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Summary:

How likely is it that electric car company Fisker Automotive will be able to draw down on the remaining $339 million of its Department of Energy loan? According to one analyst, not likely.

Ray Lane's Fisker Karma

How likely is it that electric car company Fisker Automotive will be able to draw down on the remaining $339 million of its Department of Energy loan? According to one analyst, not likely. Theodore O’Neill, an analyst with Wunderlich Securities, tells The Boston Globe that:

“Everyone that I’ve talked to is pretty certain that the DOE loan is not coming’’ back, and the Obama administration is “politically boxed in’’ by the troubled loans. If the federal money does not reappear, “that croaks Fisker and that croaks A123.’’

Fisker hasn’t been able to draw down on the DOE funds since May of 2011 because of the delays in shipping its first car the Fisker Karma. Battery maker A123 Systems is the supplier of the batteries for Fisker’s Karma, and A123 Systems has seen its stock stumble in recent months as it was forced to cut both temporary workers and cell production for Q4 because of Fisker’s volume reduction.

A123 Systems had to lower its fourth-quarter and year-2011 guidance by $45 million. Pretty much the entirety of that year-guidance cut was from the sliced Fisker deal, and Fisker was A123 System’s largest revenue-generating transportation deal.

Fisker is still shipping its first car the Karma, but has now suspended work on its second car the Nina. A spokesperson for Fisker told me last week that Fisker is pursuing “alternative funding sources.” A spokesperson for the Department of Energy tells me in an email that Fisker and the DOE “are working together to adjust the timing of the milestones.”

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  1. Sad if Fisker’s problems doom A123.

    I’m surprised no one has covered all the bugs some Karmas have. Seems clear to me that this car was pushed out before it was ready.

    1. It is A123 that has had the battery problems, not Fisker.

    2. A123 is the one that has had the problem with the battery that caused Fisker to go back and check them. I’m surprised that Katie wrote such a negative article and didn ‘t know such a common fact.

      1. Katie Fehrenbacher Paul Thursday, February 16, 2012

        @Paul, I obviously knew about the battery problem and also the software issue that Fisker had recalls over. I covered both on this site. I thought he was referring to more problems with the current Karmas that have already been shipped to customers. @Doug King, Do you want to weigh in?

  2. Katie Fehrenbacher Thursday, February 16, 2012

    @Doug King, Hadn’t heard that. Can you send any links/reviews you’ve read?

    1. Katie, just take a look at the many threads on fisker-buzz.com — at least 2 owners stranded, frequent “reboots”, power mirrors burning out, unable to use many features for fear it will cripple the infotainment system (and thus the car).

      Quite sad.

    2. Katie,

      AnOutsider has been posting on the Fisker buzz forums for a while, often critical of the car and the company, but is not an actual vehicle owner as far as I know. If you are interested in speaking to a vehicle owner I would happily speak with you.

      There have definitely been some launch glitches, many of which center around the infotainment system, and an electrical grounding issue which led to some owners experiencing erratic behavior. What AnOutsider fails to mention is that Fisker has released several software updates since those initial reports which correct many (but not yet all) of the infotainment and dashboard issues, and have replaced the grouding mechanism on all delivered cars.

      I can only speak directly of my experience, but I’ve never rebooted my car, have never been stranded, nor have I ever had any mechanical, safety or performance issues.

      The vehicle isn’t completely perfect, but I suspect the first few hundred of any brand new model see similar problems.

      What seems to be lost in the noise is that this isn’t a static issue; Fisker is actively and rapidly addressing problems as they become aware of them. I have every reason to beleive the issues AnOutsider is referring to are resolvable and temporary.

      Unfortunatley there seem to be people who are only interested in sensational headlines, advancing a political viewpoint or rooting for failure. That’s Quite sad. I encourage you form your own opinion.

      BJ

    3. Katie, sorry I hadn’t checked back for replies, but I think AnOutsider and BJ covered it. I for one would like to see Fisker succeed. If Fisker were to fail, I think it would be damaging to the industry, particularly given the current political climate.

      1. Thanks folks, will go check them out.

  3. The “analyst” may not have all the relevant information. In anticipation of Obama getting cold feet, Fisker raised $210 million last month in a capital call on existing investors. That accounts for the bulk of what the DOE would have advanced in the near term. The balance could be funded by private debt or by another venture round. There is $800 million in private equity already. The lack of the last $125 is not going to “croak” anything. It only puts off the production of the mid-range car.

    1. It definitely puts more pressure on the Karma having to sell.

    2. I totally agree. That so-called “analyst” is totaly off-base and I’m surprised at Katie for giving him so much exposure. Do you think Fisker’s major backers, including VC giant Kleiner Perkins, would let a few hundred million dollars “croak” their chance at launching the Next Great American Car Company? In a few months, this whole DoE loan BS will be seen as just a minor bump in the road. The Karma has just been
      cleared for sale in Europe, where it will probably be the first American car to make a major splash on the other side of the pond. It’s already won Top Gear’s award for Best Luxury Car — and they hated EVs up till now.

  4. It’s funny to hear the comments of many people acting as if this start up is a a”typical start up”. The fact of the matter is Fisker’s cars are not cheap and new start up or not, for the price they are charging the Karma is junk. U.S. taxpayer dollars should not be used for this program. As far as engineering and design are concerned, the jobs created by this initiative are primarily for concepting and prototyping. The long lasting jobs regarding production design, release and follow up (if it makes it that far) will end up in China. Just as someone in the engineering arena in Anaheim…the development of the karma (as well as the Nina) seems to have been organized like a college project…and the results of the karma reflect that…the rumor is if this thing flops, someone (namely a certain European automotive company) will get A very nicely styled body/chassis that can be easily outfitted with a conventional driveline for pennies on the dollar at the expense of the U.S. taxpayer….

  5. This is Andy Chu, VP of Marketing & Communications at A123. While everyone is entitled their opinion, the analyst quote that you call out continues to perpetuate a misperception that A123 is critically dependent on Fisker. A123 has a diversified customer portfolio, from transportation to grid to commercial and industrial applications. Within transportation, we have 22 production customers, serving both passenger and commercial vehicle applications. Some of A123’s publicly announced transportation production customers are: ALTe, Axeon, BAE Systems, BMW, Daimler, Delphi, Fisker Automotive, GM, Mercedes-Benz High Performance Engines, Navistar, Shanghai Automotive (SAIC), Smith Electric Vehicles, and VIA Motors. Numerous analysts have said that A123 is in the Top 5 of advanced automotive battery suppliers globally, including Roland Berger, Pike Research, and Menahem Anderman (AABC). See these recent blog posts for more information:
    http://info.a123systems.com/blog/bid/124040/Leaders-Emerging-from-the-Pack-in-the-Advanced-Automotive-Battery-Market

    http://info.a123systems.com/blog/bid/124677/What-is-the-Best-Approach-to-Determine-the-Leaders-in-the-Advanced-Automotive-Battery-Market

    It’s worth noting that 10 out of 14 of analysts that follow A123 are either neutral or positive. In fact, in the same Boston Globe article that you reference, Dan Galves, an analyst at Deutsche Bank, is quoted as saying:
    “The importance of any one customer to A123 will be reduced significantly in future years.”
    “We still see this company as having done very well in terms of carving out a position in the advanced lithium-ion battery market.”

    We’ll try to do a better job of getting information out, but to view our company as dependent on one customer has always been a mistake.

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