Fisker Automotive Inc. is in a bad place right now, running out of money, recalling its hybrid-electric Karma luxury cars because they burst into flames and shuffling around executives faster than a losing team substitutes pitchers; it's hard to find a bright patch for the privately held company that isn't on fire.
The latest blow to the company came when it announced Saturday that it was voluntarily recalling all of its roughly 1,000 Karma hybrid-electric vehicles following an investigation into a car fire in Woodside, Calif. The Woodside incident, coming on the heels of another Fisker Karma fire in Texas in May, hasn't done much for the public image of once-lauded electric carmaker.
Fisker has been trying to put a good face on its recent troubles.
"This incident resulted from a single, faulty component, not our unique Ever powertrain or the engineering of the Karma. As this situation demonstrates, Fisker Automotive is dedicated to doing whatever is necessary to address safety and quality concerns," Anaheim, Calif.-based Fisker executive chairman and co-founder Henrik Fisker said.
However, while the company has tried to play up the fact that the problem is not related to any powertrain, exhaust or battery components of the Karma, but rather an internal fault in the low temperature cooling fan, it does not dispel the fact that Fisker's only production car catches on fire on a semi-regular basis, and at over $100,000, it is an expensive fire risk for most consumers.
Fisker doesn't just have bad juju with its cars; it is also suffering from deep financial troubles. Just days before Fisker issued the Karma recall, an anonymous key investor told Reuters that the company was seeking to raise an additional $150 million to make ends meet before launching its upcoming Atlantic sportscar model. Earlier in the year Fisker lost access to more than half of a $529 million loan from the federal government and has since sought to make up the difference from private investors.
"We need money on our balance sheet ... and we need money to fund the development of the next car," Ray Lane, a Fisker director and also a managing partner at venture capital fund Kleiner Perkins Caufield & Byers, said Wednesday, according to Reuters. Fisker has already raised $400 million this year, but is short by $150 million just to keep afloat and may have to go begging to investors again in 2013.
The "recall campaign is not expected to have a material financial impact on Fisker," the company said, although it will almost certainly negatively impact public perception of the Karma and Fisker and may make it more difficult for it to secure private investment.
Running out of money and calling its cars home like distant relatives of a terminal cancer patient, Fisker seems to be making changes in the only easy place it can -- the executive suite. With the appointment of former General Motors Volt director Tony Posawatz as CEO last Tuesday, replacing Tom LaSorda, Fisker is now up to three CEOs in less than nine months. The hope seems to be that by bringing in an executive with electric vehicle manufacturing experience, Fisker can work around its technical problems, although the Volt program that Posawatz headed-up was not without its own fiery PR problems.
"Tony's expertise will guarantee that Fisker leads the way with its second-generation powertrain technology for the Atlantic and other future Fisker products," Henrik Fisker said.
LaSorda said last week that finding "a long-term CEO" was part of his assignment when he was brought on in March. In addition to swapping out Posawatz for LaSorda, Fisker also added a new CEO of Chinese operations and a new vice president of manufacturing in August, as well a new Chief Financial Officer and Chief Business Development Officer in late July.
Executive shuffling, money troubles and a massive recall are all highly visible signs of trouble in paradise, and Fisker now has its work cut out for it to make up the damage to its finances and brand image, and the competition isn't going to give it a by. Electric car company Telsa Motors' (Nasdaq: TSLA) CEO Elon Musk took aim at Fisker on Monday, calling the Karma "a mediocre product at a high price," according to Top Speed. Musk added that Henrik Fisker "thinks the most important thing in the world - or the only thing in the world - is design, so he outsourced the engineering and manufacturing." The frame of the Karma is built in Norway.
Tesla Motors (Nasdaq: TSLA) shares rose 1.32 percent to $29.90 in midday trading Tuesday.