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The cars catching on fire probably had something to do with it
April 18, 2013 10:50 PM   Subscribe

While Tesla Motors expects its first profitable quarter (despite some bad press), the electric car competitor it unsuccessfully sued for stealing its technology, Fisker Automotive, teeters on the brink of insolvency. How did Fisker, a company valued at over $1 billion dollars at the beginning of 2013, end up in this sitation? A Timeline of Fisker's Rise and Fall
posted by meowzilla (23 comments total) 10 users marked this as a favorite

 
4/5/2013 -- Fisker Automotive lays off 160 employees, which is 75% of workforce. Fisker retains 53 senior managers and executives to pursue a strategic sale and continue negotiating with the Department of Energy.

Sure, why not.
posted by Tell Me No Lies at 11:03 PM on April 18, 2013 [10 favorites]


Found the reason.

3/2/2009 Ray Lane joined the board
posted by Mario Speedwagon at 11:09 PM on April 18, 2013 [5 favorites]


Wow. That Ray Lane wiki article is most assuredly *not* written by him or any of his friends.
posted by el io at 11:23 PM on April 18, 2013 [1 favorite]


Ray is probably yet to discover Wikipedia.
posted by mattoxic at 12:10 AM on April 19, 2013 [1 favorite]


I remember seeing a Fisker car somewhere, before I had heard of the company. I immediately wrote them off because of the solar panel roof. That's just laugh-worthy. It's like something you'd throw on for techno-illiterate journalists to talk about.
posted by ryanrs at 12:39 AM on April 19, 2013 [3 favorites]


Wow. That Ray Lane wiki article is most assuredly *not* written by him or any of his friends.

I expected it to end with something like "He has a penis like a house cat."
posted by pracowity at 1:29 AM on April 19, 2013 [5 favorites]


Lots of Republicans are going to see the Fisker difficulties as more evidence of the failure of the Department of Energy in its loan guarantees to Green businesses... while overlooking the obvious, glaring success.

It's also worth mentioning that we are talking about government loan guarantees, as opposed to government loans. The government basically "derisks" the loans of lenders to a particular industry so that they'll make them and so that VC money will be attracted to the industry. It also serves to lower interest rates for the borrower.

They do this by assuming a percentage of the risk themselves, should things fail. They don't need to pay this money out until the loan fails, and can safely expect that most of the loans will be paid, which allows them to leverage their money and do much more to help the industry than direct loans will ever do. Previous reviews of the DOE loan guarantees have shown a 96% success rate.

So, in the event of situations like Solyndra, while the government is on the hook for a percentage of the losses, so is Richard Branson, the Walton family (think Walmart) and other VC investors. They thought it was a good bet too.

Lastly, failure of the DOE to guarantee further loans to a particular company is no guarantee of that company's failure.
posted by markkraft at 1:37 AM on April 19, 2013 [3 favorites]


That Wikipedia article almost deserves an FPP itself.
posted by converge at 2:49 AM on April 19, 2013


Solar panel roofs aren't a gimmick. On some Audis, they're used to keep a trickle of current going so that the ventilation system still operates when the car is parked in very sunny conditions. It keeps the interior a bit cooler. Seems logical to me. Mercedes has a similar system.
posted by jonathanbell at 3:11 AM on April 19, 2013 [7 favorites]


The Fisker story is an interesting one, and a great example of product versus business versus ecosystem.

I worked in the large-format lithium-ion battery industry from 2010 – 2013, primarily consulting with a battery manufacturer on foreign market entry. The target markets for this manufacturer were 1) grid-scale renewable energy installations, and 2) electric vehicles.

In 2011, if you would have asked a majority of people in the automotive industry, electric vehicles were just at the cusp of cracking mainstream adoption in Europe and the United States. There was a huge amount of energy around the Mitsubishi i-MIEV, the Fisker, and Tesla. The product side of the business was definitely on an escape velocity course, thanks to advances in propulsion technology, lightweight materials, and government support of things like charging networks and tax incentives for those products.

There were obvious questions around the business aspects of the industry, as government money was funding everything from battery development (A123) to car development (Fisker) to charing network development. This was the same in both the US, UK, and EU. As commercial propositions, these businesses did not stand. Indeed, the time horizon for A123 to break-even was at least seven years, and that's after almost five years of operating at a loss.

Battery development and EV technology was considered a strategic industry by many nations, China and the United States included. That is the same category as oil exploration and production, meaning that it is key to the country that those technologies and resources be developed, exploited, and captured at all costs. That makes sense when you think about it, for the argument for renewables and EVs is really an argument about energy independence.

Energy dependence is one of the weakest strategic points of most countries today. The situation exists where the wealthiest, most population nations either have depleted their energy bases, or have outgrown their domestic energy supplies. Thus, they have to turn to the open markets, where price and political movements can easily affect the fundamental operations of some of the largest economies in the world.

