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3 key differences between Tesla and Fisker

Tesla Roadsters lined up outside of the Model S Beta Customer event

This week two Valley-backed and government-supported electric car companies — Tesla (s TSLA) and Fisker — have been taking two very different paths: one up and one down.

As you read this, I’ll shortly be heading down to Tesla’s design studio to attend the company’s Model X electric SUV launch event. The Model X is the company’s third electric car — which will be one of the first electric SUVs ever in the world — and Tesla could start selling the first Model X cars by the end of 2013. By this Summer Tesla pans to start selling its second car the Model S (if it meets its target), and it’s already sold around 2,000 Roadsters and signed several development deals with huge automakers. If you need to be convinced that Tesla is doing OK, just check out its stock price: it’s above $30, after an IPO in the Summer of 2010 priced at $17 per share.

Then on the other hand there’s Fisker, which has been dominating the electric car news this week with another type of story. This week Fisker announcedthat it’s suspending work on its second planned car, Project Nina, that was supposed to be built in Delaware with a Department of Energy loan. The company had delayed (by months and years) shipping its first car the Karma to the extent that it couldn’t make the milestones to get the remainder of the DOE loan. Fisker is trying

Tesla merch at the Model S Beta Customer event

to renegotiate the loan, or look for other funding for Project Nina, but in the meantime is putting its head down to work on selling the Karma — a car that came out with a $20,o00 higher than expected price tag and a far lower than expected MPG.

A lot of people have asked me why is one doing so well, while the other seems to be struggling, despite that the companies share a lot of similarities. Back in 2008 the companies even shared a few things that were a little too close for comfort (Tesla at one point sued Fisker alleging that Fisker stole Tesla’s design ideas and trade secrets). So here’s 3 10 key differences between these two electric car makers:

1). Tech vs design: Tesla has been building next-gen electric vehicle technology since its inception in 2003, and made a strategic bet at the beginning of its life to build cars around packaging commoditized (low cost) small-format batteries. Tesla is selling its battery pack and powertrain tech to some of the largest auto makers out there, like Tesla’s $100 million deal with Toyota, for its RAV-4 EV. Tesla can use this tech to not only make hundreds of millions of dollars in revenue from development deals, but all of that IP is extremely valuable, and puts the company in control of a lot more of the development of its cars.

Fisker is a design shop first before it’s a technology company. The company founder Henrik Fisker is the well-known auto designer behind the Aston Martin. Fisker has a long-term supply agreement deal with Quantum for the powertrain tech and software for the Karma and Fisker gets its Karma batteries from A123 Systems (s AONE). Fisker has no plans to sell or license car tech, which means it doesn’t have that valuable IP and also it won’t be making revenues off of development deals. Also it’s subject to issues in third party tech, like the battery problem that emerged in late 2011, that led to a recall and fix of the Karmas on the market.

2). Stage of development: Tesla is about four years older than Fisker, but it seems like EV-years are like dog years, they’re accelerated. Tesla went through its roller coaster, delay-filled and worrisome years about four years ago. Tesla won $465 millionin DOE loans after it eeked past that period and about three months after it started delivering its

Fisker Karmas

first car. Fisker was awarded $529 million in loans from the DOE, over two years before it delivered its first car the Karma.

Tesla was at just the right stage of development to be able to make use of those government loans to build its own factory for the Model S. On the other hand, Fisker was not in the right stage to start planning a factory for a second car that was supposed to produce 75,000 to 100,000 cars annually.

3). Elon Musk: Tesla has a founder and CEO that has put up some serious cash to keep the business running, particularly getting Tesla through the dark days of the downturn. There’s not an equivalent at Fisker, or at most companies, and Fisker’s investors are made up of dozens of firms and wealthy individuals.

