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Summary:

Reuter’s investigative piece about the failed electric car startup Fisker Automotive is more fodder if Fisker’s investors plan on taking their complaints to the courts.

fiskerkarma

When I first saw the headline for Reuter’s detailed Fisker story, I thought (sigh) does the world need yet another investigative piece on electric car maker Fisker? We published our tome back in mid-April. But the Reuters article actually lays out some of the most disturbing evidence that Fisker was painting two very different pictures to investors and the Department of Energy, and also could potentially provide fodder if Fisker’s investors plan to sue the company (a lone investor already sued over this back in February 2012).

Essentially the article lays out that for about a year — from the Summer of 2011 to the Summer of 2012 —  Fisker’s finances were unraveling, and while the DOE was informed of this, the company’s investors appear to not have been aware of Fisker’s financial problems, at least according to the Reuters report. If you believe that, then the next question is naturally: did Fisker’s executives and board twist the story intentionally to its investors, or unintentionally?

Ray Lane's Fisker KarmaWe already know that Fisker’s access to much of the DOE was loan was cut off in mid 2011, but that Fisker didn’t publicly acknowledge this until February 2012. But Reuters reports that Fisker told the DOE it was nearly broke in October and December of 2011, but was telling investors at that same time that Fisker’s value was at almost $2 billion, with a planned annual sales of more than $12 billion.

Reuters reports that in a December 14 letter to shareholders, Fisker told investors that the company’s $2 billion capitalization included $720 million in private equity (which had been spent), the total $529 million DOE loan (even though Fisker only accessed $192 million before being cut off) and a $700 million value on the Delaware plant (which was idle and that number was 30 times its purchase price).

And again in August 2012, Fisker painted a different story to investors than it did to the DOE, reports Reuters. Fisker was down to $12 million in cash, and the DOE recommended an emergency sale. But in an investor presentation in August 2012, Fisker didn’t mention its low cash or the DOE’s recommendation while it was attempting to raise $150 million in equity by September 2012.

The Reuters piece has some other eye-brow raising financial tidbits like:

  • Fisker was losing $35,000 on each Karma made.
  • Founders Henrik Fisker and Bernard Koehler were making $600,000 to $700,000 a year.
  • In the Spring of 2011 Fisker spent $100,000 on a grand prix party on a yacht that was attended by the Prince Albert Monaco.

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  1. Katie drawing salaries and doing events (to which you go to all the time for auto related PR) is not a reason to sue. GM spends billions of dollars on events and brands like Lincoln are known for their multi million dollar adds during super bowl. If an investor sued Fisker on your article and for a $100K expense for an event, it would be the biggest joke. Department of Energy is a loan provider to companies like a bank. They do not make recommendations to their clients, so your analysis of the Reuters pie in the sky analysis is also faultered. Your rehash of the Reuters story is equally bad if not more. When one invests in venture capital, you do not sue because the company lost its value or you lost the money, or people took salaries or you tried to build a brand. On the contrary, journalists are on a witch hunt, and I see a class action lawsuit against several journalists who ruined the Fisker brand and caused loss of tax payer money!

  2. Katie Fehrenbacher Wednesday, June 19, 2013

    If you read the article again you would probably see that the salaries and events would not be the reason for suing. That would be if Fisker is accused of lying to its investors.

    1. Katie you are making an assumption. What exactly do you think Fisker lied about? It’s a witch hunt. Why are you so against Fisker?

      1. That’s how she earns money.

  3. Katie Fehrenbacher Wednesday, June 19, 2013

    @Nicjones, Did you actually read the post? I lay out the details of the Reuters story and say if that is indeed true then the next question is was it intentional or not. I’m actually giving Fisker a lot of leeway in describing it that way:

    “Essentially the article lays out that for about a year — from the Summer of 2011 to the Summer of 2012 – Fisker’s finances were unraveling, and while the DOE was informed of this, the company’s investors appear to not have been aware of Fisker’s financial problems, at least according to the Reuters report. If you believe that, then the next question is naturally: did Fisker’s executives and board twist the story intentionally to its investors, or unintentionally?”

  4. Fisker investors and customers like me should jointly sue Reuters, Jalopnik and all the bogs like Gigaom that are on a witch hunt and have ruined the Fisker brand and caused harm to employees, customers and tax payers. The car is perfect, works beautifully and it’s shocking how blogs have ruined the name. It’s called harassment and defamation Katie.

    1. Agree: karmathedoc.com

  5. Katie Fehrenbacher Wednesday, June 19, 2013

    Its called reporting.

    1. Katie please don’t call misrepresentation, your love for tesla and hatred to Fisker, witch hunt REPORTING!

      1. That’s how she earns money.

  6. I agree with the two other comments. You are piling on — and looking for cheap headlines implying that Fisker is toast — just as you have been doing for a while now. I’m betting that you — along with a bunch of other pundits who been saying the company is doomed — are all going took pretty silly when Henrik Fisker and Richard Li resurrect their company, launch the Atlantic, and successfully go public all within a few years.

    1. Its sad that people DO NOT understand how much work went to this beautiful car, and do not see that a new tech car will have flaws…..the very first fights to moon caught fire before getting started ( no one demanded $$ back from NASA, or Russia ).

      I think 600k for the brain that put this car together is not a lot of money. Please take a look at salaries for some other car companies.

  7. Peter E Wednesday, June 19 2013 EDITED

    I agree with the two other comments. You are piling on — and looking for cheap headlines implying that Fisker is toast — just as you have been doing for a while now. I’m betting that you — along with a bunch of other pundits who been saying the company is doomed — are all going to look pretty silly when Henrik Fisker and Richard Li resurrect their company, launch the Atlantic, and successfully go public all within a few years.

  8. Katie clearly Fisker is not the New Jersey 9/11 as you post in your article. Just because Reuters spoke to a few disgruntled employees? Do you think investors are stupid and do not know what are investing in? When one makes a private investment, specially in an uncomplicated business like Fisker, you make a bet on future. You either have money in the bank or not. You either sold 2,000 cars or not. So Katie please try and not make a mountain out of a witch hunt.

  9. Katie Fehrenbacher Wednesday, June 19, 2013

    Right the “two” other commenters. You know I can see when commenters have the exact same IP address right?

    1. I’m just surprised the press and politicians have been so against this American company. The likes of Ford, Nissan, GM and Tesla all have some type of US gov’t help. Why the gloom for great technology and the future of automobilia?

  10. Please go ahead and check Katie instead of again making false allegations. Now you are accusing your own readers!

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