The encyclopedia · Product & Design · Product decision · 2007–2013
Fisker got a $529M government loan, built a beautiful car, and went bankrupt anyway
Fisker Automotive raised $1B+, got a $529M DOE loan, and launched the Karma. A battery recall, Hurricane Sandy, and $1B in losses led to bankruptcy in 2013.
Fisker Automotive · U.S. Department of Energy · 2013-11
What happened
Fisker Automotive, co-founded by designer Henrik Fisker in 2007, aimed to build the world's first premium plug-in hybrid. The Fisker Karma, designed by Fisker himself, was stunning — a $100,000 luxury sedan with a range-extending gasoline engine. The company raised over $1 billion in private investment and received a $529 million loan from the U.S. Department of Energy.
The Karma launched in 2011 but was plagued by problems. A battery supplier (A123 Systems) went bankrupt, cutting off Fisker's battery supply. In October 2012, Hurricane Sandy flooded a New Jersey port, destroying 338 Karmas and causing a battery fire that led to a recall of all 2,400 cars sold. Production stopped in July 2012 and never resumed.
Fisker Automotive filed for bankruptcy in November 2013. The DOE loan was partially repaid from the sale of assets, but taxpayers absorbed a $139 million loss. Chinese auto parts maker Wanxiang Group bought Fisker's assets for $149 million in 2014. Henrik Fisker later founded Fisker Inc., which also filed for bankruptcy in 2024.
Why it happened
- The Karma depended on a single battery supplier (A123 Systems) that went bankrupt — a critical supply chain failure for a company with no backup.
- The $100,000 price point limited the market to a tiny niche; Fisker needed volume to survive and could not get it at that price.
- Hurricane Sandy's destruction of 338 cars was bad luck, but the battery fire recall was a product failure that destroyed consumer confidence.
- The $529M government loan created political scrutiny that made restructuring harder — every delay became a congressional hearing.
The lesson
A beautiful product with a fragile supply chain is a prototype, not a business. Fisker's sole battery supplier went bankrupt and a hurricane destroyed a month of inventory.
Aftermath
Wanxiang Group acquired Fisker's assets and briefly produced the Karma under the Karma Automotive brand. Henrik Fisker founded Fisker Inc. in 2016, which launched the Fisker Ocean SUV in 2022 and filed for bankruptcy in June 2024. The DOE loan program was restructured after the Fisker and Solyndra failures.
Sources
- Fisker Automotive — Wikipedia (founded 2007; $529M DOE loan; Karma launched 2011 at ~$100K; A123 Systems bankruptcy; Hurricane Sandy destroyed 338 cars; production stopped July 2012; bankruptcy November 2013; Wanxiang bought assets for $149M; $139M taxpayer loss)
- McGuireWoods — In re: Fisker Automotive Holdings, Inc. (bankruptcy filed November 2013; DOE sold $168.5M of Fisker debt for $25M to Hybrid Tech; Wanxiang won auction with $149.2M bid; $126.2M cash plus equity and $8M assumed liabilities)
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