By on August 14, 2012

Fisker photo

If you’re a regular reader of TTAC, one of the Best & the Brightest, you probably know that the Fisker Karma’s range extender is a 2.0 liter turbo Ecotec engine supplied by General Motors. What you probably don’t know is that GM’s relationship with Fisker goes beyond that of a vendor and a customer. That’s because GM owns part of Fisker. Okay, technically speaking General Motors owns a minority interest in a company that was once Fisker’s majority owner and that still holds an equity stake in the startup EV maker. Regardless of the details, that still counts as GM having an interest in Fisker’s success or failure.

Ever since Henrik Fisker announced his bold plan to start a new car company that made sporty and sexy green cars, a company called Quantum Technologies has been in the picture. Quantum is involved in a lot of alternative energy technology. They supply components for Ford’s PHEVs as well as tanks and tech for CNG vehicles for other manufacturers. Quantum also has significant contracts with General Motors and may be a supplier for the Volt. In addition they’re a military supplier working on stealthy offroad vehicles powered by things like hydrogen fuel cells. Other military projects use what Quantum brands as the Q-Drive, a series hybrid system where a combustion engine drives a generator that provides electricity for extended range when the batteries are depleted. The Karma uses a drivetrain based on the Q-Drive system.

Fisker also has used Quantum’s money to get off the ground. Initially Quantum owned 62% of Fisker. After investments by Kleiner Perkins Caufield & Byers and other private equity investors, that stake has been diluted to only 1% but don’t cry for Quantum, Argentina or anyone else. The company is paid a royalty fee for Fisker’s use of the Q-Drive of between $3,200 and $4,100 for each Fisker Karma that is sold. Quantum also makes money selling Q-Drive components to Fisker Automotive. It’s not clear if GM sells engines directly to Fisker or if Quantum is a middleman so Quantum may also make money brokering those motors.

General Motors’ relationship with Quantum goes back at least a decade. Quantum, as mentioned, has done research on fuel cells and done other contract work for the giant automaker. In 2002, GM announced that it was taking a 20% interest in Quantum. At the time GM’s main objective in that hookup was in Quantum’s hydrogen storage systems. In a 2006 filing by Quantum, GM’s stake was said to be 8.2%. GM’s interest in Quantum seems to have survived GM’s 2009 bankruptcy and restructuring. In a 2010 interview with the Wall Street Journal, Jon Lauckner, now GM’s Chief Technology Officer and at the time head of a new GM venture that was investing $100 million in emerging technologies, alluded to GM’s equity stake in Quantum and Quantum’s relationship with Fisker. That equity appears to now be around 7% of Quantum’s stock.

Seven percent of one percent isn’t much. It works out to GM owning the equivalent of less than one tenth of one percent of Fisker. Still, GM’s interest isn’t chicken scratch. Fisker is going to build about 10,000 Karmas this year. The royalties due Quantum on those cars is more than $35 million and remember, that royalty is in addition to vendor payments from Fisker. Some have suggested that GM made a mistake by first offering the Volt’s drivetrain in a Chevy and not making it available as an upmarket Cadillac. It appears that by hedging their technology bets via Quantum, through Fisker GM already has an interest in an upmarket PHEV.

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

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19 Comments on “Did You Know That GM Owns Part of Fisker?...”

  • avatar

    Electric Vehicle manufacturers are the “PALM Computing” of the automotive industry.

    • 0 avatar

      You do know that Palm failed because of wireless carriers favoring Android & iOS, right? It had nothing to do with the quality of Palm products.

      I see the same trend in Alternate Energy. The laws/regulation can make or break it.

      • 0 avatar

        Palm killed itself with its self destructive behaviour. But I agree with the gist of your comment. No matter how many of other peoples children are killed protecting/controlling oil supply lines these kind of thoughtless comments regarding EVs proliferate, and generally imply some kind of americanism. It baffles me.

      • 0 avatar

        Was it wireless carriers or an inferior product? Palm was competing with Blackberry. Neither were competing with iOS or Android. Now, Palm is dead (or at least, how I see it), Blackberry is a dinosaur, Symbian has gone the way of the Dodo, and Windows mobile is trying to claw its way into the market.

        WebOS was highly received, but my understanding, it was very limited on the amount of devices that were using it. Android had a decent following by several manufactures which allowed it to really take off. The iPhone really took the market by storm and needed no ones help. The bets that Palm made caused it to lose. Not wireless carriers. If that was the case, why is Windows Mobile still around? Why is Blackberry still around? BTW, my opinion is that Blackberry will be done soon. Companies will realize that running two systems and paying Blackberry won’t make sense much longer. When corporations pull out, Blackberry will be officially dead.

      • 0 avatar

        inferior product + aggressive competition from competitors – government subsidies = palm = fail.

      • 0 avatar

        @BrianL – You raise some good points. But, did you try going to a Verizon store to buy a Palm phone towards the end of Palm’s era? There was absolutely NO incentive to salespeople for selling Palm phones. The young salespeople would look at you strange if you asked for a Palm device. They would act like they had never heard of such a thing before and would try to steer you towards an iPhone or an Android. If you still insisted on a Palm, they would actually get pissed and make a face to convey their unhappiness. This is the same story that echoes in the archaic palm-related forums.

        Also, towards the end, it was not possible to get new Palm devices on any other carrier but Sprint. This makes it harder for a platform to compete.

        If the carriers got out of the way of consumers and device/platform manufacturers, the mobile market would be very different. But, unfortunately, rather than being the dumb pipes they are, wireless carriers want to tell you what you can/cannot do with your device and also control what device you buy. All in the name of the “network”. Oh, it about the network, you see.

