PEV 2009: Henrik Fisker explains how his company will be profitable, plans for 2010
With his company about to announce its first U.S. plant in Delaware, CEO Henrik Fisker was in high spirits and high demand at last week's Business of Plugging In conference in Detroit. We were able to pull the busy man aside for a few minutes to ask for more information on how his company plans to make money – will they really find 5,000+ people willing to pay $89,000 for the Karma plug-in hybrid? – and how the unusual development path that the Karma has been on has been good for the small automaker. Get the details after the jump.
First things first. Getting a bunch of money from the government helps Fisker out a lot. Fisker said the $528 million DOE loan that Fisker secured means that Project Nina, the next car the company will build, a lower-cost plug-in hybrid, gets started about three years earlier than it would have otherwise happened.
On its own, though, Fisker will be profitable in 2011, he said, because Fisker has a different business model and structure than other automakers that need to sell a lot of cars to make money. Fisker said the way the Karma was developed, the company's low overhead and outsourcing the production of the company's first car are the three main reasons that his company can be profitable with low sales numbers.
While Fisker has figured out it can make money selling just 5,000 Karmas a year, the company is expecting more sales than that. Why? Because they have not yet begun to try and sell the car. In January, the company said it had 1,300 pre-orders. Now the number had grown to 1,500. Undaunted by only 200 more people signing up for his car in the last ten months, Fisker said that all the pre-orders have come without a dealer network or a big advertising push:
It's very encouraging that we have that many people who already did that, with a new brand, a new car and for $87,000. Once we get the dealer network up and running, which should happen by the second quarter of next year, in terms of having showrooms and everything else, that puts everything in a completely different perspective because now you have people walking into a showroom and taking a test drive.
Thus far, the Karma has only been seen moving on its own power once – in August at Laguna Seca – and that first public drive was a chance to show people that the car is ready. Fisker is developing the Karma in a different way than the OEMs, Fisker said, and it doesn't give the company much to show off to the media as there is using the traditional model. Currently, there are seven prototypes running around without the skin and the Q-Drive powertrains are also being tested in some trucks. None of these mules are great for PR work. Things will change about the middle of next year, Fisker said, as the media will be invited to drive the first Karmas in May or June of 2010. Our inbox is open.
Listen to Fisker here (download here, 5 min. 2 MB):
Reader Comments (Page 1 of 2)
letstakeawalk 3:09PM (10/26/2009)
Great news, I have very high hopes for this company! Rumor has it that Biden - and maybe even Obama - will be at the official announcement in Delaware...
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Boyprodigy1 3:12PM (10/26/2009)
These guys and Tesla really make a sport out of making the larger auto makers look really bad. I like it.
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Nick From Montreal 4:23PM (10/26/2009)
Yeah, and to ad insult to injury, Fisker actually uses a GM ICE engine. Quantum (makers of the Fisker drive train) is a pubic company. GM should just buy them if their system turns out to be superior. We'll know soon...
sean lawrence 4:59PM (10/26/2009)
I just learned today that Fisker's economy model will be priced at $48,000 before federal tax breaks. Al Gore pulled strings to get them $500,000,000 worth of government loans to build the economy car. There are lots of rumors that it will be built on a Hyundai platform. I would like to understand how a $48,000 car can be considered and economy car. What percentage of the car buying public would be willing to spend $48K on an economy car? Good luck getting those loans back.
Thank you Al, you've screwed US again.
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Mark Kiernan 5:03PM (10/26/2009)
Can you please provide some sources (Glenn Beck doesn't count).
If one of your GOP friends had pulled strings to get 500m of government loans (do you need to google the word loan to see it isn't a grant) you would be preaching about great they are for creating local jobs. Yawn.
jake 5:06PM (10/26/2009)
Uh, they said lower cost, never said economy car. New tech is always going to be more expensive to start, esp without mass production on your side. Even GM, which obviously has mass production capability, will be selling the Volt at $40k.
And I'm pretty sure there isn't a set price for project Nina yet, it's still in the development stage.
sean lawrence 5:43PM (10/26/2009)
Mark- Sources: (Sorry, it's not Glenn Beck, but it is Fox News!)
http://www.foxnews.com/story/0,2933,569577,00.html
Fisker is buying the GM facility that manufactured the Pontiac Solstice. And it is in Joe Biden's home state imagine that!
I never said that it was a grant, but when Fisker goes belly up, then it will be a bad loan. It is obscene that these loans were given to make yuppy mobiles.
Jake, It is still in developement, but their target price is $48K. The fact that half a million dollars was loaned for a car that is only a concept is insane. It would have been much better to loan it to Aptera.
meme 6:48PM (10/26/2009)
That web page doesn't contain the word "Gore".
jake 8:13PM (10/26/2009)
I initially found it kind of ridiculous too, but it seems the DOE does a very thorough job of reviewing plans (they have access to all the confidential plans of each applying company) and finances of the companies it decides to loan out to. Fisker seems to be financially sound and has a good chance of finishing this project. If I remember correctly, you need matching equity to qualify for these loans, so it's not like any random company can do it. Of course, whether consumers will buy the vehicles is still a question.
Chris M 3:05AM (10/27/2009)
Um, that "project Nina" car has a targeted price of $39,900, as they want to undercut the price of the Volt. Basic competition, that.
Joeviocoe 2:30PM (10/27/2009)
Chris M, I could you some help here:
http://green.autoblog.com/2009/10/06/altcar-2009-ef9s-unlimited-clean-energy-turbine-could-go-int/6
I don't really have much background in fluid dynamics.
