Electric car maker startup Fisker Automotive has suddenly been thrust into the spot light — and is the target of Republican ire — via an ABC report last week and a slew of articles comparing Fisker to Solyndra, the bankrupt solar company that lost a $527 million loan from the government. I’ve covered Fisker since the company was founded, and have also written my own skeptical posts about the company (also saying it could end up like Solyndra one day), so I have mixed feelings on this sudden attack.
But here’s 10 things I do know about Fisker Automotive, which will hopefully help give some perspective to all those peoples on the Internet searching for Fisker info and also watching the video I did with Fisker (also embedded below):
1). Fisker is a startup: Fisker is a startup company that was founded in September 2007, as a joint venture between car designers Fisker Coachbuild and publicly traded hybrid technology company Quantum Technologies. Venture capitalists in Silicon Valley, including Kleiner Perkins Caufield & Byers, and Advanced Equities, funded the company with a whole lot of money. Because it’s a startup auto company, an electric vehicle maker, and a VC-backed company, it is inherently risky and there is no guarantee that it will succeed, be able to produce and sell its cars, and one day go public or get bought by a big auto maker. I think it’s one of the riskiest deals that the DOE gave loans to via the stimulus, on par with Solyndra.
2). The Fisker Karma was always meant to be produced in Finland: The ABC News story jumps on the fact that Fisker took a loan from the U.S. government but is producing its first car in Finland. But Fisker always intended to build the Karma with Finnish auto manufacturer Valmet Automotive in Finland, and Fisker says it isn’t using any of the money from the government loan in Finland. Instead, the government loan is being used to build its second electric car Project Nina in the U.S., and also to do some supply work for the Karma in the U.S. I think this is a distracting argument, that takes away from both the other risks with Fisker, and also the work that Fisker has done to date.
3). Fisker’s founder Henrik Fisker is a car celebrity (but needs better media training): For those people that aren’t gear heads, Fisker founder Henrik Fisker is a car designer celebrity, who was responsible for designs at BMW like the Aston Martin DB9, Aston Martin V8 Vantage and BMW Z8 Roadster. If you’re just jumping into this story by way of the ABC news article, you probably have no perspective on why investors have given the guy so much money to design a new electric car from the ground up. It’s like if there was a company making a new boxing glove, and Mike Tyson came on board to lead it. This point shouldn’t be overlooked when considering demand for the car — he’s got a following.
But despite Henrik Fisker’s successes, it seems like part of the problem with the ABC interview is that he should have better media training. Watch the video, he’s really adamant about not being able to find a place to produce the Fisker in the U.S. when the company first started, when in fact, they are spending the DOE loan on exactly that. It’s just confusing.
4). Fisker has raised over a billion dollars: Fisker has raised $1.25 billion in equity, loans and grants. For a VC-backed startup that is a massive amount, is highly unusual and is the equivalent to what Solyndra raised. If Fisker does stall, struggle or even run out of money, it will cost its investors, including Kleiner Perkins and Advanced Equities, a lot of money. In the same way that Solyndra’s backers, like Madrone, RockPort and Argonaut, got a lot of unwanted attention with the Solyndra bankruptcy, a Fisker scandal could lead to much negative attention for one of the Valley’s most well-known brands: Kleiner.
5). Fisker’s Karma has been delayed by months, years: Fisker had originally hoped to deliver the Karma by the fourth quarter of 2009. The Karma just got approved by the EPA and 39 Karmas were shipped to the U.S. last week. That’s about two years behind. There’s also reports that Fisker has delayed its second car Project Nina, but Fisker maintains that it’s beta and volume production are still on track.
6). Fisker hasn’t been entirely transparent: Over the years I’ve been surprised by Fisker not being completely transparent with the media and also changing certain aspects of the car. Beyond the months of delays for the Karma, Fisker gave the impression that the Karma had gotten all the necessary certifications at an event this Summer, when the company hadn’t actually gotten those approvals. Fisker also quietly bumped up the price of the Karma late last year by tens of thousands of dollars.
The Karma also recently received an EPA certification of 52 miles per gallon-equivalent (mpg-e) for combined city and highway driving, including 32 miles on all-electric range, and 20 mpg for its gas engine — that’s lower than Fisker previously indicated it would be. In addition, unlike many of the other electric car companies, for a long time Fisker wouldn’t let the media check out or do test drives of the car. Fisker investors had also been talking about an IPO this year, but now that doesn’t seem like it’ll happen either.
7). Political connections: I can see why Republican pundits are pointing to any political connections that Fisker might have had to score the DOE loan. If anyone remembers back when Fisker emerged, Kleiner Perkins was introducing the car company as Al Gore’s first deal for Kleiner. This is why firms like Kleiner hire people with political connections to join their companies — to help make connections in Washington DC, help with lobbying if needed and make political introductions. Fisker had lobbyists and consultants actively working on getting startups included in the DOE’s advanced auto loan program. Kleiner’s John Doerr was also on Obama’s Economic Advisory Board.
8). Fisker could be another Solyndra: Fisker could easily become another Solyndra. But not because it’s making its first cars in Finland, but because it’s really expensive to be a startup car maker, and its not a good time in the economy to try to sell a luxury plug-in car. Particularly one that has been delayed for so long and delivers a smaller electric range and lower MPG than expected.
9). Anyone remember when Tesla was suing Fisker? That was fun. Just thought I’d bring that up. Tesla alleged that Henrik Fisker did design work for Tesla (that they said was substandard) and then decided to launch his own competitor. These companies are young and sometimes they struggle.
10). Electric cars are moving slowly in the U.S.: Electric car sales and production in the U.S. are moving more slowly than expected. That’s partly because of the economy, but also because the big auto makers themselves move slowly and because the average consumer doesn’t commonly like to buy the first generation of a technology. In addition, because of the boosted national high fuel efficiency standards, auto makers are also looking to invest in more efficient traditional internal combustion cars.