Fisker Buying Delaware Kappa Plant
Fisker’s first car, the Karma, is being assembled by Valmet in Finland, but Fisker is already looking ahead. Following the Tesla model of offering a second sedan at around half the price of the brand’s flagship nameplate, Fisker is negotiating the purchase of the former Solstice/Sky plant where it plans on building a $48k “family-oriented” hybrid. The WSJ report Fisker is eying up to 100,000 units of production, employing 1,500 workers. Fisker is also following the Tesla example for funding; the EV company will spend most of its $528m in DOE ATVM loans developing its new lower-cost model (the Karma will retail for around $90k) and retooling the Delaware plant. Though companies like Fisker and Tesla surely appreciate these loans, one can’t help but wonder if they encourage an unhealthy level of optimism in a company that has yet to bring a vehicle to market, let alone record a sale. Though it’s understandable that fledgling EV companies would begin with a luxury model and work towards mainstream offerings, shouldn’t there be some indication of the flagship’s success (especially if it involves a more-complicated range-extending ICE) before going full-speed ahead for a 50 percent cheaper model?
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The government has given money towards electric vehicle research for many years. More recently PNGV and the Future Car partnerships but to no avail. You can lead a horse to water... In my cynical view the car industry is averse to building anything that has a good chance of exhibiting the longevity of a Hoover vacuum cleaner. Not enough wearout mechanisms to warrant replacement. The only manufacturer of a viable electric vehicle dropped it while finding the resources to fund a niche sportscar. It has the Aveo as its entry level car ! Good long term thinking there. We can at least expect the Fisker company to provide the motivation in the direction of low polluting vehicles if nothing else. Starting any new business is risky today without including the government as a stakeholder since the government has so many ways to tax a startup out of business. Although I am against the use of taxpayer funds - it speaks to a form of slavery - clearly the venture capital route hasn't worked either, Cerberus anyone ? The american business model is broken. There is lack of shareholder democracy. Companies are allowed to grow too large. Then we say they are too large to fail, making the government the lender of last resort. When the necessary housecleaning at the top looks too much like intervention from Big Brother it only makes sense that the government would turn around as it has done here and take an easier route by reaching out to become the lender of last resort to a company that is already "with the program". It is not that important for the government to be fixated about its ROI, unlike an investor, since it can expect immediate returns in the form of the income tax on those newly employed workers. Significant quantities of cash from paycheques also go back to municipal and county levies.To anyone who thinks that the local govt would always get its due from the citizens anyway, I would remind them that both Detroit, Michigan and Hamilton, Ontario are experiencing migrations to other areas. BTW it is assumed the DOE is the only donor. It wouldn't surprise me if Delaware and the local municipality are also chipping in, simply because at high taxation levels it is important to maintain a tax 'balance' so as not to allow any one of these government entities from benefitting at the expense of the others.
I live near this plant. Locally there is much fear over what will happen, especially after the Chrysler plant went down in Newark a few miles away. This facility is huge and there is no plan for what to do with it if they can't make cars there. If Fiskar wants to give it a shot then fine. The only other alternative is to shutter the building and watch it fall apart.
The picture above is actually Elsmere DE from the air not Wilmington. Although the plant is reported as being in Wilmington it is actually in this little unicorporated part of New Castle county. I had the plaesure of touring the plant in 1996 on the occasion of it's 50th anniversary. The plant is much older than Chrysler's in nearby Newark, which tells me that FIAT may have plans for it so it's not for sale like GM's facility on Boxwood Road.