|Fisker Automotive, the maker of a $100,000-and-up plug-in hybrid luxury sedan, said on Friday that about three-quarters of its workers had been let go to “allow the company to work through its current financial challenges.”
The statement was issued on behalf of Fisker by Sitrick & Company, a Los Angeles public relations firm that Fisker, a start-up automaker, retained late last week.
A former Fisker employee familiar with the cutbacks, who spoke on the condition of anonymity because of ties to the company, said about 150 employees had been fired while about 50 senior managers and executives had been retained. Fisker, which is based in Anaheim, Calif., declined to specify the exact number of affected employees.
According to the company statement, Fisker executives met in Southern California on Thursday with a group of employees who were asked to stay on to “address the challenges before us.”
The exact size and makeup of the work force will probably not be known until the individual employees who were asked to stay either agree to the offer or decline it. But it is clear that the remaining managers face grim circumstances, not the least of which is an April 22 deadline to repay a portion of a $193 million low-interest loan from the United States Department of Energy. Although Fisker was granted a $528.7 million loan in late 2009, that money was frozen after Fisker fell short of its production targets.
The company and the Energy Department have declined to disclose the exact amount due on April 22, The Wall Street Journal has reported.
Although Fisker successfully brought its stylish Karma sedan to market in late 2011, the company has had a spate of problems in recent months, including a recall of more than 2,000 cars to replace a cooling fan. Last October, 320 Karmas, awaiting delivery to customers, were destroyed by Hurricane Sandy at Port Newark in New Jersey, resulting in a $32 million loss for the automaker.
“Once Sandy hit, it seemed like that was it,” said John Gartner, research director for the Smart Transportation practice of Pike Research. “There has been no positive news from the company since that time, except for rumored discussions with potential new investors.”
The loss from Hurricane Sandy represented a significant amount of lost revenue for a start-up, Mr. Gartner said. “Forming a new automotive company is an extremely risky proposition, with little room for failure,” he said. “When you have an event like that, it’s not surprising they’re in the position they are in right now.”
The company has had further problems since the storm. It suspended Karma production in November 2012, one month after its battery supplier, A123 Systems, declared bankruptcy. Fisker, which has not produced a vehicle since that time, has sold about 1,800 units.
While Fisker planned to build a second vehicle, the Atlantic, at a former General Motors plant in Delaware, the Karma was assembled in Finland by a contract manufacturer.
In its Friday statement, Fisker said, “Our efforts to secure a strategic alliance or partnership are continuing in earnest.” This comment refers to efforts since production was halted to sell the company or find a partner to resurrect it. Fisker refused to provide specific information about suitors, but industry analysts and press reports speculated that Chinese auto companies, hoping to obtain electric vehicle technology, might buy Fisker.
On Feb. 18, the Reuters news agency reported that the Zhejiang Geely Holding Group of China had made a bid of $200 million to $300 million to acquire a majority stake. Geely is the owner of Volvo, the Swedish automaker, which it acquired in 2010 for $1.8 billion. But talks with Geely and other suitors ended without a deal. Fisker’s value is largely ascribed to the design of its sleek Karma vehicle, rather than any proprietary technology that could be leveraged by Chinese companies.
On March 13, Henrik Fisker, the company’s co-founder, executive chairman and namesake, left the company because of disagreements with management. Mr. Fisker, a celebrated automotive designer who left his stamp on Aston Martins and BMWs, unveiled the Karma as a concept car in 2008 at the Detroit auto show. After repeated delays, Fisker Automotive made its first sale of the Karma in October 2011.
Since August, Fisker’s chief executive has been Tony Posawatz, a former G.M. executive who led the engineering team that developed the Chevrolet Volt plug-in hybrid.
The Wall Street Journal, citing unidentified sources, reported on March 28 that Fisker had hired the law firm Kirkland & Ellis to prepare for a possible bankruptcy filing.
According to Automotive News, a trade publication, employees were seen leaving Fisker headquarters at about 8:30 Friday morning, some carrying boxes and many with large white envelopes. According to the account, former Fisker employees said they had been given no severance pay other than compensation for unused vacation days.
“The big question now is what is left to sell?” Mr. Gartner said. “It’s likely they’re now trying to sell any physical assets available to get some return for their investors.”