        Also, carriers want to charge you for services that are otherwise absolutely free. Take navigation for example – Every Android device you can buy on Verizon comes with a “VZW Navigator App”, in adition to the Google Maps app. Google Maps will give you free turn-by-turn voice navigation, but Verion still insists on handing out devices with software like VZW Navigator pre-installed (which, by the way, is also uninstallable). The unsuspecting customer will sheepishly pay $10/month for a navigation service that otherwise comes free out-of-box with their device. This was just one example, there are many other scenarios where wireless carriers like to force consumers into certain behaviors. And a platform (like Palm) which makes it hard for carriers to do that becomes an eyesore for the top-level management.

        Same happened with Palm. The devices were good, and the software was good. Yes, Palm was an aging platform and the whole HP/WebOS fisco did not do the company any good. To top that off, the mismanagement of some crucial projects like Veer, Pre 3, Touchpad, slab phone and 7″ pad did a lot to end Palm. But, that being said, every platform has its quirks and limitations, but they are not enough to end that platform’s prospects.

        Yes, BlackBerry is an aging giant that will soon fail. I agree that it will be hard for BB to survive once corporations pull out of it. Windows Mobile has not seen any development since early January, 2010 (Windows Mobile 6.5.5). What is still around is Windows Phone which is completely different. Yet, it struggles to succeed in the American market. Go to a wireless carrier’s store and tell me how many walls you find dedicated to Windows Phone or BlackBerry. None? Apple and Android will have their oown walls, complete with BIG banners and tons of stuff to make you take a look. No such love for Windows Phone 7 or for BlackBerry. they sit around in a corner like orphans. If cell phones had to compete independent of contracts and wireless carrier subsidies (like in the rest of the world), the cell ohone market would be different.

        To summarize – I was in no way implying that THE sole cause of Palm’s faliure was wireless carriers. But, I do believe that wireless carriers’ policies and favoritizm had a lot to do with the end of palm. And, it was pretty surprizing to see a blanket comment like what bigtrucks posted.

  • avatar

    So, apparently that means if a Chevy Volt is below your “Karma”, you can pay a lot more and buy a Fisker…

    Why didn’t I think of that?

  • avatar

    Well, if they ever make them without going TU, the new Fisker cars will have the BMW N20 engine as the range extender. Same engine as in the new 328, etc.

    Fisker’s press release some month’s ago said something like “well, everyone knows BMW makes the best engines in the world”, etc. etc. blah, blah, blah. No, it’s getting the BMW engine because the people with $200 haircuts and plenty of moolah don’t want a Cobalt SS engine in their >$100,000 trinkets. My take anyway.

  • avatar

    If the intent of the article is to stir the pot by suggesting there is a conflict of interest due to GM’s indirect investment in Fisker, I’m not biting.

    Alternatively, I’d say that due to Fisker’s problems, GM stands to lose their money on this investment.

    • 0 avatar

      No suggestion of a conflict of interest at all.

      I’ve always been fascinated by the incestuous nature of the auto industry, where they compete with the same companies from which they buy components. Also, vendors have been double and triple dipping since the early days. The Dodge Bros supplied Ford Motor Co. with Model T rolling chassis (from 1908 to 1914, when they started making cars under their own brand) and ended up owning 10% of the company because Henry liked to stiff them. The DuPont family owned a controlling interest in General Motors for much of the 20th century, making money on GM stock dividends while also selling GM paint and plastic.

      Maybe “surprised” is too strong a word so I’ll say that my curiosity was piqued when I found out that GM indirectly owned an interest in Fisker and I figured that TTAC readers would find that interesting as well. As mentioned, it’s really not that unique that a company in the car biz has equity in some of its customers. Still, Tesla certainly and Fisker to a lesser extent have both tried to portray themselves as “not Detroit” while the simple truth is that they are both dependent one way or another on the domestic auto industry.

  • avatar
    Polar Bear

    Wow. GM indirectly owns 0.07% of Fisker. Did they clear this huge investment with Obama?

  • avatar
    el scotto

    Basically Quantum is doing advanced research for hybrids and hydrogen power for GM. There ain’t no such thing as a free lunch; pay for R&D in house or pay some company to do it.
    A hydrogen powered military vehicle? With road side bombs in abundance, NO. In the name of all that is Holy, NO.

  • avatar

    In the scheme of things, Fisker is a pimple on GM’s backside. If GM stands to gain much from the relationship, it’s the modest revenue produced by the sale of a few engines. The equity stake via Quantum is irrelevant.

    As for GM owning a piece of Quantum, I assume that GM took a stake to (a) protect the IP that comes out of the relationship and (b) to capitalize on the IP if it ever produces anything of value. It’s not about buying stock low and selling stock high.

    It’s not unusual for large companies to contribute equity to smaller companies that are engaged in peripheral operations. Equity isn’t taxed as income by the company that receives it, and the smaller company could probably use the money (especially if its relationship with the larger company requires that it spend some money in order to get their relationship off of the ground.)

  • avatar

    Raise your hand if you think Fisker is going to build, much less sell, 10K Karmas this year.

    Anybody? Do I see any hands?

  • avatar
    Polar Bear

    Reality check. Owning 0.07% is a tiny shareholder. It doesn’t give GM any influence in another company or access to that company’s technology.

  • avatar

    The q-drive is based on military research so we all own a part of it. When it comes to better ways of killing we’re all socialists.

  • avatar

    I’m betting GM will be filing their share under ‘… or failure.’

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