Fisker won't restart production until A123 sale clears

Dec 12 2012, 10:50 IST
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Fisker won't restart production until A123 sale clears. (Reuters) Fisker won't restart production until A123 sale clears. (Reuters)
SummaryThe short-term future of Fisker Automotive, the hybrid-sports car startup, could hinge on the outcome of Chinese auto parts maker Wanxiang's controversial quest to acquire bankrupt U.S. battery maker A123 Systems .

The short-term future of Fisker Automotive, the hybrid-sports car startup, could hinge on the outcome of Chinese auto parts maker Wanxiang's controversial quest to acquire bankrupt U.S. battery maker A123 Systems .

Fisker, based in Anaheim, California, hasn't built a car in six months and says it doesn't plan to restart production until after A123, its battery supplier, concludes a court-managed sale.

The Delaware Bankruptcy Court approved the $256.6 million sale of A123 to Wanxiang Group late on Tuesday afternoon, but the deal still has to be approved by the Committee on Foreign Investment in the United States.

"We plan to wait until Wanxiang takes full control of A123, then we will get in contact with them to negotiate a contract," Fisker spokesman Roger Ormisher said. Once a deal is reached with A123's new owner, he said, "we can resume Karma production." Until then, "we have a sufficient supply of cars," Ormisher said, who added, "We are not looking for a new battery supplier."

Like A123, Fisker received government funding to support green-technology development. However, its $100,000-plus Karma hybrid sports car is built by contractor Valmet in Uusikaupunki, Finland.

Ormisher said no Karmas have been assembled in Uusikaupunki since July, when the Finnish company begins a traditional summer break.

With the break in Karma production and a delay in the development of its second car, the Atlantic, Fisker has cut its workforce to around 300, Ormisher said. The automaker said last week it hired investment bank Evercore Partners Inc to search for partners and investors, but denied reports that a sale of the company was under consideration.

Fisker previously said it had held discussions with potential strategic partners to cut costs and raise money to build the Atlantic.

Earlier this year, the U.S. Department of Energy froze the unused portion of its $529-million loan to Fisker, due in part to a delay in bringing the Karma to showrooms.

The DOE also said the remaining $120 million of A123's $249-million federal grant would not be transferred to the new owner.

A123 filed for Chapter 11 bankruptcy in October as demand for electric and hybrid vehicles such as the Karma has not met expectations. The battery maker also was forced to recall defective batteries used in the Karma.

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