We've observed the slow-motion luxury hybrid car crash that has been Fisker's path to market for the past few years.
Today's news comes courtesy of a report in Jalopnik that finds "the entire Fisker PR team, as well as numerous other employees, will be laid off as of 8:00 a.m. PST today."
This comes after last week's news in the WSJ that more than 200 employees had been laid off and that Fisker had retained "restructuring lawyers from Kirkland & Ellis to prepare for a possible bankruptcy filing," citing people close to the matter. Fisker also learned that it would only receive a settlement of $15 million from creditor A123 instead of the $140 million it is owed, according to InsideEVs.
We reported on founder and namesake Henrik Fisker leaving the firm last month, as well as reports that China’s Zhejiang Geely Holding Group was leading in bidding to take a majority stake in Fisker.
Geely, which also bought Swedish automaker Volvo in 2010, is leading other potential buyers, including Chinese state-owned Dongfeng Motor Group, in offers ranging from $200 million to $300 million for a controlling share of the Anaheim, Calif.-based startup. Both Fisker and Geely declined to comment to Reuters on the reported bid or the figures involved.
It's quite a sobering figure, considering that Fisker has raised nearly $1.2 billion in private investment since its 2007 founding. Much of that has come in the last year, including $380 million from Kleiner Perkins and NEA in the first half of 2012, as well as now-defunct investment firm Advanced Equities (Fisker raised $103 million of a $150 million round from Advanced Equities in the third quarter, according to this SEC filing).
At the same time, Fisker has been struggling amidst a very public set of troubles, including production delays, storm-related losses, bad reviews and recalls of its $100,000-plus Karma plug-in sports car. It’s also been denied ongoing access to a $539 million Department of Energy loan meant to build a factory for the startup’s promised $55,000 plug-in sedan, the Atlantic. Fisker has drawn down about $192 million of that loan, but it has stopped work at the Delaware site and laid off about half its workforce.
In December, new CEO Tony Posawatz told the Wall Street Journal that Fisker had hired Evercore Partners Inc. to find potential partners or investors from the automotive industry. Posawatz, the former head of GM's Chevy Volt program, is the third chief executive for Fisker in the past twelve months -- co-founder Henrik Fisker was replaced as CEO by former Chrysler Group chief Tom LaSorda in March.
Evercore also helped General Motors through its own bankruptcy restructuring, but Posawatz said in December that bankruptcy wasn’t part of Fisker’s plans. Fisker has certainly been entangled in the bankruptcy troubles of A123, which supplies the lithium-ion batteries for its vehicles, however.
A123’s massive battery recall last year involved batteries for the Karma, and the startup accounted for one-quarter of A123’s revenues at the time of its September bankruptcy filing. Posawatz told the Wall Street Journal in December that the company had only about 100 battery packs from A123 available -- enough for service and repair, but not enough to restart production.
Wanxiang, which outbid U.S.-based Johnson Controls with a $256 million offer to take control of A123’s non-government and military assets, could restart production to fill Fisker’s needs. Fisker said in late January that it was awaiting the opening of A123’s Livonia, Mich. battery plant to restart Karma production. About 1,500 Karma models have been sold to date.
What are the lessons of the Fisker debacle? Depending on a U.S. DOE loan guarantee is a less-than-stellar business strategy. New car companies should be run by automotive experts or brilliant entrepreneurs, not venture capitalists. Building automobiles is different than building software; one shouldn't ship beta units. And looks aren't everything -- you have to have quality engineering at the core of the product.
Jalopnik wrote that the Fisker has "an interior the size of a Geo Metro, build quality that has a real Pyongyang sort of charm, and, of course, a crippling lack of money. But holy crap, is that a pretty car." Jalopnik suggests that Fisker abandon any pretense of battery power and just put an internal combustion engine in the beautiful body of the Fisker.
"I don't think very highly of Henrik Fisker. [...] The fundamental problem with Henrik Fisker is he is a designer or stylist. [...H]e thinks the reason we don't have electric cars is for lack of styling. This is not the reason. It's fundamentally a technology problem. At the same time, you need to make it look good and feel good, because otherwise you're going to have an impaired product. But just making something look like an electric car does not make it an electric car. [Fisker] thinks the most important thing in the world -- or the only important thing in the world -- is design, so he outsourced the engineering and manufacturing. But the fact is, [...] that's the crux of the problem. And he's outsourcing to people who don't know how to solve the problem. So he came up with a product -- it's a mediocre product at a high price. It looks good. Particularly from the side it looks good. I don't love the front. It looks too much like a caricature of a Mexican bandito, the grille. The car looks very big, it's bigger than the Model S, but it has no trunk space and it's cramped inside, particularly in the rear seats. The mark of a good design is something that has great aesthetics and great functionality."