Electric Car Company Posts Its First Profit While Another May File For Bankruptcy
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The luxury all-electric carmaker Tesla Motors has passed a major milestone. It says it just achieved its first profitable quarter. Meanwhile, its competitor, Fisker Automotive, which makes plug-in hybrid supercars, may be about to file for bankruptcy.
NPR's Sonari Glinton has this tale of two car companies.
SONARI GLINTON, BYLINE: In order to tell the story of these two companies, I've decided to come to the Third Street Promenade in Santa Monica, California. Here on the promenade is the Tesla store, and the idea for Tesla is that it wants to sell the idea of a car, which it can do because, well, it has fairly deep pockets. OK, through the magic of radio, I've traveled a mile and half in about a second, and now, I'm front of the Fisker dealership, which is in Santa Monica as well. One of the things I notice when I see these cars again is how genuinely beautiful and elegant they are.
But the thing is, as Rebecca Lindland, who's an automotive analyst, says, if it were just about making beautiful, innovative cars, we'd all be driving Ferraris. But the car business is much, much more complex than that.
REBECCA LINDLAND: The capital intensity of building a car is just enormous. It's in the billions, if not 10 billions, and then you end up with a product that you're asking people to spend tens of thousands of dollars on, and there's no guarantee that's going to happen.
GLINTON: Both Tesla and Fisker cars can set you back between 70 and about $100,000. Tesla has gotten help from two of the big car companies - Daimler and Toyota - which helped it underwrite its costs. And its cars have been a hit so far in places like Southern California, pushing it to its first profitable quarter. Fisker, though, has not been so lucky.
JOHN O'DELL: The catalog of horrors.
GLINTON: That's how John O'Dell with edmunds.com describes Fisker's setbacks, which have pushed it now to the brink of bankruptcy. Fisker was able to raise more than $1 billion in the private market, and then it got hundreds of millions in federal loans from the government, and then...
O'DELL: They missed some deadlines on their production schedule, and that caused the Department of Energy to say, well, you know, we've got to cut off your access to this loan money because you didn't meet all of the benchmarks that were set.
GLINTON: And then the company lost a couple of hundred cars because of damage due to Hurricane Sandy. But don't worry, it gets worse.
O'DELL: Their battery supplier went bankrupt, and that cut off their supply of batteries. They didn't have a backup supplier, so they basically stopped building cars, which means that the cash flow from sales stopped.
GLINTON: The company has also had to furlough workers, and Fisker confirms that it's hired lawyers that specialize in bankruptcy, though a spokesman says it's keeping its options open. And after some internal squabbles, the head of the company, Henrik Fisker, left.
O'DELL: And when you've got a car called the Fisker, designed by a guy named Fisker, produced by a company headed by Fisker and Fisker leaves, you know, it leaves you in a difficult position as far as raising further money.
GLINTON: But as we've learned in the last four or five years, one successful quarter does not mean a carmaker is successful. And even if a car company goes into bankruptcy, that doesn't mean it's dead, either. Sonari Glinton, NPR News.
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