Fisker May Find a Second Life in Sale

  • Share
  • Read Later
Transtock / Corbis

The 2012 Fisker Karma.

It’s been a rough few years for Fisker Automotive, the defunct maker of tony electric cars. The U.S. government froze a $528 million loan back in 2011 amid delays in production, having dispensed only $192 million of it. Then, in 2012, the company’s electric battery supplier went bottom up, curbing production indefinitely. Hurricane Sandy destroyed much of its remaining stock. This April, having not put out a car in nearly a year, the company laid off three-quarters of its employers.

What’s left of the automaker could still have some life left in it yet. On Friday, the Department of Energy is expected to auction off the remaining $168 million loan, following an initial seizure of $28 million. The loan, expected to sell at a huge discount, could give the winning bidder access to some of the ailing firm’s most coveted assets. “This is not the last of Fisker that we will see,” says TrueCar analyst Jesse Toprak.  “They’re going to resurface in some shape or another.”

On the brink of bankruptcy, Fisker still has some valuable assets. Aside from factory space in Delaware, it owns the intellectual property behind the unique and widely praised aesthetic design of its mainstay product, the Karma hybrid plug-in electric.

The Anaheim, California-based automaker, founded in 2007 by proven auto-designer Henrik Fisker, raised more than $1 billion in funding, including the massive 2009 government loan, to produce its plug-in electric cars. Fisker, a former designer for BMW and Aston Martin, penned the original design for the Tesla Model S, which is selling well. The Karma, costing more than $100,000, was released in 2011 as a luxury head-turner. The company’s smaller Fisker Atlantic, also a high-end model, was indefinitely pushed back amid financial woes.

(MOREThe Key to Fixing America’s Savings Crisis)

What remains has already drawn interested buyers. In May, Reuters reported that a boutique carmaker led by former General Motors executive Bob Lutz had teamed up with Wanxiang, China’s largest auto parts suppliers, in talks to acquire Fisker through a pre-packaged bankruptcy. Other reports had investors in Hong Kong and Europe considering a similar move. In January Wanxiang expressed interest in supporting Fisker, and Wanxiang America Corp. President Pin Ni said yesterday in an email to TIME that the company’s “position has not really changed,” though he declined to comment on whether the China’s largest auto-maker would place a bid.  Fisker did not respond to requests for comment.

“Fisker did have a very good reputation from the design side,” says Elaine Kwei, an analyst at Jefferies & Co. “I could see a potential buyer still getting some value out of the brand from that angle.” But don’t expect the likes of GM to be rolling out Karmas anytime soon, says Alan Baum, an auto analyst at Baum & Associates.  For starters, Fisker outsourced most of the technical production of its car—a risky supply chain model that has been shunned by Fisker’s more successful counterpart, Tesla Motors—so the future owner will primarily be gaining access to the company’s designs.

The performance of the firm’s cars seemed to lag behind their looks. The vehicles were essentially too heavy for the electric engine and failed to impress.

Fisker’s assets are more likely to be parsed and dispersed into future electric—and traditional—cars, Baum says. The exceptional design could be condensed to fit a better performing car, or the car’s electronic controls, like those driving the power train, could be adopted in other models. “Some of the componentry might be somewhat unusual and groundbreaking, and that might find it’s way into something else. You wouldn’t necessarily know it,” Baum says. “The likelihood of an electric vehicle with the design of Fisker producing in even modest volume is relatively slight.”