By on October 12, 2013
The Fisker Karma's battery pack and drivetrain, supplied by Quantum Technologies

The Fisker Karma’s battery pack and drivetrain, supplied by Quantum Technologies

The Department of Energy today is auctioning off the paper for the $192 million it loaned to Fisker Automotive as part of the Advanced Technology Vehicles Manufacturing loan program. An obvious question is why would anyone want to buy that debt? Many of the press reports about the sale say that by purchasing the debt, a buyer could ultimately gain control of Fisker’s assets including intellectual property, like the extended range hybrid drivetrain and controls thereof. While Fisker may indeed have assets with some value, I’m not sure that anyone’s going to spend at least $30 million, the minimum bid required by the DoE, to be able to duplicate the Fisker Karma’s drivetrain.

I can understand why Bob Lutz, either participating or not with Wanxiang, would want access to the Karma’s design as he’s apparently had no problem selling every LS9 powered Destino, based on the Karma, that he and his business partners have been able to build. Henrik Fisker is a talented designer so it wouldn’t be too surprising if the Fisker Karma survives the Fisker car company. The Karma could become a latter day Graham-Paige Hollywood or Nate Altman era Avanti II. For their part, Wanxiang might prefer that Fisker stays intact and resumes production. Wanxiang already bought battery maker A123, which supplied the Karma, so they have an interest in keeping the startup automaker alive.

Quantum Aggressor, which features a hybrid drivetrain

Quantum Aggressor, which features a hybrid drivetrain

It’s conceivably possible that if Fisker owned something novel in the way of electric drivetrains or control systems for EVs and hybrids, that might be a way of acquiring the latest EV or hybrid tech on the cheap.  Control systems for hybrids are not inexpensive to develop. Seamlessly integrating gasoline engines and electric motors is not easy. At the recent Toyota Hybrid World Tour, the point was made that software was the most expensive part of the Prius’ development. For pure electric vehicles, motor control, regenerative systems and battery management all require complex software to operate properly. To save money on EV development, Toyota itself has a partnership with Tesla, who provide motors and battery packs for the electric version of the RAV4. Still, I have to wonder if Fisker Automotive owns any EV or hybrid technology that’s worth risking $30 million. That’s because Fisker doesn’t own the technology behind the Karma’s drivetrain.

QForce2

Quantum Aggressor’s “Q Force” drivetrain, note the similarities to the Karma’s “Q-Drive”

Fisker itself doesn’t own much in the way of EV or hybrid technology. Fisker’s “Q-Drive” serial hybrid drivetrain was developed and exclusively supplied by Fisker partner Quantum Technologies. As a matter of fact, Fisker Automotive came into being as the result of a chance meeting at a Range Rover dealership between Henrik Fisker and Quantum Technologies CEO Alan Niedzwiecki, which led to a lunch for the two men in early 2007. General Motors had just announced the concept for the Chevy Volt, which for the most part operates as a serial hybrid, electric drive plus a range extending on-board gasoline engine to drive a generator to power the electric motors. Quantum had developed a similar drivetrain for the U.S. military. When Henrik Fisker told Niedzwiecki of his plans to design gasoline cars built in China, the Quantum CEO said, “Why don’t you design a car around my drivetrain?” Fisker responded by saying “Let’s start a company!”

Quantum was the exclusive supplier of the Karma’s drivetrain, which uses a GM sourced Ecotec four cylinder gasoline engine to power the car’s generator. A Quantum affiliate also supplied Fisker with the photovoltaic roof on the Karma, that kept the parked car ventilated on sunny days and theoretically could extend range on sunny days by a few miles.

As a result of all of this, it’s unlikely that anyone could put the Karma back into production without the active cooperation of Quantum. It’s also unlikely that anyone is going to risk $30 million to have access to technology that another company owns and controls.

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 get a parallax view 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

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20 Comments on “Just What Assets Does Fisker Have to Buy?...”


  • avatar
    redav

    “Just What Assets Does Fisker Have to Buy?”

    I suspect there are several survivalists and zombie apocalypse believers who would eagerly want Fisker’s technology to start a fire in any situation, even underwater.

  • avatar
    Morea

    A) If there is a partial Federal government shutdown why is the auction going forward? In what sense is this an “emergency”?

    B) Fisker’s intellectual property consists of the ability to fool investors into putting money into unmarketable technologies. This IP is worth its weight in gold!

  • avatar
    racer-esq.

