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The Car That Will Save Our Souls?

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Andy Brockson insists—three times in a 10-minute conversation—that he is not a tree hugger.

“But,” he admits, “I like the idea of being environmentally friendly. And I love my Prius.”

The problem is, “his” Prius—the gasoline-electric hybrid made by Toyota—has been commandeered by his 18-year-old daughter, who is about to head off to college. So Brockson, a 50-year-old Hockessin real estate agent, has been relegated to driving the family SUV. “And it kills me to put gas in that,” he says.

Enter the Fisker Karma.

Brockson and his 14-year-old son, Andrew, were among more than 300 car lovers who gathered at Wilmington’s Union Park dealership in late May to ogle the Karma, the world’s first premium plug-in hybrid electric vehicle (PHEV)—and a very sexy one, at that. To say Brockson was impressed is an understatement. Calling it “the Prius on steroids,” he promptly ponied up the down payment on the $87,900 luxury sedan, scheduled for delivery in the first quarter of 2012.

Now if there are 15,000 more Andy Brocksons out there, Fisker Automotive will sell all of its projected first-year production. That, in turn, would be great news for Delaware, because Karma’s success would bode well for the Fisker Nina, a smaller, lower-priced PHEV scheduled to be manufactured at the old General Motors Boxwood Plant beginning in the third quarter of 2012. There is also talk of Karma production moving to the 3.2-million-square-foot plant. At least until 2017, however, it will be made in Finland, at Valmet Automotive, which currently builds the Cayman and Boxster for Porsche.

The Nina will be priced at $47,400. With buyers eligible for a $7,500 federal tax credit—also available to Karma buyers—it’s aimed at the mass market. Fisker hopes to roll out 100,000 Ninas by 2013 and 125,000 the following year. During its GM heyday, Boxwood had a capacity of 300,000.

In just three years, Irvine, California-based Fisker Automotive has moved at lightning speed (for the auto industry), developing two PHEVs while demonstrating a breathtaking ability to attract funding. It has raised $300 million in private equity and won a $528.7 million loan from the U. S. Department of Energy. That show of confidence from individuals and the federal government can be attributed largely to co-founders Henrik Fisker and Bernhard Koehler.

In a career that began in 1989 at BMW’s advanced design studio in Germany, Fisker has held prominent design positions with BMW, Ford Motor Co. and Aston Martin, where he was responsible for the production launch design of the DB9, variants of which were James Bond’s preferred vehicles.

Koehler began his career at 16 as an apprentice modeler and sculptor for BMW Design in Munich. He, too, held director positions in operations and design at BMW, Ford and Aston Martin.

Koehler was the company’s point man when Fisker began considering Boxwood as a production site soon after GM shuttered the 142-acre facility in June 2009. The closing left 450 people jobless and hurt countless vendors.
 

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When word of Fisker’s interest got out, Governor Jack Markell’s administration, along with the state’s congressional delegation, County Executive Chris Coons and the United Auto Workers, put on a full-court press. They soon hammered out an offer Fisker couldn’t refuse. The Delaware Economic Development Office offered the automaker a Delaware Strategic Fund loan of $12.5 million (convertible to a grant based on when the company reaches its employment projections) for the renovation of the Boxwood Assembly Plant.

The convertible provision of the loan to a grant requires a minimum of 2,495 jobs to be created by the Boxwood Facility, of which 1,495 will be direct employment by Fisker. DEDO also offered Fisker a $9 million Delaware Strategic Fund grant to offset utility costs incurred while Fisker renovates the plant prior to startup. That’s a total of $21.5 million in state government largesse. Further sweetening the package was a five-year abatement of county taxes, which amounts to about $1.3 million over that period.

With financing secured and the plant being retrofitted, the next challenge for Fisker will be marketing the Karma and, later, the Nina. The Karma is capable of 50 miles of all-electric driving, then hundreds more miles with help from a 2-liter four-cylinder gas engine. In a series plug-in hybrid like the Karma, the wheels are driven entirely by electricity, with the engine used to extend the car’s range. Theoretically, an owner could drive the vehicle without ever plugging it in, but the car would require gasoline to keep moving. Estimates have put the cost at about 75 cents per gallon to operate in electric mode. (Fisker’s Russell Datz says that charging the Karma daily will increase the average American’s electricity usage by about 25 percent (to $30 a month) and reduce gasoline consumption by about 70 percent ($80 a month), for a $50 a month net savings.

An electric-gasoline hybrid like the Prius uses a combination of electricity and gasoline to drive the wheels. Sometimes the wheels are driven by the battery, other times by the engine. The car’s computer optimizes use of both modes. The Prius was originally designed to run on electricity for the first 30 mph, then switch to the engine.

The Karma marketing campaign—“Pure Driving Passion”—kicked off July 1. As described in an adjective-laden press release, the campaign will be driven by an extensive, interactive Website and integrated social media and owners’ channels. On the site, which is chockablock with glamorous photography and video, users can go to two stylized navigation modes that reflect the sensation of driving the 403-horsepower Karma. (Real test drives have not yet been available to prospective customers.) A “Configure” section allows users to customize Karma options and submit them to their local Fisker dealer. The images and the words, such as “Designed to get you hot, not the planet,” portray the Karma as eco-chic, cool and sexy—a four-door sedan for people who want to do the right thing and look good doing it.

It’s obvious that being eco-friendly isn’t just a catch phrase at Fisker. The Karma is replete with environmentally friendly materials, such as the interior’s walnut burl and red elm wood, which was sourced from trees damaged in the 2007 Southern California wildfires. Fisker also makes sure that its suppliers are environmentally aware. “We demand that they have a specific environmental strategy in order to do business with us,” says Koehler. That also will apply to the refurbished Wilmington plant, where, he says, “We will incorporate environmentally conscious strategies whenever and wherever possible.”
 

