By on February 18, 2013

Not Dongfeng, but China’s Geely currently looks best positioned to profit from U.S. government largesse by buying beleaguered and DOE-funded plug-in car maker Fisker, Reuters reports. According to the report, “Zhejiang Geely Holding Group is favored to secure a majority stake in troubled U.S. electric car maker Fisker Automotive, according to two sources familiar with Fisker’s search for a strategic investor or partner.”

Also according to the report, red flags are sure to flutter over Fisker’s HQ in Anaheim, as Fisker “is currently weighing bids from two Chinese auto makers: Geely, the owner of Sweden’s Volvo, and state-owned Dongfeng Motor Group Co.”

Geely Chairman Liu Shu Fu (left)

Geely and Dongfeng did offer between $200 million to $300 million for a controlling interest in Fisker. Reuters’ sources think Geely has the inside track, because Geely is “more serious” and “passionate” about Fisker and its technology, the company also is said to be able to “move fast in making decisions — unlike Dongfeng, whose responsiveness could be hampered by its multi-layered decision-making structure typical in a Chinese state-owned enterprise.”

In 2009, Fisker received a $528.7 million conditional loan from the DOE. After drawing down $193 million, the credit line was frozen, following a series of scandals surrounding other DOE recipients. Production was shut down in summer of 2012 while fresh capital was sought. The financial troubles of Fisker’s battery supplier A123 gave Fisker another reason not to restart production. A123, another recipient of DOE largesse, was sold off to China.

Which is where DOE recipients appear to get outsourced to.

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18 Comments on “Fisker Will Be Chinese, One Way Or The Other...”

  • avatar

    you know Berti, back in 2009 or 2010 when i tried to teach the TTAC american readers how to pronounce GM in chinese, you deleted my comment.

    but, oh boy was i right. slowly all american companies will get chinese owners. even GM. just give it time.

  • avatar

    I can’t help the feeling the entire A123 fiasco was a scam with the end result being Chinese ownership.

    How the F does a lithium ion battery company go out of business when roughly every portable device we use needs them?

    • 0 avatar

      Because A123 sells lithium ion batteries into higher-risk markets, like transportation and power grid applications.

      Power grid operators are exceptionally risk-averse.

      Automotive applications aren’t taking off.

      It is very expensive to produce lithium ion batteries, so without diversification A123’s business model was precarious at best.

      The name of the game with commodity lithium ion cells is cost and safety. Not all cell mfrs observe the same safety protocols, but without a competitive price, you’re not even considered for an application.

    • 0 avatar

      Lithium-ion batteries are heavily commoditized, meaning that in many applications they are fungible between different consumer electronics brands and that the cheapest price usually wins the contract.

      For instance, Apple, for their iPhones, iPads, and MacBooks they are using Tianjin Lishen and Amperex batteries. Both are Chinese companies. Economies-of-scale, weaker currency, cheaper labor, and proximity to assembly supply chain (as iPhones are also made in China) make those companies natural choices over A123.

      In fact, in highly commoditized markets with strong pricing pressure, smaller, less-efficient companies without capital like A123 don’t survive. A123 should have never gone into manufacturing, they should have stayed technology licensing firm, but with all that DOE money floating around who could blame them.

    • 0 avatar

      A123 makes lithium iron phosphate cells while most portable electronics uses lithium cobalt oxide technology. Iron phosphate has lower energy density but higher rate capability, so they are ideally suited to high current applications like power tools and transportation.

      A123 had a nice, profitable business with Black and Decker in power tools. It was only when they tried to scale up and enter the automotive space when they over-extended themselves and failed.

      Their power tool cells were manufactured in China, so they were competitive in that space.

  • avatar

    “prtofity form”

    Is there an editor in the house?

    • 0 avatar

      Editor? The simple spell check and grammar check built into any word processing software should catch this. Some of these stories look like they were written on an iPhone while on the subway in the dark. The consistent and continuous spelling errors are one of the few things that really undermine the professionalism of this site. I understand there is a limited budget and most of the people writing here have day jobs but if any of them were submitting written items to their boss at a real company, they would proofread before sending. (at least I would hope they would).

  • avatar

    I can’t believe either Dongfeng or Geely are this dumb with their money.

    Fisker has nothing novel to offer. They’d be much better off reverse-engineering a Volt, if they want to understand how this sort of hybrid car works.

    • 0 avatar

      Fisker’s greatest contribution, in my opinion, is that sexy Karma body. Best thing I ever saw was that car with a small block (!?!) at one of the auto shows.

  • avatar

    I think I’ve officially reached troll fatigue with this article.

    I can’t even manage to get indignant about the attempt to get me indignant.

  • avatar

    Geely would be the better suitor for Fisker. But I have to wonder the business rational behind this move is. Geely, though not being an SOE (state-owned enterprise) does get the majority of their profits (62%) from the Chinese government:

    The return on investment in Fisker is non-existent; its not a profitable company. I’m sure Geely’s logic is that Fisker will fit into the new Shanghai Maple Guorun-Kani EV venture that was just announced. But EV demand in cooling in both the US and China, not to mention the company has debts (to the DOE) it must re-pay in addition to any purchase price.

    Geely’s other foreign investments, such as their expansion in Mexico and Brazil also have no basis in reality. Geely sells ~300k cars a year according to their website. They have plans on exporting 1.5 million cars by 2015. The growth they are projecting in not feasible.

    Let’s put it this way, the Fisker investment will cost more than the entire new Geely factory in Brazil, which has 100k capacity from a company that makes ~300k cars a year. Which is in itself more than Geely makes in profits in a year.

    The numbers don’t add up. A normal company would invest in growing marketshare in their expanding and lucrative domestic market rather than invest in a failed EV company. Obviously, this bid will be payed by Chinese government loans or subsidies; as will Dongfeng’s.

    In which case, they are ultimately just bidding against themselves.

  • avatar

    I don’t know how Fiskar can stay in business with the cars they (try to) make. Go ahead and sell them, then let them go under.

  • avatar

    Fisker becoming Chinese? Time to wave goodbye to whatever brand equity it used to have.

    • 0 avatar

      It’s no big deal. Delorean became Irish but eventually died. Studebaker became Canadian and a niche builder. Jaguar and Land Rover are owned by a company in India. Volvo is Chinese.

      It’s no big deal. If someone can afford to buy something, and someone else builds it, they will come.

  • avatar

    What ‘technology’ in Fisker’s Volt Fastback Edition is worth buying? I’ve seen maybe six in six months, one of which was on a flatbed. In car world, nothing is sillier than an expensive, sleek Viagramobile that’s built cheap and goes slow. Pathetic.

  • avatar

    little bit off-topic, but here is a great article about car batteries:

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