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Could Fisker Karma's Low MPGs Hurt DoE Car-Tech Loan Program?

 
3,530 views Oct 19, 2011
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Prince Albert of Monaco and Henrik Fisker drive Fisker Karma on Monaco Grand Prix circuit, May 2011

Prince Albert of Monaco and Henrik Fisker drive Fisker Karma on Monaco Grand Prix circuit, May 2011

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Fisker Automotive may have sensed that the 20-mpg EPA rating on their 2012 Karma electric sport sedan was not good news.

The company simply omitted the statistic from their press release announcing that the EPA had legally certified the Karma--meaning it can now be sold to retail buyers.

Fisker said the EPA had rated the Karma at 54 MPGe (MPG-equivalent) when running on electricity from its battery pack, and that the EPA-rated electric range would be 32 miles.

20 mpg omitted from release

But the other half of the window sticker--the 20-mpg rating for a Karma running on power from its range-extending gasoline engine--appeared nowhere in the release.

The only other series hybrid on the market, the 2012 Chevrolet Volt--with a less powerful electric motor and smaller gasoline engine--is rated at 94 MPGe in electric mode, and 37 mpg on gasoline, with an electric range of 35 miles.

The EPA's "miles-per-gallon-equivalent" is calculated based on how far an electric car can travel on battery energy equivalent to 1 gallon of gasoline. The most energy-efficient electric car in the U.S. is the 2012 Mitsubishi 'i' minicar, rated at 112 MPGe.

Will critics pounce?

Electric-car advocates privately express concern that critics both of electric cars and of the DoE low-interest loan program that helped fund Karma development will jump all over the gas-mileage figure, using it to criticize DoE efforts to aid advanced vehicle technologies.

Dr. Steven Chu, U.S. Secretary of Energy

Dr. Steven Chu, U.S. Secretary of Energy

Broadly, loans through the $25 billion DoE program go toward retooling existing plants at least 20 years old to build vehicles with fuel efficiency at least 25 percent higher than current cars.

In September 2009, Energy Secretary Steven Chu announced that the DoE would grant Fisker Automotive $529 million in low-interest loans through its Advanced Technology Vehicle Manufacturing program.

A total of $8 billion in loans had been awarded in June 2009, with the largest sums to Ford and Nissan. Here's the list of automakers granted loans to date:

FORD [NYSE:F]

2012 Ford Fusion Hybrid

2012 Ford Fusion Hybrid

Enlarge Photo

NISSAN [NSDQ:NSANY]

  • Amount: $1.6 billion, awarded in June 2009 (in the end, Nissan used only $1.4 billion)
  • Work Funded: Retooling of Tennessee assembly plant to build Nissan Leaf electric car, plus construction of plant to build lithium-ion cells for battery packs
  • Gas Mileage: 99 MPGe for 2011 Nissan Leaf

FISKER AUTOMOTIVE [privately held]

  • Amount: $529 million, awarded in September 2009
  • Work Funded: $169 million for engineering integration work on the Karma; $360 million for development of a mid-size extended-range electric vehicle, to be built in a former GM plant in Wilmington, Delaware
  • Gas Mileage: 54 MPGe for 2012 Fisker Karma in electric mode; 20 mpg in range-extended mode

2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

Enlarge Photo

TESLA MOTORS [NSDQ:TSLA]

  • Amount: $465 million, awarded in June 2009
  • Work Funded: Engineering and assembly of the 2012 Tesla Model S all-electric sport sedan, in a former GM-Toyota plant in Fremont, California, as well as battery-pack assembly facilities
  • Gas Mileage: The 2012 Tesla Model S is not yet in production and has not been rated by the EPA

So does the 2012 Fisker Karma's low EPA mileage rating set a bad example for the type of innovation the DoE loan program is meant to promote?

Certainly the Karma can plug into grid power to travel purely on electricity, which no other luxury sports sedans can do. And its 20 mpg is no worse than, say, the 2012 Mercedes-Benz CLS 550, with its combined EPA rating of 20 mpg.

But we suspect the perennial drumbeat of criticism and contempt for electric cars will continue, especially given another DoE loan in the news of late: Solyndra.

