Bloomberg News

Fisker Awaits A123 Plant Sale to Resume Karma Production

November 29, 2012

Fisker Automotive Inc., the California-based maker of rechargeable cars, said it’s awaiting a sale of the Michigan plant that makes lithium-ion batteries for its Karma so it can resume production of the plug-in sedan.

A123 Systems Inc. (AONEQ:US), Fisker’s sole battery supplier, filed for bankruptcy in October, halting Karma assembly for the past month, Chief Executive Officer Tony Posawatz said yesterday at the Los Angeles Auto Show. A123 is to sell assets, including the Michigan plant, at a Dec. 6 auction, where Johnson Controls Inc. (JCI:US) and China’s Wanxiang Group Co. are to be among bidders.

“Because we have no batteries, there’s no production right now. Inventory is starting to get a little low,” Posawatz said in an interview, without elaborating. “We’d like to restart production as quickly as possible. We should know the outcome of the auction by the middle of December.”

The battery situation is the latest challenge for Anaheim, California-based Fisker’s goal of becoming profitable from the $103,000 Karma sedan. Along with initial delivery delays, tight funds, an unfavorable Consumer Reports magazine review and flaws that led to recalls of A123 batteries and cooling fans, Fisker was criticized by Republican presidential candidate Mitt Romney as a recipient of low-cost federal loans.

For now, Fisker needs to use its inventory of A123 batteries as pack replacements for current Karma owners, said Roger Ormisher, a spokesman for the carmaker.

The closely held company expects to deliver about 2,000 of the sedans, built under contract in Finland by Valmet Automotive, by the year-end, Posawatz said. The car can go about 40 miles (64 kilometers) on electricity before a gasoline engine kicks in.

More Fundraising

Fisker suspended work in February at the Wilmington, Delaware, factory, where it wants to produce its second car, the lower-priced Atlantic. The project stalled after a portion of $529 million in U.S. loans it received was cut off last year when it failed to meet sales and production goals for the Karma.

The company has raised more than $1.2 billion in private money and will raise more, said Posawatz, who took over as CEO in August after retiring from General Motors Co. (GM:US) as vehicle line director for the plug-in Chevrolet Volt.

“The fundraising process never really ends,” he said, without elaborating.

Fisker “would be fine” with either Johnson Controls or Wanxiang taking over operation of the battery plant, Posawatz said. While there are other potential battery suppliers the company could work with, it takes as much as a year to test and evaluate alternative cells, he said.

“I wish this was more of a ‘plug-and-play’ situation, but that’s not the case,” the CEO said.

The company said Nov. 27 that it hired Joel Ewanick, GM’s former head of marketing, as interim chief commercial officer to manage Fisker’s sales.

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


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