By on March 19, 2013

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.

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9 Comments on “Disagreement At Fisker: Bailout By Which Government? American? Chinese?...”

  • avatar
    Dr. Kenneth Noisewater

    “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.”

    My grandmother and grandfather met while working at a mansion whose property became a good portion of the town of Islip, NY. The owner of that land followed your advice when a hick from the midwest came by soliciting an investment in his cockamamie scheme. That hick was Henry Ford.

    • 0 avatar

      The auto industry in 1903 was very different from the auto industry of 2013. The entire business was in the start-up phase back then, there were no really entrenched leaders, and Ford was at no real disadvantage against anyone else since everyone else was basically brand new as well. It was around the 1920s when investing in new car companies in the West became a losing proposition.

  • avatar

    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.


    • 0 avatar

      I am a fan of Tesla, but their stock price is artificially supported by the government loans helping to keep the doors open.

      The price will jump if Tesla repays the loans, but collapse if they default. Even if they can’t repay the loans through revenue, Mr. Musk will probably write a check himself.

      • 0 avatar

        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?

  • avatar
    DC Bruce

    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.

  • avatar

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

  • avatar

    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.

    • 0 avatar

      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.

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