Updated: Electric vehicle startup Fisker Automotive dramatically scaled back production plans of its first car, the Karma, in the fourth quarter of 2011, and it won’t ramp up to full production until the second quarter of 2012. That was the word from Fisker’s battery supplier, A123 Systems, in its third-quarter earnings call on Wednesday.
As a result of this “dramatic” and “sudden” reduction in Karma volume for A123’s batteries, as A123 execs described it in the call, A123 Systems had to lower its fourth-quarter and year-2011 guidance by $45 million. The entirety of that year-guidance cut seems to be coming from the sliced Fisker deal, and Fisker was A123 System’s largest revenue-generating transportation deal.
A123 Systems even had to cut both temporary workers and cell production for Q4 because of the Fisker volume reduction. A123 Systems quietly released the drop in guidance in the late afternoon last Friday, but it gave more details in its earnings call on Wednesday.
In the third quarter of this year A123 actually ramped up battery production to meet Fisker’s previously set production goals. Update: Fisker had to scale back its work with A123 because of the delay from the federal and state certification process, which Fisker expected to happen earlier, Fisker told me. I’m speculating, but it sounded like other suppliers potentially didn’t meet their production targets for the Karma, which is not so uncommon in the electric auto world. Because electric cars are so new, there are a limited number of suppliers.
Update: Fisker says it is busy ramping up production during Q4 to reach full run rates early next year. “The fact is that we have sufficient inventory of batteries at the plant currently to deal with our production plans, given that we did experience some delays due to regulatory issues. Therefore, we are not in need of more battery stocks at the present time,” says Roger Ormisher, the director of global communications at Fisker.
Fisker received federal and state certification for its Karma just last month and shipped almost 40 Karmas to the U.S. from its partner’s factory in Finland. Some of the first customers have received theirs — like investor Ray Lane and celebrity Leonardo DeCaprio — and the other cars were shipped to dealers as their first demonstration units.
A lot of industry watchers probably aren’t surprised by this. Fisker has delayed the launch of the Karma by months and years. It is a difficult task as a startup to get the first line of cars built — just ask Tesla, which struggled with the launch of the Roadster, too. Battery maker Ener1 placed its bet early on in the all-electric Think City car, and when that company went bankrupt, it practically took down Ener1 with it (the company was just delisted from the Nasdaq).
I’m surprised that with all the previous media attention from right-leaning media on how Fisker is using the Department of Energy loan to build cars in Finland (it’s not, the loan is mainly for its second car to be produced in the U.S.), more people aren’t paying attention to the real numbers and real issues with the company. If you’re just learning about Fisker, here are 10 things to know about it.