The chief executive of cash-strapped Fisker Automotive is in Europe looking for investors and business partners for the Anaheim maker of expensive rechargeable sports cars.
Fisker needs about $500 million to launch a second vehicle, which would be made at a factory in Wilmington, Del., but has had to halt development after the Department of Energy barred the automaker from drawing down a federal loan.
Fisker said it is using Evercore Partners Inc., an investment bank, in the search for investors.
The company also confirmed that Chief Executive Tony Posawatz is meeting with potential partners in Europe, where the company believes its prospects for finding investors are better than in the U.S.
Sales of all-electric and other rechargeable cars have been almost immeasurable since their introduction in the U.S. auto market two years ago.
“We have a number of different discussions going on,” said Fisker spokesman Roger Ormisher.
It’s not clear how much success Posawatz might have.
“Fisker right now is full of problems,” said Rebecca Lindland, an analyst at IHS Automotive. “They have money problems, they have supplier problems, and they are trying to sell a type of vehicle, an electric vehicle, which is a challenge in itself. They have three strikes against them.”
Lindland said that ventures like this are notoriously famous for underestimating the burn rate of cash, needed to launch and then produce a car.
“Whenever I see stories about private equity investing in auto companies, I cringe,” Lindland said. “They have no idea about how much capital they need.”
The automaker gained notice late last year for introducing its high-style Karma hybrid, which uses an electric battery to go about 33 miles before a gas engine kicks in and extends the range. It has a zero-to-60-mph time of under six seconds and a top speed of 125 mph. High profile owners include actor Leonardo DiCaprio and singer Justin Bieber.
Although the $110,000 car has received rave reviews for its styling, the vehicle has been panned by Consumer Reports and others for mechanical problems and electrical glitches.
Fisker has struggled to get the car to market and to launch its Atlantic model, a $55,000, four-door rechargeable sports sedan.
Work on the Atlantic came to a standstill this year when the federal government suspended a $529 million loan after delays in the introduction of the Karma. Fisker had drawn down about $192 million of the loan and continues to pay interest on it. It is scheduled to start repaying principal early next year.
The design of the Atlantic and the engineering of its drive train is 90% done, Ormisher said. "The next big part would be moving in production equipment and that would be a major cost – the hard tooling and supplying the parts. We need to get that all in place.”
Fisker also has run into troubles with Karma production, which is currently on hold because the battery maker, A123 Systems Inc., filed for bankruptcy this year. The automaker is holding onto its current inventory of batteries to use as spares in case some of the existing 1,800 Karma owners have trouble with their cars, Ormisher said.
While not providing any numbers, Ormisher said there was a sufficient supply of Karmas at the automaker’s dealers to last well into the first quarter of next year. He expects that A123 will be sold and will restart production sometime next year.
Fisker also has seen considerable churn at its executive offices. In August, the company installed Posawatz, the former head of electric vehicles at General Motors Co., as chief executive. He was the third CEO at the company this year, replacing Tom LaSorda, who became CEO in February, taking over for company founder Henrik Fisker.