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Jim Ursomarso, vice president of Union Park Auto Group in Wilmington, says the Nina will be comparable in size to the Mercedes C class. Photograph by Jared CastaldiThe cars will be marketed through a global network that includes 45 U.S. retail locations and about the same number in Europe. “We’ll also be expanding into Asian markets like China and Japan,” says Koehler, adding that there are plans to increase the retailer network by 2012 to support the demand that will be created by introduction of up to six additional models.

One of the American distributors, Jim Ursomarso, vice president of Union Park Auto Group in Wilmington, says the Karma has “two levels of appeal.”

“It’s a stunning vehicle, a very curvy, large sedan about the size of the BMW 7 series or Mercedes 500, but it looks more like a Ferrari, like a $200,000 car,” he says. “It’s a high performance luxury car, with the finest leather and electronics. So you’ve got the design and the performance. If that was it, the car still might be a hit, because there’s nothing like it at that price point.

“But then you’ve got the whole aspect of the hybrid. It’s got solar panels on the roof that power the AC system, so it’s eco-friendly. And you can drive the car for 50 miles on the battery, and then the gasoline engine will provide the charge for the battery and keep the car running after that. So this can be somebody’s everyday car. You don’t have to worry about running out of charge. If you drive 50 miles or less a day, like I do, you won’t use any gasoline. Other vehicles are all electric. When you run out, you run out. Recharging takes several hours.”

When a Karma is sold, Ursomarso explains, the dealer will arrange to install a 220-volt outlet at the customer’s home. A piece of equipment connects the car to the outlet.

The smaller Nina, Ursomarso says, “looks a lot like the Karma,” though comparable in size to the BMW 3 series or a Mercedes C class vehicle.

Industry experts are being cautious in their predictions for Fisker. “The Karma looks very attractive and unique, which should help it to be a new toy to have at the high end of the market,” says Huei Peng, executive director of interdisciplinary and professional engineering programs at the University of Michigan. “However, I will be very surprised if it sells more than a couple thousand units.”

Bruce Belzowski, associate director of the automotive analysis division at the Transportation Research Institute at the University of Michigan, says it’s “too early to make a call” on either the Karma or the Nina. The plug-in aspect, in particular, he says, “is unclear at this point.”
 

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“There are some real limitations on the plug-ins, having to do with having someplace to plug it in. Obviously a garage is the best place, but if you don’t have a garage, maybe a driveway will do it, but then you’re running cords out there. Anybody who lives in a big city, unless there is some kind of charging unit or a wall plug that they can plug into, it just makes life more complicated.”

Fisker dealers are expected to have charging stations. (Ursomarso says Union Park will have two stations.) Fisker also claims the Karma will have a total range of 300 miles. After the first 50 miles on the tailpipe-emission-free electric-only charge, the range-extending gasoline engine turns on to add 250 miles.

With carmakers under pressure from government regulators to develop vehicles that use little or no gasoline and emit minimal harmful gases, competition in the electric and hybrid markets is growing. Toyota, Honda, Ford and GM all have hybrids on the market, and all are different from each other.

In July, Toyota, the world’s largest seller of hybrid autos, upped the ante by partnering with Tesla, the Palo Alto, California, maker of the $109,000 electric Roadster. According to Bloomberg Businessweek, Toyota bought a $50 million stake in Tesla for a joint venture aimed at developing a car that costs about $40,000, with 150 miles of driving range per charge.

Tesla has never turned a profit, and lost $55.7 million last year. After causing a stir by going public in June—the first IPO by an American car maker since Ford in 1956—Tesla stock spiked, then quickly dropped below its offering price.

The company has sold only about 1,200 cars worldwide. By comparison, the Karma, priced about $30,000 below the Tesla product, is targeted for 15,000 units in the first year. Meanwhile, reports are that Fisker may be considering an IPO of its own.

Whatever Fisker’s future may hold, its presence at the old Boxwood site will pump major dollars into the state’s economy almost immediately. Fisker chose the plant for several reasons. “Of all the plants we looked at, Wilmington best fit our business model,” says Koehler. “At 3.2 million square feet, it’s a perfect size for us to grow into. And more than half our production will be exported, so proximity to ports was a priority. Having been closed only a short time meant it hasn’t deteriorated, and we could quickly and relatively inexpensively bring it back on line. Its world-class paint facility was especially attractive.

“But perhaps most important was that we knew Delaware would have many experienced and skilled auto builders eager to again build world-class American cars.”

Local United Auto Worker officials have worked closely with Koehler, as well as Delaware officials such as DEDO director Alan Levin. Says Dave Myers, president of U.A.W. Local 435, “All the players know one another.”

Myers is optimistic about Fisker’s future. “They’re car people,” he says, “and they’ve done all their homework.” He adds that success won’t depend only on sales in the U.S. market, since 60 percent of production is expected to be exported.

Joe Riccio, chairman of local 435, believes Fisker’s presence offers Delaware entrée into “a brand new industry.”

“The potential here is beyond belief,” he says, adding that when GM was in full production, “It brought $147 million a year into the state’s economy.”

Checkbook in hand, Andy Brockson is ready to do his part. He knows he won’t take delivery soon, but he’s willing to be patient for what he calls “the wave of the future” and “a bargain.”

“I don’t think they’ve overpriced the Karma at all, what with the look of it, the amenities inside,” he says. “I expect that the performance and the handling are going to be really good. And with 403 horsepower, it’s going to be fast.”

As for the environmental niceties, the non-tree-hugger says, “I don’t really care that the wood came from some tree fire in California. I just think it’s a real cool car, and I can’t wait to show it off to the neighbors.”
 

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