Disagreement At Fisker: Bailout By Which Government? American? Chinese?

Bertel Schmitt
by Bertel Schmitt

When Henrik Fisker left last week, all we knew was that he “disagreed on business strategy” with the management, code for “board-room brawl, founder leaves in a huff.” Now we know where the disagreement was. It was whether to ask Uncle Sam or Auntie Zhang for money.

According to Reuters, Fisker and CEO Tony Posawatz could agree that the company needs money, lots of it.

Now for the hard part: Where to get the money.

Posawatz, a former GM man, was for hitting up the Department of Energy again to unlock access to a $529 million federal loan. DOE had blocked the loan, supposedly due to the delays in the launch of the Karma, but ostensibly because those loans became a hot potato.

Fisker, says Reuters, “was opposed to relying on additional federal funds.” The article did not say where Fisker wanted to get the money from, the guess is China. With Geely out of the running, the only Chinese suitor seems to be Dongfeng. If Dongfeng gets Fisker, effectively the Chinese government would give the money. Donfeng is owned by China’s central government.

Both strategies smell of desperation. The formerly generous DOE does not want to get caught in the cross-fire again. The Chinese are tight with money and usually buy when the company gets bust, see A123 etc.

Remember: If you want to destroy a small or medium, fortune, start a car company. If anyone asks you to invest in a start-up car company, run. Alternatively, shoot him.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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7 of 9 comments
  • David Dennis David Dennis on Mar 19, 2013

    If you'd invested in Tesla Motors when it was founded, shares were worth about $20. Now they're $35. Seems like investing in the company wasn't such bad advice. Admittedly, shares are flat in the last year, but if you'd gotten in on the startup phase you would have done quite well. D

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    • Lorenzo Lorenzo on Mar 19, 2013

      @SCE to AUX When his first wife filed for divorce, Musk claimed he was broke. He must have had a pre-nup when he divorced his second wife last year. He's now allegedly worth $2.4 billion. If called on to bail out Tesla, how can you be sure he won't claim he blew it all on rocket fuel?

  • DC Bruce DC Bruce on Mar 19, 2013

    Well, one could say that the Fisker Karma is an answer to a question that nobody asked . . . As far as investing in startup car companies . . . absolutely right. The financial barriers to entry are extraordinarily high. It would have been much better had these startups partnered with an established company.

  • SCE to AUX SCE to AUX on Mar 19, 2013

    Fisker Automotive can ask for the $500 million, but nobody is going to give it. This is playing out like Saab's demise.

  • Jpolicke Jpolicke on Mar 19, 2013

    Since the Karma is really just an upgraded Volt, why not turn the company over to GM in a Fiat-Chrysler type arrangement? Maybe put the Volt and Karma together and revive the Saturn name. They could even recycle the "Different kind of car" advertising.

    • Syke Syke on Mar 19, 2013

      From what I've read, a Karma is a copy of the Volt - on paper - but the execution is nowhere near as good. First problem is that the Karma is way too heavy for what it does. And I can't see why GM would want to take the time to re-engineer a job that wasn't done as well as they're already capable of.