Tesla Triumphs as Fisker Falters: Pursuits and Perils in the Emergent E-Car Market

Tags: Elon Musk, Henrik Fisker, Tesla Motors, Fisker Karma, W Ned Livingston

W Ned Livingston by W Ned Livingston

Elon Musk
photo by By Brian Solis via Wikimedia Commons

On May 22, 2013, Tesla Motors, Inc. wired the sum of 481.8 million dollars to the U. S. Department of Energy (USDOE). Just four years earlier, in 2009, Tesla Motors was not in such an enviable situation. They needed money to survive and expand. The company had made enough off their Roadster model, introduced in 2008, to warrant expansion, but they lacked the capital to do so. As most will remember, 2008 saw a financial crisis the likes of which have not been seen since the 1930s. Banks were not lending.

Events could have been tragic for Tesla Motors, had founder and CEO, Elon Musk not been singularly prepared and uniquely resourceful. According to a San Francisco Business Times article, printed at the time, Musk was able to use his own finances to fund his company. What ultimately saved Tesla Motors, though, was an exercise in resourcefulness and leadership that had begun in 2003, at the company's inception.

When Tesla Motors was founded, there were no off-the-shelf options for powering a fully electric car. So the company looked to Co-founder, J. B. Straubel who had been working on breakthroughs in battery storage technology. As a result, Tesla's in-house power systems development became an industry leader. They were so good in fact, that by 2008, Tesla was providing power train development resources to Daimler AG. A relationship that came in handy when, in 2009, Tesla Motors was on the USDOE's back burner, as far as loan guarantees were concerned. Because of the importance of Tesla to Daimler's continued development of their next generation cars, Daimler AG entered into an agreement in which Daimler would buy 10% of Tesla Motors, thus providing not only the much needed cash infusion to keep the company viable, but also the "legitimacy" the USDOT craved in order to give Tesla their crucial "stimulus" money; an amount totaling $465M.

As a result of critical strategic planning, and careful management of those funds, Tesla Motors survived to not only continue selling its Roadster, which originally sold in the $90,000.00 range, but also to develop the new $45,000.00 Model S. In addition, one year ago, in May of 2012, Tesla Motors entered into strategic partnerships with both their old friend Daimler, “to create an entire electric powertrain for a new Mercedes-Benz EV,” according to Elon Musk, and Toyota to develop battery technology for the RAV4 EV.

Tesla has gone on to deliver cars ahead of schedule, and their stock, which sold for $32.96 in May of 2012, is now valued at over $90.00 per share. And that is why, on May 22, 2013, Tesla Motors, Inc. wired the sum of 481.8 million dollars to the U. S. Department of Energy. An event that would have been impossible if they had gone the way of their somewhat less successful competitor, Fisker Automotive.

Calling Fisker Automotive a competitor with Tesla Motors is not completely accurate. For one thing, Tesla develops and sells cars that are 100% electric, with a range of about 200 miles, while Fisker has developed and produced a single "plug-in hybrid electric vehicle" (PHEV) model, appropriately named, Karma. In addition, Fisker is not really a competitor with Tesla because they are providing no competition.

Founded in 2007, by Henrik Fisker, the company has lacked inspired and inspiring leadership from the start. Their initial offering, Karma, was intended for late 2009. It finally received EPA approval in late 2011, and wasn't available for sale until 2012.

Up Close with a Fisker Karma.
photo by Tuner tom via Wikimedia Commons

Unlike Tesla Motors, self-sufficiency was not a watch-word at Fisker, and the company contracted with A123 Systems for battery production. Then things started to go wrong, depending on which article you're reading. According to documents available from A123 Systems website, the battery manufacturer began to fail due to low volume demands from Fisker, and finalized the sale of all assets to Wanxiang America Corporation on Jan. 29, 2013. According to Fisker, it began to fail when battery manufacturer A123 Systems began having financial problems and was unable to deliver product in a timely manner.

More and more, though, it is looking like Fisker's biggest failure was plain old bad management, as detailed in an article by Paul E. Eisenstein in The Detroit Bureau: “Their books are a mess,” a very well-placed source who had considered joining the firm told TheDetroitBureau.com. “It is likely going to take a forensic accounting team to understand how they could have gone through all that money” and achieved so little for it, the source complained.

The U. S. Department of Energy, which so recently received $481.8M from Tesla Motors, has seized $21M in Fisker Automotive's funds, against $192M they were allowed access to, out of a $529M low interest loan. Amid all this, Fisker has laid off its employees, and Henrik Fisker, founder and namesake of the company has resigned and is now in a bidding war to buy back his own company. Who is he bidding against? He’ll be bidding against Wanxiang America Corporation, the same people who bought the floundering battery maker, A123 Systems. Perhaps Wanxiang America Corporation learned something about self-sufficiency from the management team at Tesla Motors.

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