Wednesday, March 7, 2012

Battery car start-ups race to prove critics wrong

By Paul A. Eisenstein, contributor

A new lawsuit targeting California car- and battery-maker Fisker Automotive is the latest potential setback for the once-promising company, one of several high-tech start-ups to receive millions of dollars in assistance under a Department of Energy loan program meant to promote the development of high-mileage technologies.

The legal wrangle with investor Daniel Wray underscores the problems Fisker is facing as it struggles to line up alternative funding if the DoE pulls the plug. The loan is critical to develop a second line of Fisker products aimed at the emerging market for battery-powered automobiles.

But Fisker isn’t the only one analysts and investors are watching closely.  Red flags were raised earlier this month when Tesla Automotive announced it had fallen short of earlier earnings targets, with its first truly significant product still months away from production.

“We’re caught up in politics,” lamented Henrik Fisker, the Danish designer and founder of Fisker Automotive, as he discussed the challenges in renegotiating the $528 million DoE loan that has been essential to the development of a mid-range model codenamed Project Nina. 

The loan program has come under sharp criticism in the run-up to this year’s presidential election -- especially in the wake of the bankruptcy of solar cell manufacturer Solyndra, which also received the government assistance.  Fisker Automotive hasn’t drawn down any of the loan since last May, the executive confirmed, and earlier this month laid off 64 employees while it pressed to renegotiate the agreement -- or line up more private equity.

Washington is by no means entirely to blame for the carmaker’s problems, however.  The CEO admits his company was “too aggressive” when it initially lined up the loan.  “When we set out designing and developing this car,” he added, “we had to make some estimates and we wound up missing some of those timelines.”

Fisker’s first product, the 4-seat Karma plug-in hybrid sports car, is only now coming to market -- and at $102,000, it is around 20 percent more expensive than originally forecast.  The EPA also gave it range and fuel economy ratings significantly lower than expected.

The company long claimed Karma would deliver around 50 miles in “stealth,” or battery, mode.  But the EPA tests lowered that to only 32 miles on battery power and gave the hefty vehicle a meager 32 MPG fuel economy rating.  Operating on gas alone, the EPA said the Karma should get just 20 mpg. 

Fisker is quick to point to the results of European testing. Regulators there were much more generous with an estimated 51 miles on battery power and a 112 MPG estimate.  But the EPA numbers are what will go in the window -- and in the company’s advertising.

Company officials remain hopeful, and there are signs the sleek Karma could maintain its appeal to those who want a green machine that is more fun to drive than the purely practical Toyota Prius. Among those who’ve already taken delivery are actor Leonardo DiCaprio and former Sec. of State Colin Powell.

As for Project Nina, CEO Fisker insists the car is 95 percent ready, as is the former General Motors plant in Delaware where it will be built. The company has been lining up additional cash, he stresses, including $243 million of a planned $300 million.

But a letter sent to investors has triggered a suit by earlier investor Wray, who put $210,000 into the start-up and now claims he “suffered significant money damages at the hands of Fisker and Advanced Equities” because of what he describes as a “corporate bait-and-switch.” The company reportedly demanded an additional $84,000, or, Wray was warned, he would lose certain rights gained through his initial investment.

Whether the lawsuit will have any serious impact is uncertain, but analysts have been growing more skeptical. That could complicate Fisker’s hopes of raising more cash if it can’t get the DoE to sign off on the proposed changes to the loan agreement.

As for Tesla, the company staged a well-publicized IPO more than a year ago, and its stock has swung wildly ever since. It is currently back up near its 52-week high of $35 a share, after some market uncertainty in the wake of $264 million in losses for 2011.  The $81 million in red ink for the fourth quarter, in particular, ran well beyond expectations, triggering an initial sell-off.

But Tesla quickly rebounded – its fortunes buoyed by news it will be developing a new electric vehicle for Mercedes-Benz, one of several more established makers with ties to the start-up. The new Mercedes is still several years away from production, but 2012 will see the launch of the RAV4 EV that Tesla is developing for Toyota -- as well as the debut of Tesla’s own mainstream model, the Model S.

So far, the maker says it has taken 8,000 reservations for the Model S, as well as another 500 for the Model X, a battery-powered crossover vehicle it revealed earlier this month.  Each deposit is $5,000. Tesla predicts that could nearly triple revenues this year, to somewhere between $550 million and $600 million.

What’s on the horizon “is more-than-sufficient to reach 2013 (so) we continue to believe that Tesla is uniquely positioned to succeed as a new automaker,” said Rod Lache, chief automotive analyst with Deutsche Bank.

Perhaps, but other analysts remain skeptical, noting that the entire market for battery-based vehicles, from basic hybrids to pure battery-electric vehicles like the Model S, totaled less than 3 percent of overall U.S. sales in 2011.  And even with DoE loans, neither Fisker nor Tesla have much of a future without a pickup in demand.

0 коммент.:

Post a Comment