Downward Spiral Continues for Troubled Fisker Automotive | Edmunds

Downward Spiral Continues for Troubled Fisker Automotive

Just the Facts:
  • Fisker Automotive, maker of the exotic Karma plug-in hybrid sport sedan, reportedly laid off the majority of its workers today.
  • The company still owes the federal government $192 million drawn from a 2009 alternative-energy loan.
  • Company founder Henrik Fisker resigned last month.

ANAHEIM, California — Troubled Fisker Automotive reportedly fired almost all of its remaining staff this morning as the boutique maker of the premium Fisker Karma plug-in hybrid sedan struggles with rapidly mounting debt.

An unnamed source who attended Friday's termination meeting told the Reuters news service that about 160 employees are affected and that Fisker will retain about 53 senior managers and executives, primarily to pursue buyers for the company's assets.

Fisker, which owes the federal government $192 million from a widely promoted Department of Energy alternative-energy loan it received in 2009, has a $10-million payment on the loan due April 22.

The Anaheim, California-based plug-in hybrid electric carmaker has been without an income stream since the bankruptcy last summer of its only battery supplier, A123 Systems. There's been a string of woes since then, culminating in this morning's layoffs, which left only a skeleton crew according to one insider who was among those laid off.

Phones weren't being answered at the company's offices and messages left for Fisker Chief Executive Tony Posawatz and several of the company's media spokesmen had not been returned by publication deadline.

Company founder and former chairman Henrik Fisker (who resigned last month in a dispute with the automaker's board) could not be reached for comment.

Fisker builds an exotic $100,000-plus sports sedan that uses twin electric motors powered by a grid-rechargeable (plug-in) lithium-ion battery pack and an onboard four-cylinder turbocharged gasoline engine that serves as a generator to extend the car's range when the initial battery charge is depleted.

Using a contract automotive assembly firm in Finland, the company built and delivered several thousand of its initial model, the Fisker Karma, before shutting down production in July 2012 with the loss of battery supplier A123.

As efforts to find new investors floundered late last month, Fisker hired the bankruptcy law firm of Kirkland & Ellis to prepare for a possible reorganization filing, a filing that is looking to be closer to reality.

Fisker reportedly has only about $30 million in cash left in its coffers, plus $15 million due from a recent court settlement with the bankruptcy estate of A123.

The automaker at one time looked to be a success story in the tumultuous world of advanced-technology automotive start-ups. It succeeded over a few short years in raising $1.2 billion in private capital, snagged a $529-million loan guarantee from the DOE and acquired a shuttered General Motors plant in Delaware to use as a U.S. production facility.

But Fisker experienced multiple delays in getting its first cars into production, was stung by reports of several fires that destroyed customers' $100,000-plus vehicles, faced two recalls for faulty batteries and wiring, lost several hundred cars to storm damage during Hurricane Sandy and lost its only battery supplier in July when A123 went under.

Because of its production delays with the Karma and with getting the Delaware factory ready for its proposed second plug-in vehicle, the Fisker Atlantic, the company also last year lost access to funding from the federal loan after pulling down $192 million of the $529 million.

Henrik Fisker resigned last month, reportedly over a disagreement regarding the board's intent to sell controlling interest in the company to a Chinese bidder if one could be found. Fisker reportedly told acquaintances he would have lost all input had that happened.

Several prospective Chinese deals apparently have fallen apart, though. Automaker Zhejiang Geeley Group, owner of Volvo Cars, reportedly pulled out of talks in part because it felt that Fisker's federal loan would complicate investment by a Chinese firm. Another Chinese company reported to have been interested in Fisker, the state-controlled Dongfeng Motor Group, withdrew over concerns about the costs involved in rescuing the company, according to analyst reports.

Edmunds says: If bankruptcy turns out to be Fisker's next move, the results could be interesting. The company pledged its property and intellectual assets to the Energy Department as loan collateral.

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