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Fisker's Good Karma -- $529 Million From the Feds. Now All It Has to Do is Deliver

The federal government has just made a huge investment in Fisker Automotive. It may well pay off handsomely, but the company is still -- very close to launch -- keeping its flagship car, the $87,900 Karma plug-in hybrid, under wraps. Is it ready to finally meet the public and provide cutting-edge high performance late this year? A lot is riding on that answer being "yes."

At 4:34 p.m. on Friday afternoon, Fisker Automotive forwarded me the official announcement that the Department of Energy has closed its $528.7 million loan, which will create "over 2,000 jobs." Now, Public Relations 101 says that if you want to maximize your news coverage, the last half hour of the business week is the worst possible time to alert the press. On the other hand, it's the best time if you want to slip something out the door.

Getting more than $500 million in government money is good news, of course, but Fisker has taken some flak over it, especially in the conservative press. As I reported earlier, its huge federal loan is an investment in very promising but untested technology. The federal money underwrites not only the Karma but the smaller Project Nina car, which is still on the drawing board.

Fisker is also sensitive to charges that it's not really flying the American flag. Fox News had some sport with Fisker's "foreign" origins. Henrik Fisker is Danish, and the Karma will be built in Finland, with a good portion of sales in Europe. Fisker the company is made in the U.S.A., of course, and notice how many times Vice President Joe Biden uses the word "American" in this sentence from the announcement:

The story of Fisker is a story of ingenuity of an American company, a commitment to innovation by the U.S. government and the perseverance of the American auto industry.
But Fisker is American enough to count. The company is based in California, and Karma production will eventually be moved to the shut-down GM Boxwood plant in Wilmington, Del. (Biden's home state). If ever a symbol of high-tech rebirth from the old auto industry was needed, that's it. Fisker's plan for Boxwood makes sense -- although it would be nice if another new-tech automaker could rescue California's closed NUMMI plant, a joint venture between GM and Toyota (TM), the same way. But the numbers the feds are throwing around seem highly speculative. By 2015, when Fisker is in full production with both the Karma and the Nina, its annual sales "are up to 115,000 vehicles."

The Karma is a plug-in hybrid, a fascinating technology that extends electric range impressively but also adds weight and complexity to vehicles. Plug-in hybrids could be a hit in the marketplace, but they have zero track record, and Toyota (which is also rolling one out) has been decidedly cautious about them. Indeed, they're not for everyone: The Karma has 40 to 50 miles of all-electric range, so people who do 30-mile round-trips daily can be virtually zero emission, but the benefits are less for people who do a lot of highway driving.

The size of the market for EVs in the first years is anyone's guess. Estimates vary widely. But the DOE hazards a guess that the carmakers it is supporting with loans -- Fisker, Tesla and Nissan (which will build its Leaf battery car in Japan, Britain and Tennessee, the latter with DOE support) -- "could exceed 300,000 annually" by 2015. Again, that's very optimistic. In its first week of trying to convert free online Leaf registrations to $99 reservations, Nissan (which had some Internet snafus) found approximately 6,000 takers.

Federal investment helped rescue Wall Street, and now many of those firms are starting to pay back their loans. Let's hope the same happens with Fisker -- a hybrid in more ways than one.

Photo: Flickr/Fisker Automotive

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