A couple of years ago, with great fanfare, Fiskar Automotive was introduced to Delaware and given hundreds of millions of taxpayer dollars to restart the closed General Motors plant on Boxwood Road. Fiskar’s business plan (if the word “plan” or “business” is even appropriate in this context) forecast cars pumping out of the plant sometime in 2012 and a dominant “BMW-esque” cache in the market place. Since that time, Toyota’s Prius has expanded and enlarged, and Toyota has introduced a Lexus version that will be less expensive than the Fiskar Nina. Plus, only in September did Fiskar sign a deal with, ironically, BMW to provide the 4-cylinder engine that actually drives the car and only in October did Fiskar actually sell its first car, the Karma, a ~$90,000 vehicle made in Finland.
Fiskar Automotive is running very much behind plan. But just as important, Chevrolet has shown us how difficult it is to get this kind of vehicle to actually work and be profitable…
First are the slow sales:
“We’re getting a lot of interest, we’re just not getting a lot of buyers,” says William Willis, a Chevy dealer in Smyrna, Del. Mr. Willis says he has sold two Volts since the fall and has two on his lot. “Customers come in, they are wowed by the display, the quick acceleration. It’s just going to take a while for the American public to accept the price.”
The $41,000 Volt solved the biggest hurdle with electric cars: range. But that came with compromises on price and space. [Source: Wall Street Journal]
Note that the $41,000 price tag is in the same ball park as the Nina, and about $7,000 more than the Lexus.
For a vehicle that wasn’t selling, the recent battery safety issues might sign the car’s death warrant save for one small fact to be mentioned later. Safety?
When General Motors Co. (GM) announced plans in June 2008 to build the Chevrolet Volt plug-in hybrid, executives called it a “moon shot” intended to rocket past Toyota Motor Corp. (7203) in technology leadership. Now the car is a flash-point for concern.
The automaker’s image car is the subject of a U.S. probe following fires that occurred in its lithium-ion batteries at least a week after three crash tests. GM yesterday offered loaner cars to concerned buyers and said its engineers will help the National Highway Traffic Safety Administration determine the cause and a way to fix it.
While engineers work on safety issues, the largest U.S. automaker is racing to ensure that the Volt doesn’t become a public relations fiasco. [Source: Bloomberg News]
Laptop batteries, also lithium-ion, have had issues with fires, but these batteries are small and, unless the fire starts in the overhead compartment of an aircraft at 30,000 feet, are not generally life threatening. The Volt is a slightly different issue. Car owners don’t want their car to catch fire several weeks after a fender-bender in their garage while everyone is asleep inside the house.
General Motors, recipient of a Government bailout and more taxpayer dollars than Fiskar Automotive, is in a world of hurt. GM’s stock is down over 40% this year (meanwhile the broader market is roughly flat). General Motors has 100 years of operating history. General Motors has a robust and trained dealer/service network.
Fiskar Automotive is a risky startup in an industry that has eaten risky startups for years (When was the last time that you saw a DeLorean?).
Note, the Chevy Volt will not be killed as a product any time, soon. Any business with a product like this would shut it down. However, GM cannot. There is too much at stake for the Obama Administration. After the Solyndra debacle, the “Save the Earth” society can’t allow another failure. Therefore, they’ll let Fiskar hang on for a long time (or until ~2013), whichever comes first.