Fisker… Criminals Making Cars

Fisker, an automotive manufacturer based in California (2009), created luxury cars that were electric powered. The cars were an immediate hit with stars such as Justin Bieber and Leonardo DiCaprio buying multiple units. The seemingly reasonable price, a meager $100k for a supercar), attracted a cult following. People didn’t know that the production cost of one of these bad boys was around $600k…Anyway despite great sales and promotion from famous people, Fisker managed to go bankrupt in 2012.

Since then Fisker has not made a single car but rather has been in constant legal battles with creditors with claims totaling a billion dollars. They had creditors all over the country, even big names like GM. This past February the company was won by one “Wanxiang Group” in bankruptcy court. The final price?…$150 million. This means that around $850 million was still owed to these creditors. In April they came to a settlement. Only a small percentage would ever be paid back because most of the creditors were unsecured. The government has paid out just under $150 in settlements surrounding this blackhole of a company.

This is an example of a terrible business situation, almost everyone involved has lost money. The government, the original manufacturers, the people who unluckily bought these rapidly depreciating cars (a 2012 Fisker Kharma can now be bought for $50k), and the creditors… Especially the creditors. The only people that are still poised to make a profit are the Chinese. They fortunately purchased a company buried in debt that NEVER has to be paid back. But how are they going to make a profit off of a car that cost $600k to make? These are no Bugatti Veyrons. They have a 2 liter engine. They have been planning to put the Kharma back into production sometime in 2015. So we will see how the future plays out with these beautiful but unsellable cars.

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6 comments to Fisker… Criminals Making Cars

  • Bill Cosgrove

    The history of this industry is littered with companies like Fisker. Think of Delorean. Think of the Tucker. All dreamers who convinced people who should’ve known better to invest in their dreams. And so what about Elon Musk and Tesla? Is he going to be the exception and make this all work?

  • mayolj16

    I feel there are more questions to ask when it comes to this business and why major investors such as GM thought it would be a good idea to finance it. Was the whole company set up as a scam by initially calling the attention of these investors? How do the plan to re-launch it in 2015 and make it profitable? Is it ok that the government pays the debt of this business with poor planning?

  • Kade Kenlon

    I think Tesla will struggle to emerge as a successful electric car in the future. With the CAFE standards for 2025 set at 54.5 miles per gallon cars will continue to improve their gas mileage and Tesla cars will lose their appeal. There are many more improvements that need to be made in order for this car to become a practical car that consumers want to buy. One of the biggest problems Tesla faces is the range of their cars. Without recharging stations as readily available as gas stations it becomes a hassle once you lose power in the car. Secondly, because Tesla avoids using dealerships, it is very difficult for consumers to get their cars repaired or keys replaced. Tesla agreed to fly to all their consumers in order to fix damaged cars. This is not a practical business model and will largely contribute to Tesla’s downfall.

  • I did not know that Fisker was Bankrupt Beautiful cars. I also though the big stars were buying them!

  • Alexander Dawejko

    Kade you’re right that the charging would be a hassle. But Elon Musk is already beginning his network of “Supercharging” stations. These would be spread throughout the country. And if you think about the fact that they can go about 300 miles on a charge with a 30 minute recharging time…. It seems pretty practical.

  • As per Mr. Cosgrove’s comment, the past decade is littered with many failed startups, not just Fisker. Bright Automotive (the CEO is a former student of mine at W&L), Aptera, many others. We have Edison2 across the Blue Ridge in Lynchburg – not failed, because its focus was the X-Car prize (with the car that one it in the Henry Ford museum, I saw it during our brief visit). But neither does it seem to be going anywhere.

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