Imagine If Bob Lutz Was in Charge of Fisker

By · May 31, 2013

Bob Lutz

Bob Lutz, sounding off in Detroit. (Jim Motavalli photo)

One of the few remaining questions about Fisker Automotive is why the company hasn’t declared bankruptcy yet, when it’s clearly no longer viable.

The answer is fairly simple: The executives still on board are trying to put together some kind of pre-packaged Chapter 11 deal that would allow a new entity to start up production again. Better Place, the failed Israeli battery-swap company, has similar long-shot hopes.

An Unlikely Suitor

One perhaps unlikely suitor for Fisker is former General Motors vice chairman Bob Lutz, who has described the Karma sedan as “quite possibly the most beautiful four-door sedan ever.” He likes the car enough to have co-founded a company, VL Automotive, to build Karmas with Corvette engines. “It’s a beautifully designed car, but perhaps 10 percent of their possible customers want an electric with a four-cylinder engine,” he told me in Detroit in January.

VL Automotive has made a $20 to $21 million bid for the remnants of Fisker, working with China’s Wanxiang Group. The latter owns Fisker’s former battery supplier, A123, and has was involved in earlier bidding for the company. A spokesman for Lutz, Amy King, said Friday, “They did put in a bid on Fisker, but legally we can’t divulge any information about it.”

Is Lutz Good for Fisker, and for America?

Is Lutz co-ownership of Fisker in the public interest? Let’s face it, this is a man of contradictions. He’s vocal in denying that global warming is real. In Detroit, he gave me an earful on that subject, describing climate change as “the biggest scam in the history of mankind.” Yet he’s also the “Father of the Chevrolet Volt” (his legacy car at GM), and is the spokesman for Via Motors, which (one of these days) is going to start selling fuel-efficient plug-in hybrid versions of full-sized General Motors vehicles.

VL Destino

The VL Destino: A Corvette engine for "the most beautiful four-door sedan ever." (Jim Motavalli photo)

In a blog post for Forbes, Lutz expressed skepticism about Fisker as a candidate for any further federal aid, which was hardly the question on the table—the Obama administration is hugely embarrassed by its Fisker loan, which has echoes of Solyndra all over it. But Lutz also said he wants Fisker “to live and succeed, if only to ensure a continuing supply of Karma bodies for my and my partner’s VL Destino, a de-electrified Karma with a Corvette drivetrain…”

Competing Interests

Lutz probably doesn’t care if Fisker ever builds another plug-in hybrid—he’s just seeing the potential as another entry in the crowded supercar field. Lutz alone would not be a good custodian of Fisker’s green legacy. But Lutz is only one of the partners bidding, and Wanxiang clearly sees a way to leverage its A123 asset with more plug-in Karmas. So for that reason it’s in the public interest for the bid to succeed.

Of course, the elephant in the room is the $192 million that Fisker drew down from its $529 million Department of Energy loan. The government wants at least some of its money back, and went as far as to seize $21 million from Fisker’s dwindling assets in April. So now Fisker owes $171 million.

Via Motors Silverado

Lutz is also involved with Via Motors, which seeks to make plug-in hybrids of GM work vehicles like this Silverado. (Jim Motavalli photo)

There are other bidders, including Henrik Fisker himself in partnership with a Chinese billionaire. According to Reuters, “Investors in Europe are working with Hong Kong businessman [Richard Li], who is chairman and chief executive of the Pacific Century Group, to buy out the DOE’s position in Fisker, most likely at a discount…The measure would allow Fisker to wrest free of the loan’s current obligations and allow the DOE to recover more than they might get in a bankruptcy.”

Such an approach would produce howls of outrage from critics of President Obama’s clean energy strategy, but is probably more politically palatable than getting nothing back. The Henrik Fisker/Li bid is said to be in between $25 and $50 million. My guess is that the feds are relatively desperate to put this deal in the rear-view mirror, so the bid may be taken seriously.

The Bottom Line

Do we want Henrik Fisker back in charge of the company? Objectively, he's much greener than Lutz, but I’d have to say no. As a CEO, Fisker is a great car designer. He’s ill-equipped to address the car’s mechanical failings, which are considerable. The advantage of Lutz is that he’s a very experienced auto executive who could probably make the Karma work.

The feds would likely favor some kind of endgame with car production continuing. Of course, unless that production is in the U.S., it’s worse politically than just letting the enterprise die. Wangxiang might want to build the cars in China, but that’s a big blow considering the American taxpayers’ investment.

The ace in the hole is Fisker’s hold on the former GM Wilmington Assembly plant in Delaware, but as Lutz points out that plant was scaled for 300,000 cars a year, and “sank the Pontiac Solstice due to its high cost of operation.” Fisker put little, if any, money into it to prepare for production of the downsized Atlantic car.

Folks, there’s no quick, everybody-wins solution here. Bob Lutz in charge of Fisker with Chinese partners? There are worse outcomes.

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