2012 Fisker KarmaEnlarge Photo
New car companies are difficult to launch. That's why they're rare. Before the world heard of Fisker Automotive, the last major new car company to emerge from America's economic cauldron was Chrysler.
That was in 1925.
Fisker Automotive's rise to celebrity status in the green-car world came as little shock. Because it was electric, it had an allure--but it always had an uncertain road to reality, much less to longevity.
Longevity won't likely be in the product plan. The Karma probably will be the only car we see from Fisker Automotive. Today, the company laid off about 160 of some 200 remaining employees, leaving only a handful to face some immense hurdles: loan repayments, a lack of battery suppliers, and not a single new Karma built since last summer.
Five years, hundreds of millions of dollars, and at least one Freedom of Information Act filing later, how did it all come to this?
Fisker TramontoEnlarge Photo
From Tramonto to Pentagon
Fisker Automotive emerged amid the fin-de-siecle-styled optimism of early 2008, and it was built on foundations as shaky as those in the thousands of ghost-town subdivisions created that year, as America plunged into a real-estate depression. Its founder, automotive designer Henrik Fisker, had his most notable success to date with the Aston Martin DB9--a car that likely will outlive his namesake company, since it's still on sale today.
Fisker broke from Aston Martin before it was sold by Ford to Kuwaiti investors, with his first attempt at a solo project--the Tramonto and Latigo. The idea? To reskin the Mercedes SL and BMW 6-Series with more attractive sheetmetal, without invalidating their manufacturer warranties for safety systems. In the subsequent tussle with Mercedes and BMW, only 13 Tramontos and just a single BMW-based Latigo were delivered.
Fisker then shifted his attention to military contracts, with an attempt at a hybrid-powered, "jeep-like" vehicle that had won some Pentagon orders and some indirect investment by General Motors. Fisker lacked experience and funding to make military contracting happen--no surprise, at a time when even GM partner AM General was struggling with a next-generation vehicle to pitch as a successor to its Humvee.
Still intrigued by the idea of a hybrid vehicle, Fisker turned his company's attention to the ultra-luxury car market once more, with the Karma.
Not so instant Karma
As early as 2008, Fisker Automotive had formed around the extended-range electric vehicle concept, around what would become the Fisker Karma. With the same fundamental technology as the Chevy Volt--battery packs providing power to the wheels, recharged by a gasoline engine--the Karma was cast as a luxury car, with a fantastic shape penned by Henrik Fisker himself. It played perfectly on his skills as a designer, but from the start, the Karma's appeal was directed to a very narrow niche. As we wrote in early 2009, "the Fisker also calls out to an untapped market: moneyed Hollywood vegans, of which there are plenty."
The Karma was bandied as a concept while the company scrambled for funding. Engines would be sourced from GM, while batteries would come from a company that had received Federally-backed grants to produce cells for a new generation of electric cars, A123 Systems.
But developing a new car--in the absence of a vast network of suppliers on board, or a range of vehicles over which it could spread development costs--Fisker needed a shortcut. It took the fateful step of applying for loans under the Department of Energy's $25 billion Advanced Technology Vehicles Manufacturing program, and became part of a government-backed narrative that would follow one administration out of office, one into office, and would trail two major U.S. auto companies headed into insolvency.
Advanced technology, low interest (loans)
The ATVM program had been conceived of and signed into law by President George W. Bush, and prior to Fisker's approval, had already granted low-interest loans for expanding green-car programs to Ford, Nissan, and another new green-car startup, Tesla Motors. The Bush administration had given priority to loans from major global automakers, but under loosened restrictions--a more "fair" consideration, by some interpretations--Fisker was given the green light for a $529 million loan in September of 2009. The money was split between finishing work on the Karma, and a new Project Nina, an electric vehicle to be built in America.
Before long, critics questioned how a carmaker with no track record had been approved for a loan of that size, when a company with Nissan's worldwide reach had been approved for $1.6 billion. Republican party officials called it crony capitalism, and not without agreement from some more neutral organizations. The weakest charge: that $560,000 in Democratic campaign contributions were made by employees at a law firm that was paid nearly $2 million to review Fisker's loan applications.
More provocative arguments tried to pierce the fog of politically connected investors and lobbyists, as well-placed as former Vice President Al Gore, who was an initial investor in Fisker and a senior partner at venture capital firm Kleiner Perkins Caufield & Byers. Another senior partner, John Doerr, served on President Obama's Council on Jobs and Competitiveness.
Even current Vice President Joe Biden was drawn into the Fisker debacle. To build its planned Project Nina vehicle--to be dubbed the Atlantic--Fisker maneuvered itself into a purchase of a former GM plant in Wilmington, Del., that had once built the smart Pontiac Solstice and Saturn Sky roadsters. The plant was one of many properties split off during GM's 2009 bankruptcy filing, and was to be sold as a part of the "old GM." While the plant had some physical advantages of being near a port, it had several big disadvantages--namely, it was a world away from Fisker's U.S. headquarters in California, needed expensive retooling, was far too large for the task at hand, and was ostensibly more expensive to retrofit than some other "old GM" properties, such as Doraville, the suburban Atlanta plant that once built GM minivans.
The Wilmington plant did have the huge advantage of lying in Vice President Biden's backyard. Lobbying by all local politicians is said to have won the day for the Wilmington plant, but like much of Fisker's financial history, the details are blocked from view. Vice President Biden would not respond directly to questions about Fisker posed by ABC News, his office insisting only that he supported the ATVM program--but failing to address how a site from his hometown was given a Federally-backed reprieve.By then the Fisker narrative had already started to change, and production delays brought into question whether the company could rely on future financing from the Department of Energy. In the fall of 2011, High Gear Media filed a Freedom of Information Act request with the agency to determine whether Fisker had met sales and production targets that would ensure access to the remainder of loan monies. Documents were produced, but exemptions for "competitive knowledge" reduced the documentation to a series of redacted filings: