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Fisker Readying Second Luxury Plug-in After Karma Setbacks

Published: April 4, 2012 | 7:48 am
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Fisker Automotive Inc., maker of plug-in luxury cars, is preparing to build a second rechargeable model as it fixes glitches and boosts deliveries of its $103,000 Karma sedan.
The new model, the Atlantic, is already “90 percent fully developed,” Henrik Fisker, the Anaheim, California-based company’s co-founder and designer, said late yesterday at a press conference in New York. The vehicle is smaller, less expensive and more fuel-efficient than the Karma, he said.

Fisker, intending to become profitable selling cars powered by lithium-ion batteries and gasoline, has raised more than $1 billion from private investors to meet that goal. The company also needs those funds to resume work on a stalled plant in Delaware, where it hopes to build that second model, after being cut off from an Energy Department loan for the project.
“It’s been a difficult journey, but we are here,” Fisker said at the press conference, broadcast on the company’s website. The Atlantic “will be built and will go into production,” he said, without elaborating.
Fisker was approved for $529 million in federal loans in 2009 to develop technology for the Karma and to revamp a closed auto factory in Wilmington, Delaware, to build its plug-in cars. The company had drawn down about $193 million of the loans when Fisker disclosed in February its access to the funds was suspended last year, owing to delays with the Karma.

Deliveries, Recall

The company has delivered about 700 Karmas since late last year. The vehicle, with a range of 30 miles to 50 miles on lithium-ion battery power before a gasoline engine propels it, was recalled in December to fix a battery pack clamp.
Fisker sold 250 of the cars in March, Chief Executive Officer Tom LaSorda told reporters after the news conference. The company expects to sell 4,000 worldwide by the end of the year, he said.
The company will make a decision at the end of the summer on production of the new model, LaSorda said. It will be a business decision based on “what’s best for the company,” he said, not on the outcome of getting the rest of the Energy Department funding.
“We’re going to run this company as if we’re on our own,” LaSorda said.
Last week, the closely held company said defective battery packs supplied by A123 Systems Inc. (AONE) caused a Karma to shut down during tests by Consumer Reports magazine.

Welding Flaw

LaSorda visited A123’s factory in Michigan to investigate the defect, which turned out to be a welding flaw, he said. The battery supplier is absorbing the costs of the recall, said LaSorda, a former chief executive of Chrysler Group LLC.
The Karma is built under contract for Fisker at a factory in Finland. LaSorda said that the company is also looking at overseas options to build the second model.
The Wilmington plant remains the company’s first choice for production of the Atlantic, LaSorda said. The location of investors will influence the production site, he said.
Fisker didn’t immediately provide the price or on-sale date for the Atlantic. The company is backed by investors including Kleiner Perkins Caufield & Byers (ZZISK) and Palo Alto Investors LLC.
Fisker is building its business plan around financing options other than the Energy Department loan, LaSorda said. The company is looking for other partners, including more outside the U.S., he said.
“If we get it, fine,” LaSorda said of the government loan. “If we don’t, we can still have a great company. We’re going to build this car with or without DOE funding.”

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