Fisker Automotive Halts Production at Electric Car Plant in Delaware as Financing Collapses

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Researched by Industrial Info Resources (Sugar Land, Texas)--U.S. electric car manufacturer Fisker Automotive Incorporated (Anaheim, California) has halted production at its new, $175 million electric car manufacturing plant in Wilmington, Delaware, as the company seeks investors and handles supplier, technical and operational problems.

Local taxpayers are footing the bill for a new electric car plant that has yet to become operational. Due to many financial and technical setbacks, the company has halted all existing production until further notice. Since beginning operations in 2007, the company experienced steering and emission problems with the production of the company's first product, the Fisker Karma, one of the world's first plug-in hybrid electric vehicles, which has an estimated price of $103,000. After repeated delays, the company commenced production of the vehicle in 2011.

But production was stopped in the summer of 2012 as the company sought new investors. Then, supplier A123 Systems filed for bankruptcy in October 2012. A123 Systems, the supplier for Fisker's lithium-ion battery pack, froze all existing operations. The company's assets were sold off at a December 2012 auction.

Fisker executives say the company has enough packs in stock to service existing customers, but no new cars are being built since the battery supply ran dry. In 2012, Fisker recalled more than 600 cars due to battery pack defects, which were later repaired by A123 Systems.

Fisker is seeking a new lithium ion battery supplier. Fisker's cars are designed around the battery pack, and switching battery suppliers would involve redesigning the Karma and the new Atlantic, although the company is not considering redesigning the Atlantic. Fisker is now looking at getting the existing A123 Systems factories back into operation but with a new owner.

Fisker planned to refurbish and retool the 142-acre, 3.2 million-square-foot building complex, formerly owned by General Motors Corporation (NYSE:GM) (Detroit, Michigan), with the installation of supporting equipment to begin production of the fuel-efficient Atlantic plug-in hybrid and enable the plant to have the capacity to produce 100,000 vehicles per year. The Atlantic is a smaller, four-door rechargeable sports sedan that has an estimated price of $55,000.

Work on the Atlantic was halted when the federal government suspended a $529 million loan after delays in the introduction of the Karma. The U.S. Department of Energy froze the loans that Fisker would have used to fund development of the Karma and the Atlantic. Fisker used only about $192 million of the loan and is continuing to pay interest. The company concluded that the design engineering of the Atlantic was 90% complete, but it has yet to begin moving in production equipment, which would involve supplying the parts as well as tooling.

With plans stalling on manufacturing and selling the existing Karma luxury plug-in hybrid sedan and not being able to begin operations for the new Atlantic vehicle, Fisker is currently looking overseas for financing.

After the devastation of Hurricane Sandy, which resulted in the loss of 338 Karma plug-in hybrids, Fisker's insurance firm denied the company's insurance claim of $33 million for replacement recovery. Fisker is going to the New York Supreme Court in hopes of reversing the firm's decision.

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