    $30,000,000 is a drop in the bucket in car development, right? For that Cadillac could get an awesome car design to make both a top line V8 powered V-series sedan (basically Lutz’s LS9 powered Destino with a Cadillac grille), and a series hybrid that isn’t just a Cruze coupe like the ELV.

  • avatar

    Flatten that battery pack out like the TESLA’s and you’ll have something. The Karma wouldn’t have failed if they hadn’t made it a highly stylized SMALL sports car. If they’d built it into a spacious car with luxury looks, it could have even the GENESIS’ exterior and be a winner. The simple fact is that people do want the ability to plug-in, but they deamand a gas backup.

    You’ll understand what I’m talking about when the ELR sales do well.

  • avatar
    myheadhertz

    A Quantum Aggressor with an air-cooled 1835cc VW engine might actually be a viable product.

  • avatar
    highdesertcat

    It’s been said that Marketing is creating a demand for something that doesn’t (yet) exist.

    The main problem, as I see it, is that there is so little demand for EVs, PEVs and Hybrids in TODAY’s global auto market. We’re not going to run out of oil/gasoline/diesel for at least the next 200 years and oil/gasoline/diesel is cheap, by any standard; Cheaper than generating electricity from wind, wave, geothermal, solar and nuclear.

    It can be argued endlessly, and it has by some, that EVs, PEVs and/or Hybrids are the wave of the future, but in reality, the actual number of people who put their money where their mouth is and buy one, much less are able to afford one, has been minuscule in the overall scheme of things.

    So the question I would pose instead is, “Why would anyone sink at least $30M into a failed venture that shows no ROI for the foreseeable future 5, 10, 15 or even 20 years hence?”

    I’m with racer-esq on this one. Let the DoE peddle this failed upstart to another one of the government’s bailed-out, handout-enriched and nationalized wards, GM. If all else fails to attract other suckers, give it to them, even if it takes another bribe to sweeten this pot.

    Hey, it worked with Fiat.

    • 0 avatar
      HerrKaLeun

      I think the Toyota hybrid sales numbers alone proof there is large demand for hybrids. Toyota probably sells more Prius than all sportscars in the world combined. I think it is certain once they offer each of their models (ie RAV4, Corolla) as hybrid option this will even explode. Then add all the Ford, Honda etc. and you see hybrids already are way beyond niche.

      $30m is nothing… developping one V8 cost $1bio, developing a RWD platform cost the same plus years of time. If you cry about $30 mio, you dont understand the car industry. GM went bankrupt with severa l billion $ in cash since they need at least $10 bio in cash just to cover daily bills.

      The car industry isn’t something you start in your garage anymore.

      • 0 avatar
        highdesertcat

        I agree that $30M ain’t much “in the overall scheme of things”. But why waste it on a venture that shows no ROI for decades to come, if ever? Hell, it failed ’cause there was no ROI from the start.

        My inclination is that since WE, THE PEOPLE, already own this failed enterprise, we should just give it to another failed enterprise, GM, that died and was bought to life at tax payers’ expense.

        In for a penny, in for a pound.

        Your premise that

        “If you cry about $30 mio, you dont understand the car industry. GM went bankrupt with severa l billion $ in cash since they need at least $10 bio in cash just to cover daily bills.”

        accurately reflects the Far Left Liberal Democrat Agenda that somehow the government should selectively decide which businesses should survive through resurrection, while others should be allowed to die on their own merit and accord, without dignity. Crony capitalism, sounds like. How about that Solyndra, eh? Or A123.

        Someone actually has to pay for this largesse since there is no free lunch. And again, it is the mentality of the Far Left Liberal Democrats of spend, spend, spend, and then tax the hell out of the remaining working people.

        I’m an Independent and can clearly see both sides of the political spectrum. I agree with neither since both lack common sense, to wit: our current national political conundrum.

        Having worked for my keep all my life, and having been affiliated with the US auto industry for more than 30 years as an advisor, through retail sales of new vehicles sold though the dealerships of my brothers, choosing one side over the other inevitably places the other side at a disadvantage.

        The total sales of ALL EVs, PEVs and Hybrids on a global scale, even in the years with the lowest SAARs, do not amount to a pimple on a gnats ass.

        I say, “Give this guppy to GM!” Let’s be done with it, like we were done with Chrysler when we dumped its carcass on Fiat with $1.3B.

        That smooth move motivated me to buy a UAW-built 2012 Grand Cherokee, imported from Detroit!

