Fisker tries new tack as woes pile up for plug-in carmakers(Read article summary)
Fisker wants to share technology and sell shares, the latest sign that the economics of plug-in cars are making it difficult for automakers to turn a profit.
On Monday, Fisker revealed it is looking to share parts and technology with other companies. It also wants to raise new money by selling stock to the public. Translation: The financial situation isn't exactly rosy for the Anaheim, Calif., hybrid carmaker.
How could they be? A year ago, it was roundly criticized for getting a $529 million US federal loan guarantee and then assembling its cars in Finland. In March, Consumer Reports revealed that its brand new $107,850 Fisker Karma broke down during initial testing. Last month, the publication gave the Karma a failing grade for everything from poor dash controls to cramped space and long battery recharge time.
"Most all of the bumps can be fixed" for a company that went to market too quickly, Fisker CEO Tony Posawatz said in a speech Monday to the Automotive Press Association. "I did not want to let this company not have a fighting chance."
That's hardly a ringing endorsement for the automaker's future. Then again, several electric plug-in car companies are struggling to make and sell their cars at a profit.
Last week, startup Tesla Motors warned its revenue outlook for the third quarter would come in some 45 percent below what analysts had been expecting, due to lower production of its new Model S sedan.
Last month, Nissan said it had sold only 4,228 of its all-electric Leafs in the United States through August, nearly a third fewer than it sold the previous year.
Also in September, the nonpartisan Congressional Budget Office reported that the lifetime costs of owning a plug-in car are higher than owning a conventional car, even after factoring in the gas savings and the federal tax credit of up to $7,500. The CBO estimates it would take a tax credit of more than $12,000 to reach break-even.
A few car companies have made their own moves to reach that break-even point. Slow sales have forced Nissan to offer big discounts and cheaper leases on the Leaf. General Motors is doing the same with its hybrid plug-in, the Volt.
The discount strategy seems to be working, since customers are starting to snap up the cars, especially the Volt. In September, Chevy sold a record 2,851 Volts, just above strong sales in August. Leaf sales jumped to 984, its best showing in a year. The plug-in version of Toyota's Prius hybrid holds the No. 2 spot after the Volt.
Americans appear willing to buy plug-in cars, when the price is right. The problem for automakers is that that price is far below their cost of production. A recent Reuters report put the loss at up to $49,000 for every Volt, a figure that many criticize as too high. As plug-in technology spreads to other models, auto experts say, those costs should drop substantially.
Still, the losses are high and make it hard for start-up automakers to compete.
It's not hard to imagine a few years down the road that an auto company will deliver a plug-in that drivers will flock to because it's not only cool but actually saves them money.
That car could have profound effects on world oil markets and the environment.
But the road to get there is bumpy – and filled with potholes big enough to swallow startup car companies that don't get everything exactly right the first time.