Last week Consumer Reports posted a brief report that the Fisker Karma, a plug-in hybrid luxury sedan, that CR had bought for testing had died, and was towed back to the dealer for servicing. This prompted a flurry of coverage, some of it over-hyped negativity, and I posted a piece noting that while it looks bad for Fisker that CR’s Karma died during testing, it’s not unknown for newly built cars to inexplicably die and require servicing. Yesterday, Katie Fehrenbacher, writing on GigaOM’s Earth2Tech blog, reported that Fisker had pushed delivery of the Karma in an effort to meet deadlines in the Dept of Energy loan program, implying that quality problems of the sort CR reported last week were due to the rush to meet DoE deadlines.
While attending yesterday’s launch of the Coda electric car, Fehrenbacher reports having talked with a former Fisker employee who is now a Coda employee. That unnamed Fisker employee claimed that it was not uncommon for Karma’s to be shipped to customers to have technical issues, and that the company rushed to launch before the car was ready.
As we have noted before, Fisker has had repeated delays, over the years, in getting the Karma into production. Those delays caused the company to miss milestones in the Dept of Energy loan program, resulting in the DoE freezing Fiskers loans. Additionally, Fisker’s battery supplier, A123 Systems, is beginning to stumble because Fisker has not purchased of batteries from A123 at the expected rate. Clearly these issues are likely to have placed Fisker Automotive management under pressure to meet the company’s commitments to the Dept of Energy and the suppliers like A123. If nothing else Fisker’s management signed contracts, and made other commitments, putting the company under an obligation.
The questions before us are: Whether Fisker did rush the Karma to production? Is the failure of CR’s Karma is an abnormality indicating the Karma is a lemon? Whether all this means Fisker Automotive is headed towards bankruptcy?
|
Sponsored |
It seems likely from what we just wrote that Fehrenbacher’s source is accurately saying that Fisker’s Karma was rushed to production. They had the motive, pressure to meet commitments, and the means, in setting schedules and priority.
Does the string of bad news about quality issues on the Karma mean it’s an undriveable lemon? First was the battery flaw found by Fisker’s QC team, leading to a recall to replace the battery packs. Then there was a software glitch causing the need for a software upgrade. The most recent is this report from Consumer Reports where the Karma they’d purchased for testing got into a confused state and wouldn’t drive.
This series of flaws may be a sign that the Karma is deeply flawed and Fisker is doomed to failure. Or it may simply be manufacturing oopsies that Fisker is working to correct. Automakers make manufacturing mistakes and conduct recalls all the time, so it’s not like cars are ever perfect. Right?
The battery pack flaw found in December was in packs manufactured by A123 Systems, and involved incorrectly installed hose clamps. It is to Fiskers credit that the companies QC team discovered this flaw before very many cars had shipped, rather than the flaw be discovered in some inconvenient manner such as a car fire. The software glitch resulted in a four-day stoppage of sales, and a recall to update the software. Plenty of cars have software glitches resulting in required updates. The failure reported by CR sounded like another sort of software glitch, but yesterday CR reported their Karma was back after the dealer replaced the battery pack and cable. Again, it’s not unknown for cars, even from major manufacturers, to have flaws out the gate, that’s why car manufacturers offer warranties. And we’ll note in passing that in part A123’s financial struggle is due to high costs for warranty replacements of battery packs.
The issues are beginning to pile up, and it may turn out that Fisker’s Karma is actually a lemon. At the same time the Karma issues so far do not appear to warrant using the L-word.
Does all this mean Fisker is headed towards failure? Is Fisker another Solyndra? That last refers to another company, Solyndra, a solar panel manufacturer, that also received Dept of Energy loans, and ended in failure last summer. In the case of Fisker, company management has said reports of their bankruptcy is premature, and that Karma production is well under-way, and is not dependent on Dept of Energy loans. The company has raised approximately $850 million in private investments, and is in the middle of raising more capital. Hence the company is on a path of freeing itself from dependency on the Department of Energy loan program.
On the other hand there is the little matter of an investor lawsuit against Fisker. Further, Crain’s Business News reported last week the SEC has notified Advanced Equities Inc., a Chicago venture capital and investment banking firm, that that company is SEC investigation regarding its fundraising activities for Fisker.
As for any startup business, whether Fisker “makes it” depends on a lot of factors. Sales are a key, and while the Karma has sexy looks galore, that isn’t a guarantee of future sales or that there are enough buyers for this expensive luxury car to support Fisker’s business. The other factor is the investments, and the company’s efforts to raise private capital is commendable. Especially given the way Fisker Automotive has become a political football being kicked around by the punditry to score political points. But the investor lawsuit and SEC investigation have the potential to cast a shadow over Fisker’s fundraising.
|
Sponsored |
We started this with a report on GigaOM’s Earth2Tech that Fisker rushed the Karma out the door. This bit of news adds to the growing doubt about Fisker’s viability, given the history we’ve just related. Either the doubts will continue to pile up, eventually causing the camels back to break, or something will occur to evaporate the doubts. In the meantime each bit of news is an opportunity to re-evaluate Fisker and its prospects.
Originally published at TorqueNews: http://www.torquenews.com/1075/did-fisker-deliver-karma-it-was-ready-doe-loan
- Highway design could decrease death and injury risk, if “we” chose smarter designs - March 28, 2015
- GM really did trademark “range anxiety”, only later to abandon that mark - March 25, 2015
- US Government releases new regulations on hydraulic fracturing, that some call “toothless” - March 20, 2015
- Tesla Motors magic pill to solve range anxiety doesn’t quite instill range confidence - March 19, 2015
- Update on Galena IL oil train – 21 cars involved, which were the supposedly safer CP1232 design - March 7, 2015
- Another oil bomb train – why are they shipping crude oil by train? – Symptoms of fossil fuel addiction - March 6, 2015
- Chevron relinquishes fracking in Romania, as part of broader pull-out from Eastern European fracking operations - February 22, 2015
- Answer anti- electric car articles with truth and pride – truth outshines all distortions - February 19, 2015
- Apple taking big risk on developing a car? Please, Apple, don’t go there! - February 16, 2015
- Toyota, Nissan, Honda working on Japanese fuel cell infrastructure for Japanese government - February 12, 2015
