Henrik Fisker seems destined to go down in history as the Preston Tucker of the 21st century.
Various reports, including a new one from Reuters, say electric vehicle pioneer Fisker Automotive is on the verge of filing for bankruptcy protection in the U.S.. And the irony of ironies is that those reports indicate the U.S. Department of Energy will likely trigger the Chapter 11 filing in an effort to get Fisker to pay back nearly $200-million in U.S. Government loans (all figures in U.S dollars).
From a business perspective, this is not a smart move by the U.S. Government. Fisker Automotive has been actively seeking partners, investors or even a buyer to stave off bankruptcy. But no one is likely to jump in with an offer, not with Chapter 11 looming. Better to wait for the fire sale set to ensue in bankruptcy.
Reuters says politics is at the heart of the Energy Department move.
"They want to get it in the past so that the next DoE secretary doesn't have to deal with it," one source told Reuters. That source is close to the talks and said the U.S. Government wants to distance itself from Fisker's well-publicized financial struggles. "They want to basically force the issue."
Fisker makes the roundly-praised $100,000-plus Karma hybrid sports car, though as Reuters notes, not one has been built since last summer. In the meantime, Henrik Fisker himself left the company months ago, and the company itself has been tapping cash reserves to keep afloat. With those reserves dwindling, Fisker recently laid off 75 per cent of its U.S. work force. All that's left at present are about 50 senior managers and executives, noted Reuters.
The Henrik Fisker saga is destined for Hollywood, like Preston Tucker's story which was told in a 1988 movie directed by Francis Ford Coppala and starring Jeff Bridges. As the movie notes say, Tucker: The Man and His Dream told the story of Preston Tucker, "The maverick car designer and his ill-fated challenge to the auto industry with his revolutionary car concept."
Henrik Fisker, who was a top designer at BMW and Aston Martin before setting off to start his eponymous company in 2007, had a grand vision for green cars that seems unlikely to be fully realized. But he and his company certainly enjoyed a promising start. Fisker, as Reuters notes, raised more than $1.2-billion from private investors and also won an Energy Department loan of $529-million in 2009 as part of a U.S. program to fund advanced vehicle development. Fisker tapped $193-million of that loan before the Energy Department stopped funding in May 2011.
No doubt Fisker missed milestones and there were certainly delays in launching its flagship Karma plug-in hybrid. But a few cars have been sold and those who have tested them sing the praises of the Karma. For instance, Dan Neil, the Pulitzer Prize-winning auto reviewer of The Wall Street Journal wrote:
"Meet the world's most interesting car. Every square centimeter of the Fisker Karma riots with clarity and design intent and vested individuality and scorn for convention the likes of which we haven't seen since the Tucker Torpedo. Which is to say, the Karma is radically different from any other car. 'Different' might strike you as an empty accolade, but believe me, in the global car business, the forces of homogenization (fuel economy and crash standards, aerodynamics, limited supplier base, material costs) are almost irresistible. That's particularly so in the premium luxury segment. Yes, the BMW, Audi, Mercedes-Benz, Jaguar and Lexus full-size sedans and four-door coupes are great, but they are for the most part interchangeably great. A car so far outside the mainstream as the Karma is nothing less than a Nietzschean act of will. And cojones."
In recalling a first test drive, Automotive News noted: "A Mercedes-Benz AMG C63 driver pulled alongside and pronounced the Karma: 'Bad-ass.'" And after a fairly brief drive in the Karma, The New York Times said, "So a starlet is born. My date with the Fisker was an entertaining sneak preview that left me eager for a full-length performance. Let's hold the curtain call 'till then."
Fisker is a cautionary tale and will make a good movie some day. But the truth is, automotive start-ups have little chance of succeeding in the 21st century, especially "green" ones producing small-volume specialty models for rich buyers with environmental sensibilities. Fisker seemed to have enough money, the right technology, a stunning design and a qualified management team fully versed on the ins and outs of the global auto industry – which demands massive amounts of capital and a multi-continent reach to be successful these days. But all that apparently was not enough to make Fisker and the Karma a profitable, sustainable success.
Personally, I've known Henrik Fisker since his BMW days and I lament the apparent end of his company. But perhaps not his dream.
This is a talented and savvy designer turned businessman. He and his ideas will land somewhere in the auto industry. Or perhaps he'll make enough money from selling the movie rights to his story to fund another chapter in this saga. I hope so.