Fisker's slow motion car crash

Green car group Fisker is edging ever closer to bankruptcy.

On Saturday morning, Australian time, the US maker of the hybrid Karma said it had made the wretched decision to sack 75 per cent of its workforce. Yes, 75 per cent – that is not a typo.

One doubts whether a company has ever survived after removing three quarters of its staff in one fell swoop.

It’s beyond desperate times for Fisker as it seeks to shore up its finances ahead of a $10 million government loan payment due April 22. The company has been beset with troubles over the past year, the most recent of which being the departure of one of its founders – Henrik Fisker – on March 13 and the destruction of 30 cars thanks to Hurricane Sandy. Before then its battery supplier – A123 Systems, another US-government backed group – entered bankruptcy. A123 has since come out of bankruptcy and is now known, humorously, as B456 Systems. The name change is one of those ‘funny because it’s true’ stories.

Fisker, meanwhile, hasn’t manufactured a single car since the middle of last year as it went into cost saving mode while on the hunt for a new financial backer. It thought it was making progress on that front with interest from a couple of Chinese firms, but they ultimately opted out as they viewed the company’s ties to the US government were onerous.

Finding anyone else to display more than a passing interest has been a major challenge, and little wonder given the checkered history of the group. It all started on the wrong foot when its first – and only – model, the Karma sports car, was released almost two years behind schedule. It has released two concept cars since, but those are looking unlikely to be seen anywhere other than a museum in the years ahead.

It wasn’t all bad news, however, with the company, founded in 2007, far from short of backers in its formative years. Indeed, as late as April last year, the company was able to drum up enough interest to receive close to $400 million in funding. Its backers have included actor Leonardo DiCaprio, Palo Alto investors and A123, as well as the US government. All up, it has been supported to the tune of over $1 billion.

About the only other thing that has gone right was a lawsuit win over Tesla Motors, after the latter claimed Fisker had stolen its technology for use on the Karma. The dispute was settled in Fisker’s favour, with Tesla ordered to pay $1.1 million in legal fees.

It is a classic tale of winning the battle but losing the war, as just as Fisker’s decline is near complete, fellow ‘green car’ maker Tesla has just announced its first profit and is seemingly going ahead in leaps and bounds.

Right now it appears Tesla founder Elon Musk was onto something in his much publicised criticism of the hybrid car maker last year:

“The fundamental problem with Henrik Fisker – he is a designer or stylist... he thinks the reason we don't have electric cars is for lack of styling. This is not the reason. It's fundamentally a technology problem,” he told Automobile Magazine (in a wide ranging interview in which he aired his grievances that led to the lawsuit).

Musk argued that Fisker, in focusing on design and outsourcing the engineering and manufacturing, was essentially “outsourcing to people who don't know how to solve the problem”.

Given the contrasting fortunes of the two most high profile EV/hybrid car makers, it’s hard to argue with that assessment.