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Fisker Karma

Fisker Atlantic
In the first four months of 2012, Fisker's Karma plug-in generated a revenue of over $100 million for just 1,000 Karmas sold

Fisker Automotive could build its next hybrid electric vehicle, the Atlantic, outside of the U.S. due to the automaker's lack of access to government funds.

Back in April 2010, California-based Fisker Automotive received a total of $529 million from the U.S. Department of Energy (DOE) for clean vehicles. The loans were part of a program to progress development of high-tech vehicles, where Fisker received $169 million for its $102,000 Karma plug-in and $359 million for the production of its Atlantic midsize sedan.

The loans were also meant to revamp a closed General Motors plant in Wilmington, Delaware for Fisker auto production. So far, Fisker has drawn down $193 million from its loans, but there's a chance that the company may never see the rest of it.

In May 2011, DOE froze Fisker's loans because delivery of the Karma plug-in was delayed and ended up falling behind schedule. DOE said Fisker did not meet the milestones previously promised, and since then, Fisker has not been able to access the DOE loans.

The lack of access to loans affected work on the Delaware factory. In fact, work on the auto factory had been halted, and 26 people were laid off.

However, Fisker CEO Henrik Fisker said earlier this year that the loss of DOE loans wasn't the end of the company's auto production in the U.S.

"We are a viable, self-funded company," said Fisker. "We can actually be self-sustainable on the Karma. But we have bigger aspirations."

Despite Fisker's enthusiasm, the unfortunate realization may be that the automaker may have to go elsewhere to build its next clean vehicle, the Atlantic, because of the lack of government funding.

According to Fisker spokesman Roger Ormisher, Fisker's loss of government loans will force the automaker to look into other building locations for the Atlantic. However, the company still hopes that the Delaware plant can be used somehow and that government funding will be returned.

"If Fisker no longer gets government monies, then obviously we are in a place where other options are open to us and have to be considered from a business perspective," said Ormisher. "However, given the work that we have done at the plant in Delaware and the fact that we own it, it is still our primary option to consider."

DOE may be giving Fisker a hard time when it comes to past Karma issues, but recent reports show that Fisker is certainly doing something right. In the first four months of 2012, Fisker's Karma plug-in generated a revenue of over $100 million for just 1,000 Karmas sold.

Source: ABC News

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Says it all
By FITCamaro on 6/1/2012 7:04:52 AM , Rating: 3
"If Fisker no longer gets government monies, then obviously we are in a place where other options are open to us and have to be considered from a business perspective," said Ormisher. "However, given the work that we have done at the plant in Delaware and the fact that we own it, it is still our primary option to consider."

Its getting to the point in the US that if a company isn't subsidized by the government, they don't want to or can't do business here due to our taxes, regulations, and cost of labor.

RE: Says it all
By BZDTemp on 6/1/2012 7:54:22 AM , Rating: 2
I think it is more a case of startup costs vs. running costs.

For a small auto company it's cheaper in short term to pay for production to take place at a site that is up and running (like they do with the Karma that is being assembled in Finland at a factory that also does work for Porsche).

What is cheapest and best in the long run depends and I think Fisker is thinking big which is why they want/wanted to get their own factory up and running. With the loss of cheap access to loans it's likely a cash management thing that is having Fisker look to assembly elsewhere and not the cost of labor/taxes/regulations (fx. Finland is not a place with low wages). Footing the bill for starting up a factory is not a small one and there is lots of challenges that may cause production delays.

RE: Says it all
By mcnabney on 6/1/2012 9:24:02 AM , Rating: 3
This whole problem (and unemployment in general) can be solved by some nice fat import taxes - you know, the kind of taxes that were the chief source of revenue for the Federal government for the first 100 years the United States existed.

and don't scream but, but, but, but protectionism!

The simple fact is that pretty much every job can be done cheaper offshore and it looks like company that employs Americans wants a handout from the government. This is not sustainable. The government has two general methods to influence the market - carrots(incentives) and sticks(taxes). It generates needed revenue to use more sticks and costs revenue to use carrots. Let's make with the sticks.

RE: Says it all
By Reclaimer77 on 6/1/2012 11:25:05 PM , Rating: 2
Meanwhile in the short term, you raise the price on just about everything we consumer drastically. Yeeeah, great plan on fixing things.

