Fisker Karma

[Matthew049]

i believe my binary argument is indeed supported by enough facts that telsa is angelic and fisker is and always was crap. i dont agree at all w the way you look at the situation.

i know there's nothing illegal about koehler asking for money. it just shows they shouldnt have lent money to a company that's teetering on bankruptcy. you say those companies should be given money and that's the point of the program. oooooooooook. i dont believe high risk loans were the point of the program, altho i admit i could be wrong there. i'd have to see the fine print.

yes, people compare fisker and tesla all the time. so? you list a few basic generalities that says very little about the companies themselves. i can come up with 10 things similar about them. they both make something with 4 wheels, they both get plugged into a wall, they both are in california, they both etc etc. now, if you want to look at the things you listed and say "see!!! see how similar they are!!!" well, go ahead. i maintain that people comparing the two are comparing them very superficially and therefore really not comparing them at all. if that works for you, so be it, im not buying it. i dont think elon would either no matter how many things you listed.

fisker has 20 patents. uh huh. wow. what does that prove? who's interested in them? who are they selling their incredible knowlege to? i know a guy down the street that has a patent. correct, no innovation. building a car from the outside in was a really bad idea THEN. it turned out to be a large reason for the death of the company. the people that had high opinions of fisker had high opinions of the looks of the car. and from what i understood advanced equities raised most of their money after the DOE loan was announced. so, to my knowledge, the loan was not insulated. it was pure high risk.

as for advanced equities, yes, i think they're very shady. they were fined a million dollars by the SEC for misleading investors. i dont know if they did anything illegal or not and honestly dont care. i care just as much about their morals as i do their legality. if you're fine w them misleading investors to raise money quickly cuz, "uh, that's what they do" then knock yourself out.

 

[anticitizen13.7]

i believe my binary argument is indeed supported by enough facts that telsa is angelic and fisker is and always was crap. i dont agree at all w the way you look at the situation.

Again, its easy to say that in hindsight, but there were plenty of investors besides DOE that put money into Fisker and got nothing for it.

oooooooooook. i dont believe high risk loans were the point of the program, altho i admit i could be wrong there. i'd have to see the fine print.

All loans for speculative and/or leading edge technologies are "high risk". Every single penny of the DOE program in question was high risk. Tesla was an extremely high risk and still is a high risk investment.

 

[Matthew049]

Again, its easy to say that in hindsight, but there were plenty of investors besides DOE that put money into Fisker and got nothing for it.

All loans for speculative and/or leading edge technologies are "high risk". Every single penny of the DOE program in question was high risk. Tesla was an extremely high risk and still is a high risk investment.

i agree, it's ez to say in hindsight. i was saying when it wasnt in hindsight.
and it depends how you define high risk. ok, they're all high risk, but some are more than others. when tesla wasnt doing well elon made a statement that he would keep tesla going even using his own funds. that made me feel pretty secure as an investor.

 

[stopcrazypp]

If you are discussing the DOE's perspective, the reason why Fisker was an attractive applicant is because it was able to raise massive amounts of massive funds from private investors (with is one of the main requirements of the loan program). Even Tesla was not able to match Fisker in raising private funding.

There's a lot of applications (over a hundred) that was thrown the reject pile because they just couldn't get the private investors.

 

[anticitizen13.7]

i agree, it's ez to say in hindsight. i was saying when it wasnt in hindsight.
and it depends how you define high risk. ok, they're all high risk, but some are more than others. when tesla wasnt doing well elon made a statement that he would keep tesla going even using his own funds. that made me feel pretty secure as an investor.

You can't be serious.

Fisker received its loan from DOE around September 2009.

Around that same time, Elon Musk was completely out of cash, fighting a brutal divorce case, and borrowing money for living expenses. He certainly did not look like he had the resources to continue to prop up Tesla. This was very well publicized, but for those who don't remember just how bad it was: http://venturebeat.com/2010/05/27/elon-musk-personal-finances/

As he ran low on cash, a contentious divorce — in which his ex-wife, Justine Musk, is seeking a sizable chunk of Musk’s holdings — caused him more financial problems. Justine Musk is asking a court to rip up a post-nuptial agreement she and Elon Musk signed in March 2000, which could in theory lead to much of his holdings being deemed community property. While there’s no telling how the case will turn out — it has already gone to appeal — more important is the protective order the court has slapped on Musk’s holdings in Tesla and his other illiquid assets. These include his stakes in private equity funds. He won’t be able to sell significant holdings without first getting permission from his ex-wife. And he has also been ordered by a court to continue paying her legal fees for the duration of the lengthy appeal process.

