Forbes Take On the Demise of the Coal-Powered Vehicle -- Bright Automotive Folds

Updates

February 19, 2014: I guess Fisker is now a Chinese company -- Wanxiang Group, China's top auto parts company. 

January 2, 2014: Fisker bankrupt; in court trying to sell assets to Korean company. Chinese company that Fisker says caused their bankruptcy is trying to buy Fisker's assets. In one corner: Wanxiang Group, China's top auto parts company. In the other corner: South Korean tycoon Richard Li.

September 17, 2013: where is Fisker? DOE putting the $168 million loan on the auction block for another huge loss for the taxpayer. 

May 26, 2013: another electric car company folds -- this time, an Israeli company.

April 28, 2013: Fisker owners trying to unload their cars; willing to take huge loss. 

April 24, 2013: how the wheels came off the Fisker.

April 19, 2013: $600,000 for each $100,000 car. 

April 5, 2013:  Fisker will fire 75% of work force.

April 5, 2013: Key staff being laid off. 

Fisker Automotive has laid off its public relations staff and other employees today, according to a source familiar with the company, another sign of deepening problems at the beleaguered electric car maker.

March 13, 2013: Founder and CEO resigns. Abruptly.

November 29, 2012: Fisker idles production. Battery supplier, A123, in bankruptcy.

August 20, 2012: more chariots on fire; GM recalls a quarter-million mid-size SUVs at risk of ... you guessed it ... fire due to possible electrical shorts in power windows and door locks. I think I saw this in a movie: hit the remote control on your key fob to unlock the doors and the vehicle bursts into flames.

August 18, 2012: more chariots on fire; Fisker recalls 2,400 Karmas for cooling problems due to bad fan; results in vehicle fire;

August 15, 2012: Fisker needs "at least" $150 million to keep going. Has raised $400 million from venture capitalists, but needs more. Cut off from govt trough.

April 4, 2012: Fisker, the luxury electric vehicle appears to be nearing the end of its run.

Fisker was awarded a $529 million loan under an Obama administration program designed to spur production of advanced technology vehicles. Fisker drew about $193 million of the Energy Department loan to engineer its Karma luxury plug-in hybrid.

But a plan to retool the former GM factory to build a second model, now called the Atlantic, was delayed, and the Energy Department froze the loan last May.

The production site for the Atlantic could depend on where Fisker gets new money to replace the U.S. loan. If an overseas investor emerges, the car could be built overseas.

Fisker no longer plans to start building the Atlantic this summer.

The company is reviewing many aspects of Fisker's strategy, including whether battery maker A123 will supply batteries for the Atlantic.

Fisker has suffered setbacks on recent weeks, including a recall by A123 of batteries installed in Karma models to fix defects that caused vehicles to stall.

April 3, 2012: a bit more on the financing --

Last week Bright Automotive, an electric vehicle start-up company that General Motors helped two years ago with an investment of at least $5 million from its venture capital arm, gave up hope on winning a $450 million loan from DOE’s Advanced Technology Vehicle Manufacturing program. As the company announced the withdrawal of its loan application and that it would end operations, CEO Reuben Munger and COO Mike Donoughe sent (and released to the media) a letter to DOE Secretary Steven Chu that sharply criticized the loan programs processes and outlined their frustrations.  

Meanwhile, Fisker's bankruptcy "worse" than Solyndra. SEC could take legal action against brokers promoting this deal back in 2009.

The Securities and Exchange Commission has notified the brokers who raised most of the private financing for taxpayer-backed electric automaker Fisker Automotive that charges may be brought against them, in connection with a private offering in 2009.

Original Post

I don't get it, the fascination folks have with the coal-powered vehicles. I have nothing against coal-powered vehicles, per se. But at twice-the-cost for half-the-product I just don't get it. Give me an electric vehicle with half-the-cost and twice the product and I will buy three: one for me, one for my wife, and one for my younger daughter.

Here's Forbes' opening:

Bright Automotive, a promising start-up company developing hybrid plug-in delivery vans for fleet customers, closed its doors this week after running out of money. It’s too bad, really. Its lightweight van, called the Bright Idea, seemed like a perfect vehicle for businesses that need to make service calls or deliveries. With a 30-mile range on electricity, and the equivalent of 85 mpg, the van would supposedly lower their total cost of ownership by 10 percent to 30 percent. By building it in Indiana, Bright expected to create 675 Midwestern jobs.

If it was such a bright idea, why didn't it survive? Where's the beef? 

For starters, lowering one's total cost by 10 percent just doesn't grab headlines (the "... to 30 percent" is a marketing tool -- if they could deliver 30 percent savings, they would advertise "... to 50 percent").

I see on CNBC today, Chrysler increased its sales by 40% over some time period, compared to single-digit increases for many of the other dealers. The CNBC folks were surprised, saying that Chrysler leaned towards SUVs, minivans, and gas-guzzling jeeps. How could Chrysler do so well with gasoline trending higher? Probably because Chrysler is offering twice-the-product at a great price (CNBC noted that Chrylser's sales improved even after Chrysler ended some of their incentives).

I can understand why folks don't want an all-electric vehicle but hybrids are a different story. If the driver doesn't like to plug it in at night, or park somewhere where there is no outlet, not to worry; they always have the gasoline engine as backup, although I believe the tank is small and range is limited if that's all you have. 

One of the CNBC talking heads mentioned that he bought two new cars this month; it would have been interesting to find out if he was concerned about mileage or the environment when he bought the car. (I assume, except for Joe, all CNBC commentators will vote for Mr Obama or will stay home.)

The start-ups blame...drum-roll..... the hand that feeds them, the US government:

Both companies [the other being Fisker automotive -- the company that was building its cars in Finland with US taxpayers stimulus money] blamed their financial troubles on bureaucratic gridlock in a U.S. Department of Energy loan program intended to promote the development of cleaner, more fuel-efficient cars in the United States. Three months ago, another fledgling EV maker, Aptera, pulled the plug on its four-year-old business for the same reason.

It should be noted that North Dakota farmers, recipients of much federal aid, have had to put up with bureaucratic gridlock for decades. Get over it. The oil industry, not only has no federal aid, but literally has to fight the administration for every one step forward, two steps back. And they are doing just fine, thank you.

The last paragraph in the linked Forbes' article:

I want the government to be vigilant when deciding to whom it’ll loan my tax dollars. And any company whose business model is built around a government loan doesn’t deserve to be in business. But I do think there’s nothing wrong with government giving a temporary leg up to entrepreneurs with promising technologies that will boost American competitiveness in the long run. Other countries do it all the time. The U.S. had better wake up.

Vigilant. Like being vigilant in loaning to the four or so solar companies that are now bankrupt or near bankruptcy.