A Tale of Two Electric Startups – Fisker

Now that NEVS’s purchase of Saab’s assets are complete, a clearer picture of their future plans is emerging. While none of us know exactly where the road will take the company, one thing is clear- with a business model based on electric propulsion, they will effectively be operating as a startup company. In a previous story, we looked at Tesla as an example of an automotive startup that has proven a successful business case exists for electric cars. I’d like to continue looking at the other gorilla in the electric start-up room, Fisker, and focus more on their own missteps, so that we can watch and hopefully sound the alarm if we see NEVS in a similar situation.

Their first model, a $100K+ roadster, enabled them to test out their battery and control systems at an almost break even level. But for their first volume model, they didn’t want to compromise– they wanted a game changing mid-sized sedan. Indeed, Tesla has reduced the development process of their Model S sedan to its most salient details in order to exploit the best out of what electric propulsion provides– we’ll look at those in future articles. And by every measure of achievement, they’ve succeeded in silencing their critics. The respected auto journalist Dan Neil lost his bet with Tesla CEO Elon Musk that the Model S wouldn’t come to market on time, and paid $1,000 to charity as payment. Tesla has forecasted profitability next year, less than a year after delivery of the first Model S, due mostly to strong presale demand. They’ve presold 12,000 cars, and will break even around 8,000- showing that if NEVS wants to succeed, they must follow a similar path and leverage the support and initially target people like you and every reader of SU to survive.

But what of Fisker, you say? If you’re unfamiliar, they chose a similar strategy of designing a fastback style sedan, but instead of going fully electric, they chose a PHEV, or Plug-in Hybrid Electric Vehicle solution like the GM Volt platform. Given the choice between having the standard 160 mile range of the Tesla or an approximately 40 mile range plus unlimited recharging range with a gas generator, I’d take the latter. But where Tesla targeted a $50K starting price for their Model S after local tax incentive price, Fisker went higher end to cover start-up costs with their Karma sedan– $100K. You could say then, they’re actually following Tesla’s lead in starting out expensive to cover costs with their first car, they’re just a few years behind.

Say what you want about the Karma’s design, it certainly doesn’t scream Electric Vehicle or Hybrid, with its long nose it looks more like an amalgamation of Corvette, Ferrari, and Aston Martin. Its designer, after all, Henrik Fisker, styled the new Astons before starting his PHEV company in Irvine, California. It has received very positive reviews for ride, handling, and styling from the automotive press, but most have given the Model S the nod between the two, which doesn’t bode well for a car that costs nearly twice as much as the base model. That said, the Tesla is limited to 160-300 miles and the Fisker can go unlimited on gas– something that’s hard to quantify a price for.

While Tesla was able to work out all the difficulties of alpha and beta testing their complex and intertwined electric control systems through the Roadster program and Model S testing, and through partnerships with conglomerates like Daimler and Toyota for Chassis and engineering, Fisker had a much tighter timeline to get their product to market. I understand the call from our commenters for NEVS to bring their electric Saab to market ASAP, but I also can see the need for development to iron out all the wrinkles of the various components so as not to erode the brand’s credibility.

Even within this tight timeline, the engineering of the Fisker Karma is really state of the art. They’re using a nanophosphate battery that is better for a PHEV solution as opposed to a long range depletion scenario like a pure EV, and is also a safer design. Their chassis tackled the weight issue that Tim has talked about in recent articles as one of Saab’s great strengths, and concentrates the mass as low as possible. As this video shows, the Karma was designed to leverage the strengths of battery technology and placement on a vehicle’s design and dynamics.

NEVS has stated their intention to use cutting edge Japanese technology to leapfrog the competition. Rumors are circulating about who the provider might be, but suffice it to say, getting it right for an automotive application to Saab engineering standards is certainly going to be a huge task. Fisker’s battery manufacturer, A123 Systems (who one of our better known and more valuable site members actually employs) found defects in their battery packs early on in the production run. That defect was responsible for a dead car in a Consumer Reports test, which essentially killed the early credibility of the company. You can see their struggle in this video.

