Henrik Fisker Quits as Chairman of His Own Company
In the end, even Al Gore, Leonardo DiCaprio, Justin Bieber, Jay Leno, former Chrysler and General Motors execs, billionaire Silicon Valley venture capitalists, generous California government incentive givers, Delaware subsidizers, and President Obama’s Department of Energy investment arm couldn’t overcome the dud that was the $102,000-plus Fisker Karma.
And now as the company desperately seeks for cash and/or a rescuer – probably in China – a disagreement arose between Fisker’s founder and its top management. So the man for whom the company was named, Henrik Fisker, quit. The Los Angeles Times and dozens of other outlets reported yesterday that Mr. Fisker left over disputes about “direction” for the company, citing “several major disagreements.”
But Automotive News seemed to have the inside track on the Danish designer’s thinking, after it was able to obtain an email interview.
“I’m proud of having brought the first luxury plug-in hybrid to market under my leadership,” Mr. Fisker told the industry publication. “Despite the difficulties, and setbacks, more than many big car companies have to face, Fisker Automotive tackled the issues head on and managed to sell more than 2,000 cars to date.”
“I have driven many luxury cars on a day to day basis. I still find the Fisker Karma the best day-to-day car I have ever had,” he added.
Unfortunately the land is littered with the failed carcasses of former business start-up executives who were “proud” of what they accomplished and the fact that they faced problems “head-on.” They leave out the fact that the problems are the windshields and they are the bugs.
In the case of Fisker, the “splat” was ugly. Not long after President Obama’s Department of Energy awarded a $529-million loan guarantee to design the Karma and develop a second model (ultimately called the Atlantic, although it’s never been produced), the government halted payouts after $192 million because Fisker failed to reach some objectives in its agreement.
In less than a year, the Anaheim, Calif.-based company went through three CEOs, replacing Mr. Fisker with former Chrysler CEO Tom LaSorda, who after five months was replaced with the current CEO Tony Posawatz, a former GM executive and top developer of that other electric car smashing success (sarcasm), the Chevy Volt.
As for its efforts to raise private capital (which saw some success – the figure “$1 billion” has been cited several times), the firm that has been used to raise much of Fisker’s investment, Advanced Equities, was subject to fines and punishment by the SEC and by the Financial Industry Regulatory Authority due to unethical practices, which ultimately led to its shutdown. Alleged misrepresentations also spurred an investor lawsuit against Fisker. Mishaps such as fires (due to technology failures and Hurricane Sandy) led to losses and hiccups in production. And those and several other factors led Consumer Reports to label the Karma the worst luxury sedan, and fourth-worst sedan overall.
So despite the “fighting the odds” nature of Mr. Fisker’s resignation comments, the obstacles were largely of his own making. But he had a lot going for him too. A former designer for automakers like BMW and Aston Martin, he had the ingenuity and know-how to actually create a vehicle. And he knew of some rich liberals (Gore, DiCaprio, 90 percent of Hollywood…) who like to look like they don’t use much fossil fuel. He then connected with some private equity raisers with questionable practices (Advanced Equities), but better yet, was able to capture the vision of Silicon Valley billionaire investors at Kleiner, Perkins, Caufield and Byers, who beyond their riches also had crony capitalist ties to the Obama administration.
Besides its major investment in Fisker, Kleiner Perkins also boasted (still does) John Doerr as a top partner, as well as Al Gore, one of the first Karma owners. Doerr served on President Obama’s Council on Jobs and Competitiveness, and also hosted a dinner for President Obama at his estate in February 2011 with several other high-tech executives, according to ABC News. Doerr and his Kleiner Perkins colleagues have donated $2.6 million to candidates and political action committees, favoring Democrats over Republicans by a very wide margin, according to the Center for Responsive Politics. The coziness undoubtedly was not harmful in Fisker receiving its $529 million stimulus-backed loan.
That’s the kind of firepower you want behind you as you launch a new company with a new product that features rare technology. But even all those factors cannot overcome the laws of economics and competence, as well as consumer practicality.
For example, in a nation where gasoline-powered vehicles rule and several-hour recharging times are not desired, is it reasonable to expect sufficient market demand for a single six-figure vehicle model that caters only to the richest of the rich? Is it logical to think you could get a sufficient buyer response to a $1 billion-plus investment in such a vehicle?
And standing in the consumer’s shoes, the kind of questions about a Karma (regardless of how wealthy you are) that would rise ought to have given Fisker investors pause. For instance, a normal potential buyer would likely ask, “Will this company still be around in a few years?”; “Will I be able to find parts for this vehicle?”; “Will I be able to get it serviced by someone who knows how it works?”
Of course, these kinds of curiosities are often overlooked or ignored by puffed-up executives with “great ideas,” and because of that it drives them to search for subsidies and fools – both of which are plentiful in government. Then CEOs and innovators end up in a marriage with the feds and the states that quickly goes sour, thanks largely to the never-ending rectal exam they are subject to by the media because of the public money involved. So the likes of Henrik Fisker and Elon Musk rue the day they ever got in bed with politicians and bureaucrats.
Now, as was previously the case with Fisker’s battery maker A123 Systems, the media rumors are that Posawatz and his lieutenants seek a deal with a Chinese conglomerate as a “partner” to save the company. The current CEO is doing and saying nothing to discourage that speculation. Maybe Henrik Fisker, who has passionately defended his car and his company, doesn’t like losing control like that.
In the end, it doesn’t matter what the dispute is. The lesson is that the laws of economics and meeting market demand will always win out over short cuts and crony capitalism, regardless of the power and wealth of those involved. The more business people who learn to earn, rather than jump at bundles of taxpayer money dangled by politicians, the better.
Paul Chesser is an associate fellow for the National Legal and Policy Center and publishes CarolinaPlottHound.com, an aggregator of North Carolina news.