Also this will cause retaliatory policies with our trade partners, once again leaving us screwed.

I don't see any scenario in where your plan actually solves less problems than it creates.

RE: Says it all
By mcnabney on 6/4/2012 9:36:22 AM , Rating: 2
Yes, it will.

Ever wonder how inflation has been kept in check for the last 30 years? Offshoring labor to make up for all of the dollars we are printing. So the rich get low inflation, corporations get low labor costs, and the working/middle class in America gets screwed.

I think the country would be happy to trade 5% annual inflation for full employment. Tariffs are the only way to change that. It isn't like China and other Asian countries buy a lot from us. When trade deficits are massively against you, tariffs are your friend. The only reason we haven't done so is because one of our major parties likes to keep the poor down, and the other wants to keep them dependent on the government.

RE: Says it all
By Trisped on 6/4/2012 5:50:29 PM , Rating: 2
The simple fact is that pretty much every job can be done cheaper offshore...
It may look cheaper to outsource, but the truth is it costs more in the long run. Sure, you are getting an Indian IT for 1/2 the American's wages, but you (and your managers and staff) have to spend 5-10x more time explaining what you want and checking that it was done correctly. You want your electronic gadget produced in China? Well you better go down there and explain how to do it, otherwise you will spend months trying to get things worked out.

Maybe your experiences are different then mine, but from my experience the more it looks like you are going to save, the more it costs you in the end.

RE: Says it all
By Mint on 6/1/2012 3:42:30 PM , Rating: 2
Everyone is subsidizing in some form or another.

I remember years ago Toyota opened a plant in Ontario, Canada despite the southern states offering hundreds of millions in subsidies. The reason was a well educated workforce and, most importantly, free healthcare, both paid for mostly by taxpayers. You'll find the same thing with many European countries.

China keeps its wages low through currency manipulation, i.e. buying tons of US debt. Its citizens pay for it in poor purchasing power of foreign goods.

The world has too much production potential and not enough desire for consumption (from those who have the money to consume) to realize it. Every country is competing to nab that production.

RE: Says it all
By Reclaimer77 on 6/1/2012 11:35:16 PM , Rating: 2
I totally agree with you Fit.

But Fisker is also in the unique position of trying to produce something that virtually NOBODY is interested in buying. That can't help.

RE: Says it all
By Mint on 6/2/2012 1:26:30 PM , Rating: 2
Right, because we all know that when you sell $100 million of goods in 4 months, you're producing something that nobody is interested in...

RE: Says it all
By mindless1 on 6/2/2012 8:03:00 PM , Rating: 2
The figures could easily have been cooked and the problem is that even if a lot of rich people have initial interest in buying the product, that doesn't translate into being able to sustain the sales rate.

When a company makes toys for rich people what does that ultimately do? Just give rich people one more reason to try to screw others so they have more money for their toys, and costs all taxpayers to do so.

We as a society do not need research money put into building $100,000 vehicles, we need it put into making more affordable and energy dense batteries, and a power grid that has metal rails in major highways so EVs don't have to run off their battery pack for the majority of the trip, and because the grid has to distribute the power somehow anyway.

RE: Says it all
By BZDTemp on 6/3/2012 5:17:44 AM , Rating: 2
You do realize that the Karma is priced rather differently than the upcoming Atlantic. And that just because you may not want it lots of other people may feel differently.

I think you're totally wrong about your market estimation.

RE: Says it all
By Reclaimer77 on 6/3/2012 7:59:41 AM , Rating: 2
Yes I do realize that. But the Atlantic isn't going to sell that well either.

Are you people disillusion? The history on successful independent auto-makers who have tried to enter a market this established is very very short and sad. Karma has two huge strikes against it, and these should be obvious to anyone objectively viewing this. One, the vast majority don't buy cars from Fisker and aren't even aware of the brand. And two, they offer all electric vehicles.

Now if you honestly see this as a winning combination I don't know what to say. It's no wonder they need government money to stay alive. No investor or venture capitalists in their right minds would heavily back or loan money to Fisker in the amounts needed. Fisker was a loser from day one.

Look around. Do you see DeLorean's, Packard's, Hudson's and Tesla's in everyone's driveway? People buy cars from trusted and established brands!

I'm totally wrong about my market estimation? I really think not. It doesn't even seem like you've thought this through at all.

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