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.