In the past few weeks, we’ve seen several recalls of Karmas due to mechanical failure and worst of all, a fire in California– due to a simple problem like broken cooling fans. Their spokesman has done a good job tamping down the matter and to their credit they quickly identified the component responsible for the fire. Fortunately there are only 1,000 Karmas on the road that need the fix, and these issues seem to be resolved.

To make matters worse, the funding for Fisker’s business plan has been eroded by politics in Washington, DC, complicating their plan to produce a midsized vehicle, the Atlantic, in a former GM plant in Delaware. Their missteps and delays led the Department of Energy to freeze their $528 million loan and lead the company to scramble to the private market for more funding. It all boils down to the fact that the Karma is produced at no other than Valmet, the factory that also built 9-3 convertibles. Fisker’s promise to employ 2,000 workers for the new Atlantic in the US have come into question, and the entire viability of the company’s finances have been in limbo. As this piece from ABC in the US notes, though ultimately EVs should prove to be a good bet (and since its air date Tesla and Fisker seem to be much closer to seeing a date certain for profitability), there isn’t much tolerance for taxpayer money being wagered in difficult economic times.

Despite these problems, I believe Fisker can overcome the hit to their image and iron out their difficulties. As bad as battery malfunctions and fires can be to a new car company’s image, the love-it-or-hate-it design that Fisker has imbued into his designs transcends the short term hiccups. After all, when the average person hears about Fisker Karmas in the mainstream media, it’s more often in reference to Justin Bieber’s personal ride or their support from the Obama administration than their recalls.

And just when you think the company has little to no support in the public eye, just last week the first convoy of Fiskers took place in Southern California, where 25% of Karmas have been sold. The group of 28 cars took to the Pacific Coast Highway in a display that reminds me of the same convoys that Saab owners display during our own troubled times. It makes me think that the owners of these Karmas care just as much about their cars as a statement of what they represent, much in the same way that we are proud of our Saab’s– for being ecologically friendly and distinctively designed among other reasons. Maybe being an EV company isn’t such a bad fit for Saab after all?

The big lesson here is that I can’t stress the importance of patience for NEVS to bring a tight, focused package to market that has been thoroughly tested. They must be ready to bring up to volume production from Day 1 of its sale, rather than rushing a product to market that could kill the brand’s credibility from the get go. They need their backup financing and business plan in place to weather the inevitable hiccups that they will encounter. NEVS is already behind the timeline of their start-up competitors and worse, the mass market leaders GM, VW group, BMW, Daimler, the Japanese and Koreans. Even their fellow Chinese will have time to polish their prototypes by 2015 when we will really begin to see volume production of the next Saab EVs. It is critical that we remain patient and help push for the most credible and safe EV possible, or else it really won’t be a true Saab. Before you rush to judgement that it’s taking NEVS too long to release the 9-3 EV, remember how tough it has been for these other startups, and the toll their mistakes have taken, before you wish the same on Saab.

DUTCH900C
Member
4 years 24 days ago

At the Fankfurt Motor Show there will be a kind of a Shootingbreak of the Fisker Karma, called the SURF.

http://www.autoblog.com/2011/09/13/fisker-surf-shooting-brake-wows-frankfurt-show/
http://www.autoblog.com/photos/fisker-surf-shooting-brake/#photo-4437492/

I don’t like the Sedan/Coupé-version and in my opinion the SURF looks much better and that is, again in my opinion, because of the much better shape of the rear part of this “Sootingbreak-version”.

rask
Member
4 years 24 days ago

Yes,

The Surf shooting break concept was shown LAST year at the Frankfurt Motor Show (there is no IAA this year, it´s the Paris show this year).

And yes, it´s only a concept.

900 classic cab
Guest
4 years 24 days ago
Very interesting article. I’ve been following Tesla and Fisker for a while and I truly think that if SAAB can launch the electric 9-3 soon (It needs a facelift although), it will be a huge step forward against the main competitors. It reminds me a bit of aviation history. Unlike the Russians, the US didn’t invest on a 3rd generation fighter. Instead, they kept going with the old ones for a while and start from scratch until they have reached 4th generation. They achieved superiority for a long time that way with the F-15 and F-16, which are still in… Read more »
dcpattie
Member
4 years 24 days ago

IF NEVS enters the U.S. market, pricing is going to be absolutely critical! They just cannot be anywhere close to Fisker or Telsa pricewise,

Call me crazy but an electric 9-3 *should* be priced around 40K USD. I think this price-point is where they can gain market share quickly. In fact, a smart (long term) business plan might even have them losing money per vehicle until the all new platform cars are ready. NEVS would not be the first car company to use this long-term strategy.

