Luxury e-car firm on drive to save cash

After loss of Dongfeng Motor as potential partner, Fisker puts workers on leave

PUBLISHED : Saturday, 30 March, 2013, 12:00am
UPDATED : Saturday, 30 March, 2013, 4:50am

Fisker Automotive, a maker of luxury plug-in cars that's seeking investors to fund operations, lost a potential partner and gave employees a week off to save cash. Fisker also retained restructuring lawyers, according to a person familiar with the matter.

Dongfeng Motor, a Chinese carmaker that had considered buying a stake in California-based Fisker, said on Thursday those talks were over. Fisker has repeatedly declined to identify specific companies it is talking to.

Dongfeng chairman Xu Ping said the acquisition talks ended as there was "some distance" between Fisker's future development and the Chinese carmaker's plans.

Dongfeng had offered US$350 million for majority control of Fisker, people with knowledge of the matter said last month. Neither company confirmed that bid.

Fisker has struggled since halting assembly of rechargeable Karma cars last year when the supplier of the US$103,000 car's lithium-ion batteries, A123 Systems, filed for bankruptcy. Company co-founder Henrik Fisker quit this month over unspecified disputes with other executives.

The carmaker retained restructuring lawyers from Kirkland & Ellis, a person familiar with the matter said. The law firm's corporate bankruptcy and restructuring practice is one of the biggest in the US. Roger Ormisher, a Fisker spokesman, declined to comment. Kirkland's role was reported on Thursday by the Wall Street Journal.

Fisker Automotive, with celebrity customers including singer Justin Bieber and actor Leonardo DiCaprio, has sold about 2,500 Karmas in the past two years. It has raised more than US$1 billion from private sources and was awarded US$529 million in low-interest federal loans in 2009 to develop and build its plug-in hybrid cars.

In parallel with the process of identifying a strategic partner, Fisker is, of course, continuing to manage its day-to-day operations 

That hasn't been enough to sustain operations after a slower-than-expected start-up, technical flaws that led to two Karma recalls and the A123 bankruptcy. Fisker said last year that the Department of Energy blocked access to the loan after the carmaker failed to meet an initial timetable for Karma deliveries.

"In parallel with the process of identifying a strategic partner, Fisker is, of course, continuing to manage its day-to-day operations and has … instituted temporary furloughs for its US workforce covering the final week of March," the company said.

More than 200 employees were affected by the action, Ormisher said.