Ray Lane takes delivery of the first Fisker Karma

Ray Lane takes delivery of the first Fisker Karma

Enlarge Photo

What do you think? Is the Karma's 20-mpg gas mileage a liability for the DoE low-interest loan program? Is it appropriate for the DoE to make such loans in the first place?

Tell us what you think in the Comments below.

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Comments (26)

  1. MichaelThwaite avatar Michael Thwaite Posted: 10/19/2011 5:51pm PDT

    I agree, the critics of the program might will brand the Karma as a rich mans plaything that exists only to green wash the owner. That'll be the first round.

    The second round will come when Fisker produces the station wagon version that turns out to be even heavier.

    The final blow will come when the company fails to meet the re-payments.

    I expect loans to fail, at least some; the government is still creating some stimulus in the failures as well as the successful ventures, just nothing like as much.

    I believe that Fisker still has an out; either create a Gas only version to sell to those that just love the shape & style - though this can't be funded by the loan money and/or loose some weight and create an electric only model.
     
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  2. Roy_H avatar Roy Harvie Posted: 10/20/2011 5:04am PDT

    Although I am not a Fisker fan, I disagree with your points. There are already 3000 customers willing to pony up $100k for a car they have never driven and has no long term reliability record. But this is designed/built by the same company that builds Porsche Carreas, so that should assure high quality.

    They have already proven that they can market the niche Karma, it is the coming Nina I am a little more pessimistic about with grand claims and no obvious method to meet them. I think they will find the Nina far exceeding their price target, and be scrambling to find ways to reduce price.
     
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  3. CDspeed avatar CDspeed . Posted: 10/20/2011 6:00am PDT

    Correction Valmet was hired by Porsche to build the Boxster and for a time also built the Cayman.
     
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  4. fb_1001015277 avatar John Briggs Posted: 10/19/2011 6:48pm PDT

    I would say that if either Tesla or Fisker turns out to be successful, the government's track-record would be pretty good. If they both fail, it seems like a waste.

    If the Fisker Kara is priced at $100,000 each (roughly) and there is a $529,000,000 loan that means that 5290 cars need to be sold just to cover the loan, and perhaps 10 times that to make a profit. Tough economics in the cars business.
     
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  5. Roy_H avatar Roy Harvie Posted: 10/20/2011 4:56am PDT

    True but the loan was for the Nina, not the Karma. The Nina is supposed to be half price and much higher volume.
     
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  6. fb_100002544459353 avatar Ramon Leigh Posted: 10/19/2011 7:27pm PDT

    Of course, the MPGe rating is pure meaningless nonsense, since one gallon of gasoline can only produce around 10 kWhrs , or roughly 35 to 40 miles of driving range for the Volt.
    Originally the Fisker claimed it would have 60 miles of range off its battery pack - they probably figured to use all its capacity, I suspect, then found out different. Much the same as GM finding out that the battery would cost roughly double what they originally thought.
     
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  7. fb_100002544459353 avatar Ramon Leigh Posted: 10/19/2011 7:37pm PDT

    The govt has already flushed around $500 million down the tubes on Solyndra, a company that apparently everybody except DOE knew was a goner, and also disposed of more than a billion on the brainless "weatherization program", and also some wind projects that failed and some solar thermal projects that have
    been cancelled. The Fed's job is not to bet taxpayer money, especially on things that serve little purpose. Exactly what
    national good is achieved by subsidizing $100,000 second cars for our wealthy neighbors? If you want to support R&D for EVs, the technology that is critical is battery technology, not automobile technology. We know how to build cars. Subsidizing EV purchases is an obscenely stupid way of supporting the technology.
     
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  8. JakeY avatar Jake Y Posted: 10/19/2011 11:25pm PDT

    The government is subsidizing promising tech so we can have sustainable energy, which isn't "little purpose". This includes outright grants to battery (and other alt tech) research.

    The government is also supporting implementation of such tech through loans (not grants) to companies. These loans include both battery companies and EV companies. But given they are loans that have to be repaid with interest, I wouldn't call them subsidies. In the Karma's case, $169.3mil of loans went to US suppliers, but none directly to it's assembly (which is in Finland).
     
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  9. JakeY avatar Jake Y Posted: 10/19/2011 11:51pm PDT

    The rest of the $528.7mil DOE loan goes to the cheaper Fisker Nina.