That glossed over the business weaknesses in the EV market to a large degree. There was simply no way for EVs to compete with ICE automobiles on a price basis, but the industry was deemed important enough for that to be a secondary issue to the need to diversify energy sources and related operations. The Fiskers of the world came up in an environment where financial factors were not necessarily irrelevant, but they certainly were not the first concern. This is also when the price of gas was reaching very high levels, and there was a lot of populist anger about that – and consequently support for investing in alternatives.

Then there is the ecosystem matter. Electric vehicles cannot exist in a vacuum. Charging is the largest barrier to adoption, and the general consensus was that the best methodology to accelerate adoption was for charging infrastructure to be government or PPP funded, leaving the private market to handle consumer financing to get these vehicles on the road. It is very hard to sell electric vehicles in general, much less when the behaviour change required is shifting dependency from the ubiquitous gas station, to a group of far fewer charging points. Further, charging a battery – even an at accelerated rate – takes 10x - 30x longer than filling a fuel tank.

All of those aspects were required for the EV market to succeed. Product, business, and ecosystem.

Then two things happened that cemented the collapse of that market. The first was Solyndra and the second was domestic / Canadian oil discoveries. The first gutted popular support for government energy infrastructure investment by the government. Regardless of why things came down around Solyndra the way they did, the result was that the flow of strategic investment required from government first began to slow and then started drying up. That hit primarily the business side (subsidies), but also the product development side – A123 is now in administration, for example.

Then large-scale discoveries of new fossil supplies mitigated the oil price (you can still see it today in the price of WTI vs. Brent crude), further erasing support for EVs by consumers. This really hit the charging networks. The same companies looking at deploying large scale charging networks were often those with existing energy distribution assets. When the price of oil came down, and foreign share of US energy started decreasing, suddenly fossil fuels looked like a viable, sustainable option for the future again. Combined with massive gains in energy efficiency (which are still going on today), the immediacy of shifting away from fossils and diversifying the actual mediums of energy (electric vs. fossil) disappeared. The big concern now was efficiency, to maximise the use of available fossils. The death nail was probably fracking.

By the way, if one has any doubt about the consumer desire for price versus environmental factors in personal transport, this arc of EVs in the US de facto shows that the population today does not even consider environmental factors with near the same weight as cost.

When the ecosystem started disappearing, the nascent EV market was hit quite hard. Popular support became harder and harder to find. Funds dried up. Fisker went from automotive design of the year, to dead with in the span of thirty six months.

The one star that remains is Tesla, but there were a number of differences that has made Tesla a more viable candidate than Fisker. Not the least of which is a greater emphasis on private capital, and much more savvy marketing, sales, and customer reasearch. Fisker was an amazing product, for a tax-payer supported market, and a promised ecosystem.

It's a great cautionary tale of the difference between product, business, and ecosystem. It's all fun and games until a solar company that has nothing to do with you, and Canadian oil, clip your wings and you go crashing down.

All that being said, China's EV programme continues. There are substantial structural differences in execution that will see China as the world leader in electric propulsion this decade. A sad fact when the US has been by far in the lead since the late 70s/early 80s.

And I haven't even touched on the environmental consequences, which for the US, may well be disastrous, for all of this new, cheap oil comes at a level of toxicity which may well imperil the carrying capacity of the environment itself. The BP spill being just one example.

Cars catching on fire didn't help the case either. Despite the fact that electric cars can be overall much safer than ICE cars – where you are essentially driving around on an explosive – the reality is somewhat different. ICE cars have had a century to sort out safety features (remember the Ford Pinto), whereas EVs are in their infancy.

Regardless, we will see EVs in large-scale adoption in the US in the next fifty years. The most likely reality is they will be branded Chery or Geely, rather than Fisker.

Still, the Fisker was a beautiful car, with a grand ambition. Beware of building castles on sand, in this case, the sand being transient energy prices, and support from a heavily-divided government.
posted by nickrussell at 3:22 AM on April 19, 2013 [62 favorites]


nickrussell: flagged as fantastic.
posted by jaduncan at 3:50 AM on April 19, 2013


Building national experience and expertise in an important industry has to be worth something, even if the specific companies fail. The cars may have a problem with fire, but it's not as if the engineers and builders have vanished into a puff of smoke. I'd like to see the US building and selling a lot of electric cars (as opposed to gasoline-powered cars) real soon, and that change isn't going to happen without a few missteps.

