Fisker fixes early troubles
Future of pricey plug-in depends on investor support
Fisker Automotive’s dream of a profitable plugin luxury-car business still entices investors, even as the California startup fixes glitches in its first model and is pulled into a political fight over a U.S. loan program.
The company wants its $103,000 Karma to compete for buyers of high-performance luxury cars with Porsche AG, Fiat Spa’s Maserati and Volkswagen AG’S Bentley. It’s reportedly working to raise at least $100 million in new funds to reach about $1 billion of private money by the end of the month.
Fisker has gained symbolic importance beyond its size. The company is a test of whether electricdrive luxury cars can be sold profitably.
Its first model, the Karma, has had stumbles, including a recall and a car shutting down during recent testing by Consumer Reports magazine.
With approval for as much as $529 million in loans from the U.S. energy department, its future also will be part of debates over U.S. policy.
“It’s not unusual, even for big automakers, to have some stumbles out of the gate with a new product, particularly for exotic” vehicles, said Eric Noble, president of the Car Lab, an industry consultant in Orange, Calif.
“With this political element, they’re going to be lucky to get through all that.”
About 630 Fisker cars have been delivered, mostly to U.S. buyers so far, according to the company.
Fisker’s future hinges on continued investor support after its access to U.S. loans was suspended when the company didn’t meet a timetable for making a second plug-in model in Delaware.
The company had drawn down $193 million in U.S. loans when Fisker disclosed in February its access was suspended last year. Fisker had raised $896 million in private funds as of Feb. 10, according to a regulatory filing.
Closely held Fisker’s goal is to lure environmentally conscious buyers seeking a rechargeable luxury car able to go as far as 80 kilometres on lithium-ion battery power before a gasoline engine engages.
Fisker recalled 329 Karmas in December to fix clamps on battery packs. Last month, Consumer Reports said a Karma it purchased shut down during testing on the magazine’s track in Connecticut, a problem blamed on faulty cells.
Shipments of the Karma, designed by company cofounder Henrik Fisker, began in 2011, more than a year behind an initial goal. Engineering and design are done in California; they are built under contract in Finland.
The early technical glitches are fixable and may not be fatal for the brand, said Car Lab’s Noble.
Wealthy customers may also be more forgiving than mass-market drivers, he said. “Let’s be honest: This is a car for plastic surgeons and their second wives,” he said.
“It’s a $110,000 car and anyone who buys one isn’t expecting it to be a Camry. They want something emotional.”