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Fisker CEO revamps business plan amid Karma woes
NEW YORK |
NEW YORK (Reuters) - Fisker Automotive, a maker of plug-in hybrid sports cars, may build its second model outside of the United States if federal funds intended to pay for the vehicle's production fall through, the company's chief executive said on Tuesday.
Earlier this year, the U.S. Department of Energy froze a $529 million loan awarded to Fisker in 2009 as part of an Obama administration program to spur advanced vehicle development.
The bulk of that loan was slated to help Fisker build the new model, called the Atlantic, at a former General Motors Co (GM.N) factory in Wilmington, Delaware.
"We're going to launch this car with or without the DOE," said Chief Executive Tom LaSorda during a media event ahead of the New York auto show. "We're proceeding where the best cost will be. We're looking for alternative options to the U.S., of course."
LaSorda said Fisker would make a decision on where to build the Atlantic by the end of the summer, when production of the model was initially expected to begin. That will now be pushed back.
LaSorda and other Fisker executives, including founder Henrik Fisker, were in New York to showcase a concept version of the Atlantic, previously known as Project NINA.
Fisker is still renegotiating the terms of the DOE loan. It is also is seeking private financing and considering a high-yield debt deal. LaSorda added that Fisker was also interested in strategic partnerships.
The Delaware plant, which can build up to 100,000 cars, is still the "primary" choice, but where the Atlantic is built depends in part on who invests in the company, LaSorda said.
"One thing we need is investments," said LaSorda, a former chief executive of Chrysler Group LLC UAWREC.UL, said.
"There's a lot of interested parties outside the U.S. The investment will certainly influence us in where we might go," he said, without elaborating.
The Atlantic is key to helping Fisker regain its credibility after a series of setbacks with its flagship sports car, the Karma. The Atlantic will cost about half of the Karma, which carries a price tag of more than $100,000.
"This is their first high-volume model," said AutoPacific analyst Dave Sullivan. "They need to have a flawless launch because that's how they're going to end up paying the bills."
"They are struggling right now to gain credibility as a manufacturer," he said.
The DOE froze its loan to Fisker because of a one-year delay in the bringing the Karma to showrooms. The move forced Fisker to suspend work at the Delaware factory and lay off 26 workers in February.
Then in March, a Karma being tested by Consumer Reports failed because of a defect in the battery packs made by supplier A123 Systems Inc AONE.O.
The battery packs are now being replaced at A123's cost. LaSorda told reporters it was considering a number of battery suppliers for the Atlantic, including A123.
Should the Atlantic not be built in Delaware, Fisker may build vehicles off of a another, smaller platform that the company is working on now.
Under LaSorda, Fisker has devised a business plan that allows Fisker to be profitable without the DOE loans.
So far, Fisker has raised more than $1 billion in private financing and LaSorda has also personally invested in the company. Fisker has used $193 million of its DOE loan and has not received a payment from the agency since last May.
Fisker recently raised $392 million in private financing, according to a Fisker regulatory filing this week. It hopes to raise $500 million.
The car maker was founded in 2007 by Henrik Fisker, a one-time Aston Martin designer who was until recently its chief executive. In February, Fisker named LaSorda as the new CEO to manage Fisker's business strategy.
The Karma has benefited from the support of celebrities such as actor Leonardo DiCaprio and pop icon Justin Bieber, who received the car for his birthday this year.
(Reporting By Deepa Seetharaman; Editing by Chris Lewis)
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