STAFF NEWS & ANALYSIS
Who Will Win the Electric Car Prize?
By Staff News & Analysis - March 14, 2013

Henrik Fisker has quit as executive chairman of Fisker Automotive, the plug-in hybrid car company he founded in 2007. A dispute with other executives over a survival strategy for the struggling start-up led to his departure. A former designer for BMW, Ford and Aston Martin, Fisker created the high-style Karma, a $100,000-plus plug-in luxury car with a backup gasoline engine similar to the powertrain of the Chevrolet Volt. But the company has been beset by problems: It sought investors and infusions of cash to stay afloat. Though the company is based in California, the cars were built by a contract manufacturer in Finland. Only about 2,500 Karmas have been made, and production has been suspended. Talks reportedly have included Chinese auto companies, including Volvo owner Zhejiang Geely. – USAToday

Dominant Social Theme: A setback, but electric cars are the wave of the future.

Free-Market Analysis: We've written about electric cars quite a bit because it is such an obvious elite meme. There is no use for electric cars that we can see, no clamor for them. But nonetheless they have been rolled out in endless waves accompanied by great grants of federal dollars.

These cars have been accompanied by tremendous adulation as well. Thousands of articles have been written celebrating them even though the reasons for the celebrations are minimal, indeed.

These cars have little or no range and thus need recharging often, are often sloppily made and cramped from carrying gigantic batteries onboard.

We've written this is a kind of meme, sponsored by government money and climate change zealots. We've also predicted that the whole electric car fad will likely die down again unless significant breakthroughs are realized. We've focused especially on the Fisker Karma, and you can see our articles here:

Fisker Karma Panned by Consumer Reports

Bieber's Fisker Karma and Elite Gift-Giving

As Predicted, Electric Cars Foundering: GM Shuts Down the Volt

Now it appears that company's founder is leaving Fisker – amidst reports that the company has suspended production. Competitor Tesla just announced it was pushing back production of a new model as well. Here's more from the USA Today article:

Among Fisker's problems:

• In May of 2011, the Department of Energy froze payouts from a $529 million loan it had agreed to give Fisker because the automaker missed deadlines that were part of the deal. Fisker had borrowed about $193 million of the total at the time, much of which had been used for design work. The rest was to have been spent to develop and build a second, less-expensive vehicle — the $55,000 Atlantic sedan — at a refurbished General Motors plant in Delaware.

• The company lost its only supplier of batteries for the Karma when A123 Systems filed for bankruptcy protection last fall. That not only affected batteries for new cars but batteries that Fisker says it is owed to replaced defective units that led to a recall of 2012 Karmas last year. A123 has sought to void the Fisker deal.

The sale of most A123 Systems assets, including its plants, to a Chinese company has been approved by the bankruptcy court. Fisker has creditor claims and a lawsuit pending.

• In December, influential Consumer Reports gave the Karma "a failing grade" because of multiple problems with its test vehicle. "The car didn't always run. I cannot recall a vehicle we ever tested that had this many issues, or had to be flat-bedded away," says Jake Fisher, head of auto testing at CR.

• At least two owners reported that their Karmas caught fire while parked, and the Karma was recalled for a potential cooling fan problem that could lead to a fire.

• The company lost 338 new cars that were flooded at a port in New Jersey last fall when Superstorm Sandy struck, including 16 that burned after the saltwater caused a short circuit.

The last bullet point above is especially ironic as the loss of the Fisker automobiles ended up providing Fisker with a good deal of operating cash from insurance reimbursements. Critics say the reason the cars were at the port in the first place was that dealers were slow to take delivery.

Fisker's problems may well be insurmountable. Large companies like GM and Toyota have also had a good deal of difficulty unloading electric or hybrid cars, but the deep pockets of these companies have allowed production to continue.

It is difficult to interpret the endless fostering of electric cars as a market-driven effort. Instead one returns to suspicions that central planning is behind a good deal of these offerings.

As Smart Meters are rolled out, as regulations involving carbon dioxide continue to be passed by legislatures, as energy continues to be rationed via legal fiat, the groundwork is obviously being laid for continued expansion of the electric car industry.

After Thoughts
It is all about control – of the many by the few. For investors, the battle is obviously between the market itself, which is rejecting electric cars, and those who labor for Money Power and encourage the conditions for electric drivership. Who will win?

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