Ok, so he promised that he would keep the company afloat. Except that his financial liquidity was zero. And his soon to be ex-wife was suing him for a lot of money. And his other assets were not easy to liquidate for cash. And a court had frozen those assets. And the court also ordered him to pay his wife's legal bills.

Just 1 month before IPO, Elon Musk's personal finances were clearly (1) uncertain due to litigation (2) in a massive state of disarray.

That made you feel secure as an investor?

You can stand there and criticize DOE for making a bad loan to Fisker, but if your confidence in Tesla was based on the guarantee of one man who was in extremely critical and uncertain financial condition, then I don't believe you have any good standing to point fingers at DOE for taking too much risk.

 

[ohmslaw]

ok, several points here.

did fisker have no "innovation!!!!"? you seem to forget that fisker touted its business strategy as outsourcing to others the capital intensive aspects of automotive manufacture. and capital markets loved it. have others invest in what they do best, and you find a way to integrate them. leave everyone to their highest and best use. give them specs and then let them create. of course, in hindsight that was a flawed strategy for such a complex product, where they were dependent on many others to get everything right. and too many things failed. A123. quantum. and even fisker as the integrator and project manager. but that was a selling point rather than a perceived weakness. also, a quick USPTO search shows that fisker has 20 patents.

http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2=HITOFF&u=%2Fnetahtml%2FPTO%2Fsearch-adv.htm&r=0&f=S&l=50&d=PTXT&RS=%28%22fisker%22+AND+henrik%29&Refine=Refine+Search&Query=fisker+and+henrik


thanks, doug!

I find only DESIGN (not UTILITY) patents (ie patents that cover only the appearance of things and have nothing to do with technical innovation) and a bunch of patent applications that haven't been allowed yet by the PTO. I searched for patents assigned to fisker, rather than patents where the inventor is henrik, because the latter may turn up patents that have nothing to do with the company.

 

[Zythryn]

Musk is an entrepreneur, who made partnerships with Panasonic, Toyota and Diamler.
Fisker was a fashion designer who made no such partnerships.
This was the reason for Fiskers failure.

No, the bad luck/design of the fans which led to the fire(s), the destruction of the Sandy Karmas and the bankruptcy or their sole battery supplier hurt as well, but his lack of business experience and lack of engineering focus doomed the product.

 

[Matthew049]

^^^ yes im serious, mate. what he said made me feel secure as an investor. i wasnt aware of any of the above. and, no, my confidence in tesla wasnt only based on what he said. it was cool to hear but i would've invested in them even if he didnt say that. so yeah, i have no problem whatsoever standing here and pointing fingers at the DOE which is the same thing i did when fisker first got the loan. also, i dont recall exactly when he made that statement but it was long before the loans were given out so the above isnt even relevant. it would be kinda silly for him to say something like that if he was broke.

 

[Doug_G]

He was broke because of Tesla. He went "all in" and dumped every last million he had into the company.

 

[Matthew049]

He was broke because of Tesla. He went "all in" and dumped every last million he had into the company.

i love it. i did the same thing w my company... on a MUCH smaller scale however!!
i put every last thousand into mine!! hahahhaa!!!!

anyway, sorry for getting off topic.
also, i dont see much point in continuing the DOE/fisker discussion. my assessment is obviously different than a lot of others' around here but i certainly respect everyone's view points and appreciate everyone taking the time to educate me about things i was unaware of. :thumbsup:

 

[ipdamages]

i believe my binary argument is indeed supported by enough facts that telsa is angelic and fisker is and always was crap. i dont agree at all w the way you look at the situation.

The facts do no lend themselves to a binary judgment, but seeing things through your lens I can understand why you feel as you do. And I don't see value in rebutting your arguments given your lens, so I will just leave it at that.

On the patents, Henrik has one utility patent and 19 design patents. Fisker is the assignee on 14 of the design patents. And in case there was any doubt, Fisker was very much a design shop and did not try to be an automotive engineering shop. I like the visual aspect of their designs, though I think they haven't turned out to have been easy to execute. And Fisker has not turned out to be a good integrator of technology.

Z summed it up very well.

 

[ipdamages]

He was broke because of Tesla. He went "all in" and dumped every last million he had into the company.

True that he was broke because of Tesla and his divorce, and his passion took him to the brink, just before he and Tesla blossomed. But the fact remains that him being willing to give his last $5 was worth about $5 to investors at that time, regardless of how he got there.

Could Fisker have blossomed had the Atlantic made it to market? Maybe. It looks like we will never know.

But it is pretty clear that Tesla was better run. As many have pointed out, Sandy and A123 and fires didn't change the value proposition of a Karma and were the market to have wanted the car those things would have been overcome. The fact is that nobody was buying Karmas in late 2012. So the company's only real hope was the Atlantic somehow being far better than the Karma. Could that have happened? Maybe. The facts and Fisker's history don't inspire much confidence.

