Credibility Challenge for Fisker Karma
One of the most exciting new developments in the auto industry is the emergence of small start-ups with big visions for electric-drive cars. But the ability for these companies—like Tesla, Fisker, Coda, Think and Aptera—to fulfill their vast promise is dependent on their ability to deliver cars on a promised schedule.
The Fisker Karma is bold and beautiful—an $87,000 four-door plug-in hybrid theoretically capable of 50 miles of all-electric driving, and then hundreds more miles with help from a 2.2-liter four-cylinder gas engine. But a series of production delays could undermine the credibility of the company with any of its announcements.
In January 2009, chief executive Henrik Fisker said that production of the Karma would “definitely” begin in December 2009. When December rolled around, Mr. Fisker encouraged consumers to order a Karma right away because production will begin in May 2010. And this week Ray Lane, a managing partner of the venture capital fund Kleiner Perkins, a large shareholder in the company, told Reuters that “mass production” will begin in February 2011.
Lane added that about 100 cars would be produced before the end of the year for the purposes of testing and safety evaluation. The vehicles will be produced though Finland-based contract manufacturer Valmet Automotive. Lane also said, “Some of them will be given to customers for testing purposes as well, out in the real road.” To date, the media has not been given the opportunity to drive the Fisker Karma.
Fisker Automotive’s exciting vision for an entire series of more affordable, but no less stylish, plug-in hybrids is alluring. In fact, the U.S. Department of Energy invested $528.7 million in this vision. According to public statements, a plug-in sedan selling for as low as $40,000 after tax incentives is planned for 2012. Should dates be taken at face value or considered rough and moving targets?
If history is any indication, Fisker will be forgiven for missing target dates as soon as vehicles start showing up on streets. Tesla Motors was approximately one year behind on delivery of its Roadster, but by 2008 the company was in production. Two years later, the company has produced and sold about 1,300 vehicles. (Fisker is promising 15,000 units annually.)
Tesla’s pioneering spirit is paying off, and is apparently mapping the route for fellow electric start-ups: big plans, limited production, government support and finally investment from automotive giants. Daimler purchased about 10 percent of Tesla Motors last year, and last week Toyota announced that it would buy about 2 percent of the company.
With each passing day, the competitive climate is getting tougher for the start-ups, because major established carmakers, like Nissan and General Motors, will be introducing electric cars and plug-in hybrids later this year. Yet, in the long run, the electric start-ups might end up getting saved by Big Auto, which could decide to gobble them up instead of eating their lunch. Lane sees consolidation ahead. “I would say 10 years from now you would be lucky to have one of these (small) companies left,” he said.
A decade might as well be a million years for Fisker and other start-ups. The first priority for these companies is to set a production schedule for putting cars on the road. And stick to it.