Fisker Lines Up $115.3 In Funding, Still Needs To Spend $169m On Karma Engineering

With the economy desperately looking for signs that a bottom has been reached, news that Fisker has raised $115m in new funding might indicate that (if nothing else) the money markets are back to their good old speculative selves. At least it might if there weren’t so many darn extenuating circumstances. On the one hand, Fisker seems like the kind of business that has little business attracting much, well, business. Its $90k+ Karma brings little more to the table than some competition for Tesla in the EV-glamor-bauble segment, and like Tesla it’s trying to leverage its first model into ever cheaper, higher-volume vehicles. So why are VC firms giving Fisker the time of day?

The biggest reason is that there’s a half-billion dollars of Department of Energy low-cost retooling loans just waiting for Fisker to tap. And actually, Fisker needed this round of funding to go well in order to meet the DOE’s viability standards for the loan. Needless to say that $529m helped raise the $115m. Whether it made sense for the DOE to jump first on Fisker, essentially “king-making” the firm is another question that is sure to have a less convenient answer.

The other major factor in this funding round is Fisker’s tie-up with A123. The battery maker has also benefited considerably from federal largesse ($250m from ATVML), had a fairly successful IPO, so it’s got cash but lacks customers. Bam, A123 invests $23m into Fisker, making up nearly a quarter of this round of funding. Customer problem solved! Well, at least until Fisker starts, you know, actually selling vehicles. Thus far, consumers have had to take Fisker at face value, but selling and servicing cars is always harder in practice than theory.

The rest of Fisker’s latest round of funding comes from Kleiner Perkinds Caufield & Byers, which essentially doubled down on its earlier investment in Fisker, and Ace Investments.

“Raising $115 million in these times speaks volumes about the value of our business model and the vast potential of plug-in hybrids,” says Heinrik Fisker. It also speaks to how much work Fisker still has to do. According to Reuters, Fisker still needs to spend $169m on engineering for the Karma, which is due to hit the US market… this year. How is that supposed to work? Plus, Fisker has to raise another $27m by mid-February to stay current with its DOE loan terms. There’ll be plenty of time for self congratulation when Fisker is actually selling cars.