 

[smorgasbord]

Musk is an entrepreneur, who made partnerships with Panasonic, Toyota and Diamler.
Fisker was a fashion designer who made no such partnerships.
This was the reason for Fiskers failure.

To be fair, Fisker did a partnership with A123, in which A123 invested money in Fisker, not unlike how Panasonic invested in Tesla.

 

[Doug_G]

But it is pretty clear that Tesla was better run. As many have pointed out, Sandy and A123 and fires didn't change the value proposition of a Karma and were the market to have wanted the car those things would have been overcome. The fact is that nobody was buying Karmas in late 2012.

More fundamentally, the Karma wasn't a compelling vehicle. Yes it was sexy looking. But there was nothing in the specs or capabilities of the vehicle that would make me think, "I gotta have that". I base my buying decisions on what the vehicle can do. As far as appearances are concerned, I prefer a car that is attractive but not ostentatious. The Karma was the opposite of that - heavy and slow, ostentatious and impractical.

Honestly, I couldn't believe how Fisker kept raising more and more capital - the product fundamentals weren't there, even if they had executed perfectly otherwise. Which they didn't.

 

[AnOutsider]

Honestly, I couldn't believe how Fisker kept raising more and more capital - the product fundamentals weren't there, even if they had executed perfectly otherwise. Which they didn't.

Sadly, having dealt with the VC and wall street types, it's not really all that surprising. Tends to be all about politicking and pitches. More money than brains in a lot of cases.

 

[ipdamages]

More fundamentally, the Karma wasn't a compelling vehicle. Yes it was sexy looking. But there was nothing in the specs or capabilities of the vehicle that would make me think, "I gotta have that". I base my buying decisions on what the vehicle can do. As far as appearances are concerned, I prefer a car that is attractive but not ostentatious. The Karma was he opposite of that - heavy and slow, ostentatious and impractical.

Honestly, I couldn't believe how Fisker kept raising more and more capital - the product fundamentals weren't there, even if they had executed perfectly otherwise. Which they didn't.

I'm a little more willing to go with the eye-catching styling than the majority, but I agree that this car ended up being very much about styling and not green and not performance (though many have said the car handles well).

I put down a deposit in Feb of 2008 because I didn't realize the car was so huge and I thought they could deliver on the promise. Had they done that I think they could have been successful. For me the car's failure to qualify for HOV access was a big problem. The Volt and PIP did qualify in California. But if they had held to the $80k price and 50-mile electric range and 0-60 under 6.0, and qualified for HOV access and not been buggy, I think they would have taken a lot of Model S sales.

But that is a lot of ifs. And even if they had done all of that, it is still a HUGE car. Just like the Model S. And I'm not buying a Model S because of the size, even though it does almost every other thing well for me. And the design doesn't excite me, but with some aftermarket wheels I like it better. And that shiny nose cone. Blech. Paint it red and it is Rudolph. But the market seems to love it, which as Ian says is why they have 31 flavors, so bravo! Too bad Fisker couldn't deliver on its promise as it would have been nice to have another option pushing the industry forward and outward.

 

[anticitizen13.7]

He was broke because of Tesla. He went "all in" and dumped every last million he had into the company.

This may be true, but it doesn't change what I am saying.

It was extremely risky for DOE to loan money to Tesla. I'm VERY happy that DOE made the loan, but it was almost absurdly risky at the time and no less risky than loaning money to Fisker.

DOE finalized the loan program around November 2008 and awarded its financing to auto companies starting in June 2009. At the end of October 2008, Tesla was down to $9M in cash, which insiders described as a "dire" situation. The automotive press was salivating over what was looking like a juicy disaster, and trashier publications like "The Truth About Cars" gleefully published "Tesla Death Watch" updates on a regular basis. Elon Musk himself credits Daimler for saving Tesla with a $50M investment in late May 2009: http://www.autoblog.com/2012/09/05/elon-musk-the-credit-for-saving-tesla-should-go-to-daimler/

Musk said, "The credit for saving Tesla should go to Daimler. It was the Daimler investment that saved Tesla in early 2009. ... 2007 and 2008 were especially bad for us. ... There were a couple of near-death situations."

Those near-death situations include the time Musk needed to funnel a lot of his personal capital into Tesla – "I literally had to borrow money for rent" – in order to get through 2008 and early 2009.

So at the time Tesla would have been applying for DOE loans, the company was in a state of near collapse, with barely any shipping product, and a founder who was out of capital and getting help from friends to keep a roof over his head. It doesn't matter if someone says they will throw all their money into a company if all they have left is $0. Add all the management drama to the mix, and Tesla looked utterly finished.