3cyl
Member
4 years 24 days ago

Losing money per vehicle didn’t work out well for SAAB. For the sake of the employees, if NEVS uses such a strategy I hope the results are better.

dcpattie
Member
4 years 24 days ago

It takes deep pockets and a long term plan. I recall when Toyota launched the Lexus brand and its first car, the LS. They slotted it at 35K. Basically you were getting 7-series size and quality for 3-series price. I think that ended up working out pretty good for them. But its takes product, a good all around plan, and deep pockets to absorb initial losses. I don’t think Saab can do this either.

Angelo V.
Member
4 years 24 days ago
Let’s not forget Toyota’s entry into the U.S. minivan market. They dumped Previas in the U.S. taking a loss on all of them in the first couple years. Apparently, it’s not even legal trade—-there were lawsuits filed over it, though I don’t know how they turned out. I don’t think the answer is to lose money on each vehicle intentionally—-but they simply must to something to keep the price attractive—-reasonable or ever low. A very think profit margin on each car until they are very well established. Truth be told, not many people want to be adventurous with new technology… Read more »
Thylmuc
Member
4 years 18 days ago

That happens to be the price of a decent battery pack.

(N.B.: The base Tesla does not have a decent battery pack, imho).

Angelo V.
Member
4 years 24 days ago

Fisker was showered with piles of money from the U.S. government—–presumably because they had committed to reopening a closed Saturn plant in Delaware—-and Delaware happens to be the home state of our current Vice President. Here’s a link—-just add the http before the colon. ://content.usatoday.com/communities/driveon/post/2012/04/fisker-on-ropes-delaware-plant-absolutely-empty/1#.UEiGhFL3CuI
We’re continuing to throw federal and state money at these “green” projects—-even funding a non U.S. company! Hopefully, NEVS will make better use of the Trollhattan plant than what Fisker is doing with the GM plant.

Angelo V.
Member
4 years 24 days ago

And yes, I know the SU article touches on this—-but I thought it was worthy of further research/discussion!

Angelo V.
Member
4 years 24 days ago
Fisker and Tesla already have the reputation as expensive “statement” vehicles for wealthy people who are connected with the enviromental movement. This is how they are perceived in the U.S.—-cars that people like Jay Leno, a multi-millionaire, can buy as a toy and put in a barn or multi-car garage—seldom used. Whether or not that reputation is deserved—-it’s reality. I think a more conservative approach—-a mild restyling of the 9-3 and a considerably lower price—-will position NEVS/Saab as a PRACTICAL electric vehicle for the real world and for real people. The price point has me very concerned. DC Pattie is… Read more »
3cyl
Member
4 years 24 days ago

Since NEVS purchased the SAAB assets out of the bankruptcy, their cost to bring the EV 9-3 to market may be less than the cost to develop a car from scratch. That may allow them to price the car competitively and make money.

phermansson
Member
4 years 24 days ago

Thats a very good point, the 9-3 e-Power is already certified and ready to for production so basically they need to upgrade the interior, exterior a bit and also install the new powertrain, should be a very low cost compared to starting from scratch?

Silas
Member
4 years 24 days ago

The stealth mode on the Surf’s instrument cluster resembles a very familiar Night Panel feature.

maanders
Member
4 years 24 days ago

And it looks like there is a new company getting into the EV market, but this time competing with other supercar companies. The Concept One from Rimac Automobili in Croatia.

theSandySaab
Member
4 years 23 days ago
TCO from Rimac is a great e-car but there are no volumes. Even the Tesla S is only a few x10,000 per year. There seem to be a lack of production facilities and -competencies. I believe that is why NEVS got the SAAB factory, and the name was of course a bonus, with the history and technological heritage and image. What I see here on this forum I perceive as a slow acceptance of e-vehicles, which I find great. You and the world is slowly accepting there is a future also for e-cars, ZEV, etc… There are also plans for… Read more »
Angelo V.
Member
4 years 23 days ago

