Though the Fisker car company tried to put on a brave face at the New York Auto Show, making the public introduction of their proposed midsized Atlantic sedan, the state of the company’s affairs might be better evaluated from what they’ve done farther down the eastern seaboard – effectively shuttering the former GM plant in Delaware where the Atlantic was supposed to be assembled, laying off the 12 remaining engineers and technicians at the facility.
Earlier this year Fisker laid off 66 people at the Wilmington factory. At this point the plant is empty, Fisker having spent millions of dollars, most of it public funds, to remove the old equipment yet not having the money to buy and install a new assembly line. So far all of the cars that Fisker has sold, examples of the Karma luxury sports model, have been assembled under contract by Valmet in Finland. Fisker’s business plan was based on expecting about a half billion dollars in loans from the U.S. Department of Energy. Fisker has used about $200 million of those loans to get the Karma into production and the remaining $300 million or so was intended to get Atlantic production up and running in Delaware. Production delays on the Karma made Fisker miss conditions of the loans so the DoE has currently held up the remaining funds. It puts Fisker in a bit of a Catch-22 situation. They can’t meet the DoE loan conditions without moving forward on production of the Atlantic and they can’t move forward without the loans. Fisker is scrambling to find private funding but I believe that with the latest layoffs, we’re starting to see Fisker circle the drain.
Factories are expensive, and they make money only when they are producing things to sell. If they’re not currently manufacturing goods at the plant, and with no production in near sight, it was probably wise not to spend any more money on the facility. Newly hired Fisker executive, former Chrysler CEO Tom Lasorda has made some noises about Fisker looking at other options besides the Delaware facility. The problem for Fisker is that their entire business plan was based on getting money from the federal government and other assistance from the state of Delaware conditional on building cars in that same Delaware plant. If Fisker walks away from Wilmington, they’re on the hook for that same $200 million that they’ve borrowed in addition to what they’ll need to set up shop somewhere else. There’s just no way they’re going to find private funding with that hanging over their heads.
Fisker continues to negotiate, behind closed doors, with the Energy department in Washington. At the same time, the only remaining workers on site in Delaware are a small security and maintenance staff for asset protection. I don’t know if it’s part of Fisker’s agreement with Delaware or just another sign of the company’s seemingly dire financial situation but the electricity bill for whatever lights that are still on at the facility and other utility bills for the plant are currently being paid by the state.
Ronnie Schreiber edits Cars In Depth, a realistic perspective on cars & car culture and the original 3D car site. If you found this post worthwhile, you can dig deeper at Cars In Depth. If the 3D thing freaks you out, don’t worry, all the photo and video players in use at the site have mono options. Thanks for reading – RJS