Hard Times for Fisker Automotive

Fisker Automotive the maker of the Karma plug-in hybrid electric sports car announced today that it is laying off about 75% of its work force, or about 165 people. This follows the resignation last month of the company founder, Henrik Fisker who started the company along with a partner in 2007.

Fisker Karma

Fisker Karma – Fisker Automotive announces significant layoffs

Fisker hasn’t produced a single vehicle since its battery supplier A123 Systems went bankrupt last year and was bought by the Chinese automotive parts manufacturer Wanxiang Group Corporation. Fisker was in talks with the new owners of A123 regarding a new battery contract.

Fisker received a $529 million loan from the U.S. Department of Energy in 2011 to help the automaker get started.  Today’s announcement casts doubt on the ability of Fisker to pay that loan back.

The quality of the Karma, Fisker’s only vehicle, received some negative press over the past year, most notably from Consumer Reports, which complained of some glitches in both the Karma’s hardware and software.

While the long term viability of electric vehicles in the global automotive market remains positive, it’s inevitable that there will be industry consolidation and company failures along the way as the business model of the new generation of electric vehicles matures.

Meanwhile on a more positive note, Tesla Motors, maker of the Model S a pure battery electric vehicle announced on Monday that Model S sales exceeded 4,750 units in the quarter.  This is higher than the 4,500 units Tesla had forecast and as a result they expect to turn a profit in the first quarter of this year.

Tesla Model S exceeded first quarter sales estimates

Tesla Model S exceeded first quarter sales estimates

Source: The Globe and Mail, The Guardian