Mark Kiernan 5:29PM (10/26/2009)
@jake
Jake, Sean doesn't care about facts you can see this by his post history. Frankly what he is doing on ABG is beyond me, as he appears to be someone who is anti-green. I understand skepticism but his AlGoreaphobic (perhaps he has a secret repressed love), is just plain weird.
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sean lawrence 6:03PM (10/26/2009)
Surely you aren't talking about "Inconvenient Profits", Al Gore. The man whose home uses more energy than a small town. The man who charters jets rather than fly commerical. The High profit of the church of global warming. I can understand your admiration.
meme 6:49PM (10/26/2009)
How many times does this Al Gore nonsense have to come up?
For a home the size of his, in the climate it's in, and given that it has a full *office* in it, houses security detail, etc, it's energy usage is not excessive. The charges of hypocrisy primarily ring hollow, however, because Gore *doesn't* advocate that we all need to give up all luxury. Gore advocates that we can transition to a lower carbon economy with minimal impact on our quality of life. You're pretending like he advocates something he doesn't live by *when he doesn't advocate for it*. Instead, he lives what he preaches -- maintaining his quality of life while offsetting his carbon footprint, paying for green power, etc.
Now, we can debate the merits of carbon offsets and paying power companies for green power, but the fact remains that he lives in the manner he advocates. *You* may believe that going green means going back to a stone-age existence, but *he* does not.
sean lawrence 5:47PM (10/26/2009)
I am an auto enthusiat, green and otherwise. But I also believe in fiscal responsibility. I am also anti-corruption.
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letstakeawalk 6:00PM (10/26/2009)
Well, just because Al Gore is among the investors shouldn't make a bit of difference. Colin Powel is also an investor (which would likely have caused Dems to spout "Military-industrial complex!" if a Republican had been in office when the loans were disbursed).
Kleiner Perkins Caufield & Byers is an investment firm that invested in a green automaker. You should be happy that private investors - venture capitalists at their best! - provided part of the initial funding for Fisker (in addition to their parent company Quantum). Fisker simply had a good business plan: backed by a major tier 1 auto supplier, run by a world-famous car designer who runs his own coachbuilder, utilizing a drivetrain (Q-drive) that had been tested and developed in conjunction with the US Military and GM...
Al Gore's role in getting the loan was infinitesimal.
Joeviocoe 6:53PM (10/26/2009)
You and fox news have no real arguments left so you stoop to Ad-Hominem attacks.
It doesn't matter if Al Gore is evil or not. Is it a good investment? When you stop cherry picking facts to support your claim and start taking account of all the data, it isn't a bad investment.
"The fact that half a million dollars was loaned for a car that is only a concept is insane." -Sean
They do NOT get money disbursed to them until they arrive at milestones. So they don't get paid until it is time to pay for a factory, purchase parts, etc. It is a loan. Not a grant.
If I recall, it was fox news touting how the money would be going overseas because Fisker is un-American. What happened to that argument? Oh yeah, it dissolved into nothingness. Just like most of fox news stories. They only care about what is sensational to hear at the moment. And vilifying dems is all they care about.
Sean 8:09PM (10/26/2009)
Joeviocoe, I can see that you never read the original Fox article.
1.Is is a good business decision? NO! If enough people thought so, then they could have raised the funds in the private sector. And taxpayers should never have footed the bill for green yuppiemobiles.
2.Staggered development payments are immaterial to being able repay the loan. That is dependent on profits generated from the sale of Autos. I do not think that there are enough green yuppies to pay off half a Billion dollars.
3." Kleiner Perkins Caufield & Byers is an investment firm that invested in a green automaker. You should be happy that private investors - venture capitalists at their best! - provided part of the initial funding for Fisker (in addition to their parent company Quantum)." What is this supposed to mean? Investment companies find businesses that their clients want to invest in. Have we already forgotten the DOT COM bubble? Lots of tech companies, no profits, huge investments- Massive losses.
4. Business Plan, but no actual product. I actually like Fisker, (much more than Tesla- who I consider irrelevant), but if their plan was so good why didn't they secure private money? I believe that they could never have done it. Half a Billion! Without political connections it never would have happened.
5. Why shouldn't the money have gone to a company like Aptera? (if we should fund green cars) Aptera actually has a product, and one closer to what the average taxpayer can buy.
Boyprodigy1 11:19AM (10/27/2009)
@ sean
I dont think you have been reading anyones responses. They couldnt have gotten the loans if they didnt have the equity to pay them back. Lets repeat it agian ok "They couldnt have gotten the loans if they didnt have the equity to pay them back." good. So if fisker doesn't sell ninas and they go belly up, the investors pay back the loans. Wow, what a concept. People with degrees in this stuff actually DO know what they are investing in. Sorry to ruin your little temper tantrum...
letstakeawalk 1:32PM (10/27/2009)
Sean
Your #1 and #3 points cancel out. Fisker did have a huge private investment . They were going into production with the Karma. They do have a product, and they do already have customers. They didn't need the DOT loan, but it certainly helps speed up the growth process - which is what the Bush administration wanted to do: Grow the Alternative car industry in America.
#4, well, they do have a product. It's called the Karma, and it will be rolling out in the next year. Customers have already made deposits...
#5 I like Aptera. But how can argue as you do against Fisker and not see the exact same issues with Aptera? Anyway, the special exemption for the three-wheeled Aptera had to be allowed before they could be considered for the DOT loans. They simply didn't meet the definition of what the loans were meant for - but now they do qualify.