But I do wish someone would focus on one city rather than trying to go national all at once. Build the factory near the target city (San Francisco, for example), build a really strong local grid of charging and repair stations, focus all of the advertising money on the local market, and work out all the bugs in that limited environment. When it works there, you're ready to take it to a nearish city (maybe Los Angeles) and make sure the support infrastructure between the two centers is strong.
posted by pracowity at 4:32 AM on April 19, 2013



Lots of Republicans are going to see the Fisker difficulties as more evidence of the failure of the Department of Energy in its loan guarantees to Green businesses... while overlooking the obvious, glaring success.


the key to understanding the psychology of Republican party politics is this: the amplitude with which they denounce something is the degree to which they desire the thing they are denouncing. gay sex is just a leitmotif.

the DoE loan program is just the sort of program the Republicans wish they could be running: the government acting as "dumb money" to lower risks for VCs creating technology that is explicitly proprietary.
posted by ennui.bz at 5:36 AM on April 19, 2013 [2 favorites]


Tesla is succeeding because (1) Teslas are good looking, fun cars to drive, (2) the company early on recognized that Toyota succeeded with Prius by making it a status symbol among certain kinds of people, and emulated that (albeit with a different kind of person), (3) that kind of person has no worries for range anxiety, bricking, battery life, suitably for extremely hot or cold weather, and difficulty of maintenance because invariably their Tesla is their third (or fourth, or fifth) household car.

For the time being, plug-in (and thus battery-primary) hybrids with conventional batteries are going to be the "electric" car solution that has as a chance as the middle-class primary-car substitute.
posted by MattD at 6:10 AM on April 19, 2013


Solar panel roofs aren't a gimmick

The smart electrics in the car2go fleet have solar panels on the roof to keep things like the GPS and ability to stay connected to the cellular network to make it possible to reserve and find cars without draining the main battery. And if the battery is dead it gives the car enough juice to phone home and let car2go know where the car is.
posted by birdherder at 6:53 AM on April 19, 2013 [1 favorite]


Concur with MattD.

Tesla understand marketing. Fisker don't. Guess who wins?
posted by But tomorrow is another day... at 7:12 AM on April 19, 2013


The linked GigaOm article is a terrific analysis of potential pitfalls of venture investing. That early $1B valuation becomes a problem; if you can't sustain that price then it becomes very difficult to raise any subsequent money in a down round. It's too bad, a capital intensive project like a new car brand is exactly the kind of thing venture capital is supposed to be for.
posted by Nelson at 8:25 AM on April 19, 2013


The smart electrics in the car2go fleet have solar panels on the roof to keep things like the GPS and ability to stay connected to the cellular network to make it possible to reserve and find cars without draining the main battery. And if the battery is dead it gives the car enough juice to phone home and let car2go know where the car is.

Adding a second battery (say, motorcycle-sized) would be tons cheaper and run a GPS and cellular radio for months, even if you parked it in the shade. It could charge whenever the main car was plugged in and charging as well.
posted by tylerkaraszewski at 9:11 AM on April 19, 2013 [1 favorite]


One of our directors at work bought one, took delivery literally the day before all the layoffs. It's a really slick looking car, but is going to be nigh-impossible to have it repaired/serviced when something breaks.
posted by rhythim at 3:24 PM on April 19, 2013 [1 favorite]


Adding a second battery (say, motorcycle-sized) would be tons cheaper and run a GPS and cellular radio for months, even if you parked it in the shade.

Not if it's -20 C, even with that tiny load. I'm not sure how effective polar sanels are at -20 C either, but I've been pretty impressed by the number of cars2go I've seen on the road in morning traffic at those temperatures in Calgary (no idea if they have solar roofs). It'll be interesting to see how many remain on the road if we ever hit -35 C again.
posted by sneebler at 6:10 PM on April 19, 2013


The cars catching on fire probably had something to do with it

Unexplained fires are a matter for the courts.
posted by twoleftfeet at 7:42 PM on April 19, 2013 [1 favorite]


> I'm not sure how effective polar sanels are at -20 C either

Dunno about polar sanels, but solar panels have a negative temperature coefficient, so they put out a much higher voltage at low temperatures. Sunrise on a -30°C winter morning can really let the magic smoke out of your solar installation.
posted by scruss at 6:56 AM on April 20, 2013


No one seems to have brought up one of Fisker's other big problems: Quantum Fuel Systems. I was a shareholder briefly (and had to write off the entire investment). I can attest to the complete horseshit the company would put in its quarterly reports. It's a boondoggle, and as far as I can tell, they have no viable business plan that's grounded in science or reality. One of their board members is an academic who focuses on hydrogen-based fuel cell technology, something that most people in this field know is not remotely viable nor economical.

It's unfortunate, because Fisker genuinely cares about the business, and judging from his talks, he's not bad at rallying people. I suspect he may have made the wrong alliances due to inexperience. The other issue is they tried to create a new car by themselves, which even Tesla couldn't pull off (they had a *lot* of money behind them, and a partnership with Toyota).

If I were in charge of Fisker, I would've tried very hard to ally myself with Nissan-Renault. They could have worked on a joint Infiniti-Fisker platform. Fisker could have taken advantage of Nissan's know-how in both scaling and battery tech. Remember that the Nissan Leaf is the first mass-produced consumer pure EV, and while sales haven't been super, they haven't been horrible either. Meanwhile, Nissan would have a car that slots above Infiniti's market. Not to mention the motorsports connection via Renault. They could easily have fielded a Renault-Fisker LeMans endurance car.
posted by spiderskull at 8:09 PM on April 21, 2013


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