I think Elon Musk is a visionary and quite possibly a genius, but there was simply no way to know in late 2008 through 2009 that he would be able to get the company to where it is today.

Again, ALL investment in leading-edge and possibly game changing technology is "high risk". There is no guarantee of return, ever, in such ventures. This stuff is trial and error, and for every success, there are lots and lots of failures.

There is no point in beating DOE over its loan to Fisker, because no matter who DOE loaned money to, they were going to lose money on some ventures. It's the nature of the game. If people want to debate whether DOE should even be involved in the game, that's a different matter entirely which I don't care to discuss.

 

[ipdamages]

If people want to debate whether DOE should even be involved in the game, that's a different matter entirely which I don't care to discuss.

The DOE's program's mission is to provide support for companies and technologies that have the potential to benefit society. With this program the DOE helps companies that need help, through loan guarantees (which increase the strength of the borrower's credit risk, because applicants are in need of such support given that they are often start-ups) and government loans. These government loans are available because the borrowers may not be able to get loans on good terms from otherwise available financing sources, and the government has acted in a manner to force our investment into companies that we aren't supporting as well on our own in capital markets. As AC13.7 writes, the policy decision of whether our government should do that is another debate, but I think that many on this forum would agree that as a general matter sometimes government needs to implement policies that are in the public's interest when the citizens do not take those steps on their own. Exactly how that should be done and to what extent, well, it's all about the implementation.

But in venture finance high expected returns are a requirement. That is because in a portfolio there will be many failures. In the DOE program the big return is the benefit to society of the output of companies like Tesla.

Anyway, here is the DOE Mission page.

Our Mission

We finance the growth of these innovative clean energy technologies:
• Biomass
• Hydrogen
• Solar
• Wind and Hydropower
• Advanced Fossil Energy Coal
• Carbon Sequestration practices and technologies
• Electricity Delivery and Energy Reliability
• Alternative Fuel Vehicles
• Industry Energy Efficiency Projects
• Pollution Control Equipment

The Financing Force Behind a Clean Energy Economy

The mission of LPO is to accelerate the domestic commercial deployment of innovative and advanced clean energy technologies at a scale sufficient to contribute meaningfully to the achievement of our national clean energy objectives---including job creation; reducing dependency on foreign oil; improving our environmental legacy; and enhancing American competitiveness in the global economy of the 21st century.

LPO executes this mission by guaranteeing loans to eligible clean energy projects (i.e., agreeing to repay the borrower’s debt obligation in the event of a default), and by providing direct loans to eligible manufacturers of advanced technology vehicles and components.

Economic Growth, Job Creation & More Clean Energy Sources

Specifically, LPO endeavors to:
• Encourage commercial- and utility-scale development and adoption of new or significantly improved energy technologies;
• Fund innovative technologies which reduce greenhouse gas emissions;
• Create jobs by financing the growth of commercial clean energy technologies;
• Provide direct loans to eligible automobile manufacturers and component suppliers for projects that re-equip, expand, and establish manufacturing facilities in the U.S. to produce advanced technology vehicles and components for such vehicles; and
• Protect U.S. taxpayers by ensuring the loans and loan guarantees we provide have a reasonable prospect of repayment.
DOE-Loan Programs Office Our Mission

I note the language "reasonable prospect of repayment." Not "guarantee of repayment." Not even that the likelihood of repayment is supposed to be of a particular investment grade. This is one of the reasons I think the DOE will not really get hit on this. Again, if investigators can find some bad facts, or if not, that will define the dialogue.

It reminds me of a matter on which I worked in the mid-90s. The So Cal Metropolitan Transit Authority was sued over the impact on businesses of construction near the Red Line subway stations. Businesses and property owners lost customers, tenants, and profits. That was undeniable. But the legal standard was whether the construction was *abnormally* obtrusive and impacting. The normal level of adverse impact was permissible and to be factored out. And that included sometimes exceeding noise limits, and sometimes having to turn the utilities off, and having floods, and impairing ingress/egress and signage. And lots of other things. But that was the standard on liability and damages because it was determined that society (including those businesses, if they could make it through the construction) would benefit from the project, so the MTA was held to a different standard than would be the case in a typical dispute. Just like the DOE loan program applies a different standard. And if people like or don't like that, they should write to their representatives in congress and/or support candidates who have similar views to them.

 

[doug]

You guys might want to contribute to this GigaOm survey:

Survey: Tell us your thoughts on the fate of Fisker Tech News and Analysis

 

[Dan43]

Latest Fisker news.
Bob Lutz: GM deserved federal money, but Fisker, well, who knows?