The world was slow to accept the Sony Betamax too, or video disc players and DATs.

theSandySaab
Member
4 years 22 days ago

Comparison – FAIL!
We are still watching videos and listening to music, it’s just the medium that has changed. The e-cars will progress, designes, concepts and technology will be weeded out, BUT we will still be driving e-cars to an ever larger extent. (Probably never 100% of all transportation will go electric, but for private road transport, I’d say a large majority will be electrical, already in my lifetime(?)).
Mind you, the Betamax was technological superior to VHS, but with smart marketing and rental agreements (especially the porn-section) made VHS the industrial standard…

Angelo V.
Member
4 years 22 days ago
I think they keys are: 1) An accurate “charge gauge” (at least as accurate as fuel gauges on petrol cars) so that the driver knows how much range they have left. This is already addressed. 2) A range of 300 miles on a charge and eventually more. A person must be able to plan weekend trips of a few hours of driving without worrying about “running out.” which leads to… 3) The ability to recharge batteries about as quickly as you can refill a gas tank. If you can pull into a charging station almost out of energy—-and “refill” in… Read more »
theSandySaab
Member
4 years 22 days ago
Hmm, let’s see: 1. Check! 2. Check.. (close for most of the latest editions) 3. That’s gonna take some time, requiring new technology… 4. Soon, my friend, soon… In regard to 3. Mr Maloney had a gerat comment – he NEVER waited in line to fill his car up, he could easily commute within the cars range, then plugged it in when at home – he states in his Part 3 about the Tesla Roadster: “It’s been my daily driver for quite a while now, and because its battery is full every morning, with its 240-mile range, I never have… Read more »
Angelo V.
Member
4 years 22 days ago

What about the family vacation? A rental? I have a destination that is about 4 hours away depending on traffic—-225 miles maybe—-but in a traffic jam, 4 hours quickly becomes 5.5 or more. Would I have anything there to worry about? When I get there, to visit relatives, can I plug into their normal house electric (I’m assuming 110)? Do we need a different volt/current for recharging today’s EVs?

rune
Member
4 years 22 days ago

A little googling turned up this calculator: http://www.evsroll.com/Electric_Car_Charging.html

Not sure that calculator is all that useful. If your charger is built to draw 10A, it won’t help you to hook it up to a socket that can supply 20A.

In any case, do not get into an heated argument with your relatives the first evening. Wait for the battery to fully recharge first.

Angelo V.
Member
4 years 22 days ago
The heated argument would be if my EV causes blown fuses or damage to their home’s wiring—-or a big electric bill in the mail a couple weeks later. I changed from an electric clothes dryer to a gas dryer a few years ago—-so I had an open 220V circuit on my fuse box—-but I’ve since used that for a new sunroom I’m having built. A pity—-because the laundry room is opposite my garage—-they share a wall right where the noses of the cars are. I guess it would be easy for an electrician to make a few changes again and… Read more »
theSandySaab
Member
4 years 23 days ago

Also, one interesting guy, Mike Maloney, writes about his recent crash in a Tesla Roadster. I find Part 3 a good read, extrapolating a possible bright future for an e-Saab…
http://goldsilver.com/article/mike-maloney-in-horrible-car-crash-with-tesla/

Angelo V.
Member
4 years 23 days ago

http://www.cbsnews.com/8301-202_162-57506778/pope-gets-first-electric-car/
Wow—-the Pope is going electric! Maybe there’s hope for NEVS after all!

theSandySaab
Member
4 years 22 days ago

See Angelo, He must know!!!
I think you are warming to the idea (electric blanket?)…

Angelo V.
Member
4 years 22 days ago

Yes, I’m getting goosebumps just thinking about it…perhaps NEVS will be saved with divine intervention!

theSandySaab
Member
4 years 22 days ago

Haha, good one…
Hopefully it won’t be needed…
🙂

Brian Hamilton
Member
4 years 21 days ago

I’m curious to know the towing capabilities of electric cars. Does anyone know anything about that?

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