What happened to Fisker Motors and the Karma?

Fisker Karma
"Karma Fisker Paris" by Xabi Rome-Hérault. Licensed under CC BY 3.0 via Wikimedia Commons - http://commons.wikimedia.org/wiki/File:Karma_Fisker_Paris.JPG#/media/File:Karma_Fisker_Paris.JPG

Designed by Henrik Fisker (the chief designer of the BMW Z8), the Karma was one of the most striking electric cars that ever graced the road. With such a reputable name in the industry designing the Karma, why then did it fail? Was it because of bad karma?
Envisioned as a faster and aesthetically better-looking alternative to the Tesla Roadster, this electric car never got to live up to its potential. Despite strong financial backing (estimated at around U.S.$1.4 billion) from the government and private sectors, Fisker Motors never got around to building more than 2500 units of the Karma. A combination design issues and spotty decision making by the company’s executives resulted in Fisker Motors bankruptcy and eventual sale to China’s Wanxiang Group.

Prominent Backers

Among the prominent figures that backed Fisker Automotive and the Karma were Leonardo di Caprio (who also served as the company’s brand ambassador), Al Gore, and Ray Lane (former president of Oracle). The company was also able to secure a sizable $529 million loan from the U.S. DOE (Department of Energy) to help build the Karma. Even before the car hit production, Henrik Fisker had already raised $600 million in funding for his luxury electric car design. With this kind of backing, the company’s success should have been a no-brainer right? Well, things rapidly went downhill for Fisker Automotive after its strong start due largely to design and production issues.

Design and Production Issues

Engineers and experts who worked on the Karma were of the opinion that the electric car had its fair share of issues and would have benefited from years of testing and engineering refinement. Later on the company issued a recall of units that had defective lithium ion batteries. The replacement program for the lithium battery (made by A123 Systems) on the affected cars cost U.S. $55 million and was a big blow to Fisker Automotive’s production and sales. The engineers who worked on the car were also under intense pressure to faithfully adhere to Fisker’s design even though there were numerous issues with it. Its front end exhaust alone was a major issue that engineers were barely able to address. These issues and snags in production eventually added millions more to the cost of making the electric car road worthy. Essentially, the company ended up spending near U.S.$600,000 to build a Karma only for it to be sold at around U.S.$100,000.

Did the Fisker Karma suffer from Bad Karma?

Henrik Fisker is undoubtedly a great designer but designing a car and running a company are two completely different things. He was unable to prepare Fisker Automotive for the challenges that it encountered during the Karma’s production. Additionally, Fisker’s decision to not disclose that the company was in the red and that government funding for the company had stopped resulted in losses for everyone who invested in the Karma’s promise. Rather than attributing its failure to bad karma or a defective lithium battery, it would be more logical to say that Fisker Automotive suffered due to poor decision making.


Tracey Smith About Tracey Smith
Tracey is an accountant and entrepreneur with a passion for nature. This passion is what spurred her interest in renewable energy, and the rest is history as they say. Tracey is a principal in Energy Think Group, the publisher of Solar Thermal Magazine and Tek-Think. She is also the principal at Women's Financial Help Desk. She spends her free time in the outdoors with her horses and dogs. She loves to travel.

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