Fisker is preparing to build a second rechargeable model as it fixes glitches and boosts deliveries of its $103,000 Karma sedan, which is built under contract for Fisker at a factory in Finland.

The company was approved for $529 million in U.S. loans in 2009 to develop technology for the Karma and to revamp the closed factory in Wilmington. The company had drawn down about $193 million when Fisker disclosed in February its access to the funds was suspended last year, owing to delays with the Karma.

‘Difficult Journey’

The Atlantic is already “90 percent fully developed,” Henrik Fisker, the Anaheim, California-based company’s co- founder and designer, said yesterday. The vehicle is smaller, less expensive and more fuel-efficient than the Karma, he said.

Fisker, intending to become profitable selling cars powered by lithium-ion batteries and gasoline, has raised more than $1 billion from private investors.

“It’s been a difficult journey, but we are here,” Fisker said at the press conference, broadcast on the company’s website. The Atlantic “will be built and will go into production,” he said, without elaborating.

Deliveries, Recall

The company has delivered about 700 Karmas since late last year. The vehicle, with a range of 30 miles to 50 miles on lithium-ion battery power before a gasoline engine propels it, was recalled in December to fix a battery-pack clamp.

Fisker sold 250 of the cars in March, LaSorda told reporters after the news conference. The company expects to sell 4,000 worldwide by the end of the year, he said.

Last week, the closely held company said defective battery packs supplied by A123 Systems Inc. (AONE:US) caused a Karma to shut down during tests by Consumer Reports magazine.

LaSorda visited A123’s factory in Michigan to investigate the defect, which turned out to be a welding flaw, he said. The battery supplier is absorbing the costs of the recall, said LaSorda, a former chief executive of Chrysler Group LLC.

Fisker has done some work preparing the Wilmington plant to produce the new model, Delaware Governor Jack Markell said in an April 2 interview.

Work crews already have addressed most of the environmental issues left over from GM’s operation of the site, which “weren’t as extensive as expected,” Markell said.

Delaware Jobs

If Fisker and government officials can work out their differences over the loan funds, the company should be on track to install car-production equipment and hire as many as 600 autoworkers for the Delaware facility, Markell said.

“We would absolutely love to have those jobs,” the governor added.

LaSorda called the Wilmington factory a “green plant,” and credited GM for documenting potential pollution concerns.

“I’m not worried about environmental problems at all,” LaSorda said. Fisker is looking at putting “something” in Wilmington, even if it isn’t the Atlantic, he said.

Fisker officials didn’t immediately provide the price or on-sale date for the Atlantic. The company is backed by investors including Kleiner Perkins Caufield & Byers (ZZISK:US) and Palo Alto Investors LLC.

Fisker is building its business plan around financing options other than the Energy Department loan, LaSorda said. The company is looking for other partners, including more outside the U.S., he said.

“If we get it, fine,” LaSorda said of the government loan. “If we don’t, we can still have a great company. We’re going to build this car with or without DOE funding.”

To contact the reporters on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net; Jeff Plungis in Washington at jplungis@bloomberg.net

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


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