26 Responses to “3 key differences between Tesla and Fisker”

  1. Tesla’s management have better business skills.

    Better production plans(less delays, acquired NUMMI plant), better publicity(associations with big players, and their strategic positioning created a strong brand), better strategic alliances(Lotus, Toyota, Daimler), , better funding(bigger government loan, business partners, strong venture capital backing and publicly traded), and strategic positioning (Blue Ocean: think Tesla S with subsidies)

  2. I simply love the fact that Tesla is dispelling this traditional MBA perspective that says that labor cost arbitrage is your number one consideration in product manufacturing or sourcing. Elon and company see that when you are dealing with complex, cutting edge products, it’s perhaps less expensive to keep in-house and co-locate your manufacturing with your headquarters and R&D (i.e., Palo Alto HQ and Fremont manufacturing–awesome setup). Perhaps this serves as an example for that successful fruit company just down the road from Tesla that, nontheless, has it’s outsourcing troubles.

  3. Here’s one similarity. Both companies are losing money on every car they sell. A simple look at the bill-of-materials shows their math doesn’t add up to profit. Not even remotely close. Fisker will go down first, but Tesla will have to make some serious revenue from their alleged “IP”, since their cars are a loss leader.

  4. I’d like to start a car company also on tax payer money… ridiculous waste of money when there’s already electric cars on the market. We don’t NEED either Tesla or Fisker.

    • Ya! You go Peter! I think they called that company G.M.! Or maybe it was T.A.R.P.? Oh, and depending on your fuzzy math, the Big Oil companies get on the low end 10x more and on the high end 100x more in government subsidies! Yay B.P. & Exxxxon! I say stop ALL government handouts rather than cherry picking your concern of the day!

  5. Kjell Bergh

    I have around 2500 miles on my Karma and love it. After 44 years in the car business and a few additional years as an automotive writer, I rarely get excited about cars any more; I am absolutely impressed with the Fisker Karma. I have also seen the Project Nina sports sedan. It is equally gorgeous and still has four doors, four seats at roughly half the price in today’s dollars.

    The people at Fisker are top-notch talent from companies like BMW, Volvo, Jaguar, Maserati – and more recently Chrysler. In an election year, the Federal loan garanti is an obvious albatross which I hope they can replace with private capital. I am very confident that Fisker not only will survive, but in fact become an industry star in a few short years. Full disclosure: I own the Fisker retailer in Minnesota.

  6. Bart Barton

    Fisker is short on technology because Henrik designed Aston Martins & BMW’s? Not so much, some of the best engineers in the world are behind the Karma and it is loaded with high-tech. The only key difference between the two is all-electric vs PHEV. Both seem to be ahead of everyone else in low emissions and low fossil-fuel vehicles. You’re going to spend the price of a Karma to get a Model S with decent range.

    Fisker hasn’t made deals with Toyota, yet…but they’ve done deals with key suppliers instead, Quantum, A123, etc. Elon doesn’t have that much cash in Tesla but frankly, the deep pockets of Kleiner Perkins would give me more confidence as an investor than those of Elon alone. If your argument is about skin in the game, well its moot. Henrik wasn’t a billionaire, he was an auto industry veteran and Elon was not. Elon is a brash entrepreneur with skin in quite a few games and he ‘ran out of cash’ last year. Still, he soldiers on and so has Henrik. The differences are less important here than the similarities: two guys who are putting everything into building a car company. I keep hearing ‘Tucker’ and ‘Solyndra’ but I’m seeing “Henry Ford’ and ‘Louis Chevrolet’.

    And Katie, who are you to say Fisker wasn’t in the right stage to invest in Nina production? You don’t seem to have much evidence so you’re speculating. They acquired the factory in Delaware for pennies and have many of the best and brightest auto execs working on the Nina. Delays schmelays, part of the game.

    I have seen the Nina. In my opinion, a design triumph that will be very hard for me to resist (I drive a 5-series now). Karma as well, and same for Model S. I’d own any of these cars. Frankly, I hope Fisker redesigns its suv and I’m eager to see Model X.

    As we speak, Fisker last week closed $265 million, and this week signed LOI’s on another $200 million with a bit more in the pipeline. They’re not going to be vulnerable to shifting political winds. And yes, they paid a bit more for that money than the 3%, 20 year government program.

    When you invest in venture capital (disclaimer: I’m invested in both Fisker and Tesla), you expect to nurture that investment all the way until exit. It happened with Google and Ebay as well and no taxpayer would complain about holding those stocks with a 30-50x return.