        • 0 avatar
          HerrKaLeun

          “The total sales of ALL EVs, PEVs and Hybrids on a global scale, even in the years with the lowest SAARs, do not amount to a pimple on a gnats ass.”

          So you say the 289,163 Prius that Toyota sold in the US alone in 2012 are not significant? There are not even many other models that have those numbers. Including Lexus,and the Camry hybrid this makes close to 400,000 toyota hybrids in the US. Add all the Ford, Honda etc. and you see that hybrids are not insignificant.

          You don’t seem to understand numbers and the car industry… this isn’t political (and no, I was not for any bailout), thsi is economics that $30 mio for technology or patents is peanuts. Most car OEM have spend $billions on hydrogen, EV, and all kind of technologies without making money so far. At some point tha tmay pay off, or not. Has nothing to do with government financing.

          • 0 avatar
            highdesertcat

            That’s exactly what I’m saying. It’s not significant.

            It’s a fad. It’s niche. It’s something that’s different from the run-of-the-mill ICE-propelled vehicles. Something to stand out from the crowd.

            But all the EV, PEV and Hybrid fans on the planet haven’t made a dent in the consumption of oil, anywhere.

            Don’t misunderstand. I think there is a place for EV, PEV and Hybrids. There’s a place for Golf carts too. If they build them, they will come. Just not in significant numbers to matter.

            It’ll remain an extremely expensive niche until we run out of oil. I believe people realize that they are better off buying an econobox rather than an overhyped, overpriced EV, PEV or Hybrid. And that’s what they do.

            All this research and engineering into “hydrogen, EV, and all kind of technologies” is a crock. They don’t amount to diddly squat until we run out of oil.

            And we won’t run out of oil for at least two hundred years yet. EVs, PEVs and Hybrids are just some green-weenie alarmist environmentalist’s wet dream for the few, the proud, the well-heeled.

            So what, exactly, does Fisker have that’s worth $30M? They had nothing to begin with. They have even less now.

            (BTW, I respect your opinion. I just don’t agree with it.)

  • avatar
    billfrombuckhead

    The far left Democratic agenda that keeps saving capitalism from itself.

  • avatar
    Lorenzo

    The “auction” is being conducted like a sale, not a banging gavel event. It was probably started now because the shutdown may be over by the time a winner is announced. We ARE talking about a government-conducted process.

    Everything I’ve read stated that Fisker owns design patents, probably on every aspect of the Karma’s design so nobody can come up with a look-alike. They probably have a separate set of patents for the design of the Atlantic that was to be built in Delaware, and possibly for several future models.

    That might possibly be worth $30 million, but that’s the minimum bid, and with multiple bidders, the cost of acquiring control of the company is going to be higher than that. The bottom line is Fisker has SOMETHING several bidders want, and the process is going to take awhile before a winning bid is awarded.

    • 0 avatar
      Morea

      A) Even if the sale is being run by a contractor presumably there is a DoE contracting officer and a contracting officer technical representative overseeing the process. It is surprising (to me) that these are emergency personnel that were not furloughed.

      B) A goole patent search on “Fisker automotive” turns up “about 528″ patents including “Systems and methods of creating sparkle effect in exterior vehicle paint and using glass flake”. Some are for technical innovations but it is always hard to tell how valuable they are without being right in the thick of the field (which I am not).

      • 0 avatar
        Lorenzo

        As with the IRS, the people collecting money never get furloughed, only the people who spend money. Taxes are still being collected, but no refunds are available during the shutdown. So it must be with an “auction” to collect money for Treasury deposit. It won’t exactly stave off default, but every little bit helps.

        Thanks for the research on the patents. That “sparkle effect” is obviously worth a lot to somebody! The U.S. Patent Office isn’t the only one in the world, so I wonder if the Karma and Atlantic design concepts are patented elsewhere, like China. In fact, if Fisker has done the bull work for distribution to other countries, that might add to the value of the company.

  • avatar
    DC Bruce

    Some missing details here. Is the paper secured, and if so, by what? If it’s secured by all of the IP, then someone who buys the paper and forecloses on it gets the IP.

    Otherwise, I would imagine all of this would get sorted out in a bankruptcy proceeding. Uncle Sam is not, I’m sure, the only person who whom Fisker Automotive owes money.

    Then there’s the question . . . brought up in the original article . . . as to what value there is to the IP that Fisker owns, as opposed to what it had the right to license from Quantum or whomever.


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