Fisker CEO Still Aiming to Make Plug-in Cars in Delaware

Fisker Automotive Inc.’s new chief executive officer said the plug-in hybrid carmaker still plans to build rechargeable autos at a Delaware plant that stalled when the Energy Department blocked a loan for the project.

The closely held company, which last week said it raised more than $100 million from private investors, continues to work out plans to produce its second model, the Atlantic, at the Wilmington, Delaware, facility, Tony Posawatz said in a phone interview today. Posawatz joined Anaheim, California-based Fisker in August after retiring from General Motors Co. (GM), where he led development of the rechargeable Chevrolet Volt sedan.

“The intent and plan is to utilize that Delaware facility and build cars there in the future,” Posawatz said. Issues that led regulators to suspend access to a loan to refurbish and equip the factory have been resolved, and “at an appropriate time we will revisit the discussion with them of the possibility of accessing the remainder of the loan,” he said.

Fisker’s goal of becoming profitable from its $103,000 Karma sedan, which goes about 40 miles (64 kilometers) on battery power before a gasoline engine kicks in, has been challenged by initial delivery delays, tight funds and technical failures that led to recalls of flawed lithium-ion battery packs and cooling fans.

Consumer Reports last month criticized the luxury car, declining to recommend it because of cabin noise, interior design and reliability concerns.

Flaws Addressed

Early flaws have been addressed and the company is working on enhancements for a second-generation Karma, Posawatz said.

“We have a little bit of follow-up to do as it relates to a few component replacements, but I would say for the most part that is behind us,” he said. “Now we look forward to getting the gen-two technology and the next cars out on the road, and that’s the phase we’re starting to enter.”

He declined to say when a revamped Karma would be available. Fisker said last week it would provide details by December on plans to produce the lower-priced Atlantic model.

Fisker must raise more money before it decides where and when to make the Atlantic, Posawatz told reporters today in Detroit. About 1,500 Karmas have been delivered to customers in the U.S. and Europe since December, the company said last week. The less-expensive Atlantic will be the “cash engine” of the company, Posawatz said.

“We can’t be a Karma-only company,” he said.

IPO Preparations

The company is discussing “all kinds of alliances” with potential partners, Posawatz said.

Fisker was approved for $529 million in Energy Department loans in 2009 to develop and build its vehicles. In February, it suspended work on the Wilmington factory, which GM shed in its 2009 bankruptcy.

Posawatz told reporters today that the company is preparing for an eventual initial public offering of stock.

Until then, Fisker plans to increase its marketing. Founder Henrik Fisker will go on a 10-city dealer tour to give prospective buyers a chance to see and drive the car, Posawatz said. Dealers had been reluctant to commit until Fisker announced its latest round of funding, he said.

The U.S. awarded Fisker $169 million for Karma engineering and $359 million for production of a second model in the U.S. The company said in February it had drawn down $193 million from the loans. Karma’s battery and motor system were developed in the U.S., and the car is built under contract in Finland by Valmet Automotive.

To contact the reporters on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net; Mark Clothier in Southfield, Michigan at mclothier@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net.

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