    Will Tesla or Fisker get to that point? Probably not in 2012. Will they be solid returns? Likely they will if the cars sell. Both companies are doing everything right and working hard and smart. Both companies have huge global sales potential although Fisker has done distribution far better.

    Mark, you should go drive a Karma at your local dealer and then come back and comment, it is sublime. 15,000 Karma’s was a global projection and the indication is that could happen at the point when Karma is in full production.

    The big if is ‘the market’ for any product. So far so good, but the market will have the ultimate say. As a vc investor, I bet on the people first. And I’m satisfied with both of these bets.

    • @Bart Barton Thanks for your comments. I agree with a bunch of what you said. But have to disagree on a few things.
      1). I asked Ray Lane if Fisker had any plans to sell its tech to big autos like Toyota last Summer and he said “no”. Maybe things have changed since then. Fisker has never had the intention to do that. If they have a new strategy, Ill ask them about it.
      2). Fisker’s deals with suppliers are for building the Karma, that’s totally different than Tesla building the guts of a car for Toyota. That’s $100M deal for Tesla.
      3). I can easily say that it looks like Fisker wasn’t in the right stage for the investment for Nina. They said they were going to make 75K to 100K cars of the Nina when they were far from delivering the first car. Cart waaay before the horse. Thats why the DOE hasn’t released any of the loan money for the Nina since May. Are you saying that’s a positive thing?
      4). I hope Fisker succeeds. I’m just writing it the way I see it.

  7. I believe Govt. must put solyndra fiasco behind and bet on more aid to both these companies. Thats the only way this country will stay ahead in next era of car revolution. Beware of competitors like BYD (agree they are shabby/copy cats) but you can’t ignore them.

  8. A lot of people tend to forget that Tesla struggled mightily in their early days. They too delayed the introduction of the Roadster and increased the price by 10s of thousands of dollars as well. There were bankruptcy rumors swirling around like crazy. At the end of the day, Tesla got through it and appears to be creating a strong company. This isn’t to say Fisker is guaranteed to survive, but things need to be put into perspective here. The companies are at very different stages, Fisker being quite a bit earlier than Tesla.

  9. PaulTT, Oil companies have been getting subsidized for the last 100 years.

    Also, the article mentions 10 key differences but only lists 3. Did the full article not get posted?

  10. This whole DoE loan thing has been totally overblown. Fisker was 3 months late meeting certain sales figures due to the EPA’s delay in certifying the Karma. They are cranking out and selling $100,000+ cars faster than any other company in history — including Tesla. In a few weeks, this will all be behind them and all the naysayers will be eating their words — or looking for another ridiculous reason to point fingers at them…for obviously partisan reasons. There’s plenty of room in this world for TWO great new American car companies with two different paths to success. Get used to it.

      • I dont see any Model S’ on the road yet do you?? lets see how on time and free of bugs it is first. My bet is it wont all be smooth sailing for Tesla and the reality is Fisker has 1500+ cars built now by a quality facility (which produces boxsters and others). Listen to the people posting who actually own one and drive it each day. The technology is excellent and its far more stunning than the Model S. So lets see..

  11. Both companies are doing great on OUR tax money!!!

    I don’t recall the two Steve’s getting a government hand out when they started a tiny computer company in a garage and built it into the most valuable tech company in the world!

  12. Here’s another key difference: One of them gets that it’s about results not words. Have you seen the Fisker Nina prototype which is supposed to go into production next year? Oh? You haven’t?

    Model S, on the other hand, we’ve seen since 2010.

    Fisker’s nonsensical claim — that they’ve since backed off of — that they were going to sell 15,000 Karmas this year was idiotic. There was never any chance on earth that was going to happen. No vehicle in that price segment sells 15,000 units and yet every vehicle in that segment is sold by a more well-know company with far more distribution points. Many of Fisker’s target customers will never had heard of the company by this time next year.

    Look, I don’t want to beat on an entrepreneurial company when they are done and Tesla was on the mat not terribly long ago too, but Fisker is in serious trouble right now. They need a non-governmental white knight to back the next stage of development before returning to DOE.