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Fisker Lays Off 46 While Renegotiating DoE Loans

Latest setback for battery-car start-up.

by on Feb.07, 2012

Fisker Automotive founder Henrik Fisker with his plug-in hybrid, the $102,000 Karma.

The following story has been updated to reflect additional details and the claim by Fisker that production of the Karma plug-in hybrid continues despite the delays in receiving DoE loan money.

Already behind on deliveries and facing the need to renegotiate its $529 million in government loans, Fisker Automotive has laid off 26 workers at a plant in Delaware that was being geared up to produce the maker’s next battery car.

Another 40 Fisker employees and contractors working on the development of what is codenamed Project Nina have been released at Fisker’s officces in Anaheim, CA.

The Final Word!

The automaker has suffered a series of setbacks in recent months, including a slow start-up of production of the $102,000 Karma, which is being imported from a plant in Finland.  The plug-in also received a much lower fuel economy rating than had been anticipated following tests by the EPA.  Concerns about the safety of the Karma also prompted a voluntary recall of the small number of hybrids that had already reached the U.S.

But the latest issue centers around the $529 million in loans Fisker was granted by the Department of Energy.  It already received $193 million but the government is refusing to release additional money because the California-based start-up has missed several targets included in the loan agreement.

“We were late coming to market and didn’t hit all of our targets,” acknowledged Fisker spokesman Roger Ormisher, in an interview with TheDetroitBureau.com.  Though he said the process of renegotiating with the DoE is going “slower than expected,” Ormisher added that, “We absolutely hope to have resolution with the DoE as soon as possible.”

The Fisker spokesman also stressed that despite some news reports, Fisker has not halted production of the Karma, adding that production is finally ramping up and is now running in the range of “20 to 25” vehicles a day.

The problems with the launch of the Karma have raised alarms among industry observers who question the viability of the small company, founded by Danish designer Henrik Fisker.  However, he has insisted, in conversations with TheDetroitBureau.com, that any delays will be temporary at worst.

But so far, only a handful of Karmas have reached the States, with sales significantly behind initial expectations.  Compounding the company’s problems, prices for the sleek battery sports car have risen by more than 20% since the Karma was originally introduced.  Meanwhile, the EPA threw into doubt the maker’s claims for the efficiency of the vehicle.

Fisker claimed the Karma would get 50 miles in “stealth,” or battery mode, but the government agency has cut that figure to just 32.  And it gave the Karma a meager 32 MPGe, or miles-per-gallon-equivalent energy rating, with the sports car rated at just 20 mpg on gas alone.

Fisker has countered by noting Karma has gotten a much better set of numbers from European regulators, with a battery range of 51 miles and a 112 MPGe.

Company founder Fisker has said he started with the Karma because it would get more attention than a smaller, more conventional sedan.  Sales numbers are expected to be modest on the sports car, but he has projected figures pushing into the tens of thousands for the models to come out of Project Nina.  The company says that despite the latest setback it has already completed much of the development work on that project.

Alan Levin, the economic development director for the State of Delaware, indicated to the Associated Press that he believes the current problems with the DoE loan should be resolved soon.  And he suggested that the layoffs are not a surprise.

“We knew that this was always a possibility,” Levin said. “What they’re trying to do is conserve cash.”

Fisker has meanwhile been searching for additional private capital to supplement the DoE loans and reportedly raised another $260 million during the final months of 2011.  Whether it would be able to raise enough funding to replace the government assistance is uncertain, however.

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