    The $7.5k tax credit was build with competition in mind. If the govt gave it to the battery makers directly, they would be picking winners and can't guarantee it ends up in cars.

    If the govt set a price ceiling, that disadvantages newcomers like Fisker & Tesla, which don't have economies of scale, and must start at the top of the market to survive.

    Thus the credit provides $7.5k per 16kwh+ car. High price/low volume car companies will get less subsidy overall, but to the battery industry, it still supplies $7.5k per 16kWh+ battery pack regardless. The market can then work out who wins and loses, and the govt has accomplished the goal of jumpstarting a plug-in market.
     
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  10. TogetherinParis avatar Ross Nicholson Posted: 10/19/2011 7:35pm PDT

    Solar, wind, and electric vehicle industries must be subsidized, because we must clean up this planet.
    If the carbon-based industries would pay back their subsidies, bail outs, and pollution costs going back 90 years, THEN we could afford not to subsidize the new industries of electric cars and renewable energy.
     
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  11. Roy_H avatar Roy Harvie Posted: 10/20/2011 5:18am PDT

    Gotta put a plug in here for the LFTR. Liquid Flouride Thorium Reactors are a much better alternative to solar and wind. It promises to be the cheapest nuclear and even cheaper than coal. LFTRs produce no long term radio-active waste and are inherently safe. See: flibe-energy.com
     
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  12. James Davis avatar James Davis Posted: 10/20/2011 4:45am PDT

    I don't think the DOE is so shaky that one car will bring it down to the ground. If one car could've brought the feds to their knees, the Volt would've already done that. From looking at the loans above and how they are being used and the great success of Nissan and already the great success of Tesla with its battery, I don't think the Karma has anything to worry about and the DOE's loans can already be considered successful. EVs and battery technology need those loans and they will get them and one car will not ruin it for everyone else.
     
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  13. Roy_H avatar Roy Harvie Posted: 10/20/2011 4:52am PDT

    I don't think that people who can afford a $90k car are particularly concerned about fuel economy. They can still be proud of driving 32 miles pollution free. Personally, I think the Volt is a better car all around, but criticizing the Karma for trading off economy for performance is ridiculous.
     
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  14. MichaelThwaite avatar Michael Thwaite Posted: 10/20/2011 5:12am PDT

    I think it's important to note that the loans aren't set up to fund potential companies in areas that might be beneficial. The loans are only given to companies that can demonstrate that, all being equal, they'll be successful without the money. The money is leant to them accelerate the business; get Solyndra, Tesla, Fisker shipping product sooner.

    Solyndra's failure actually demonstrates that the government is not throwing money away blindly. The balance sheet looked ok, the product innovative & promising. The company started up and was killed in the market place by Chinese subsidized product. If the govt wanted to simply spend they'd have matched the Chinese subsidy. They didn't, Solyndra died.

    Should the govt have stept in?
     
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  15. fb_637219902 avatar Darryl Siry Posted: 10/21/2011 7:43am PDT

    Michael, that's what Solyndra would like you to believe, but their costs and therefore pricing were so high that they were undercut by US producers of Solar as well. So the "killed by the chinese" meme is a convenient cover.
     
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  16. MichaelThwaite avatar Michael Thwaite Posted: 10/21/2011 8:10am PDT

    I did hear that. Whilst the Solyndra product was high priced, it was high efficiency. I know a chap nearby that did the price/performance comparison and still picked Solyndra for a huge install.

    To be honest I'm not absolutely up to speed on the details so may be a victim of the 'meme'.
     
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  17. fb_100002441833924 avatar George Parrott Posted: 10/20/2011 6:19am PDT

    I am not critical of the DOE loaning $ for such development, not earlier and not now. I am specifically critical of the Karma design engineering that leads to such a low MPG and range outcome. For me, it was obvious that the ICE selected for the Karma was not an "economy sensitive" choice, but I would not have guessed it would be rated THIS bad. ER-EV designs, IMHO, should integrate the least powerful/more frugal ICE commensurate with keeping the vehicle functional when the battery pack depletes. I am still leaning to the "French" approach of integrating a diesel engine to complement the electric motor of a hybrid drivetrain. I had been seriously budgeting for an upgrade from our Volt, but the Karma is "off the radar" now.
     
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  18. fb_637219902 avatar Darryl Siry Posted: 10/21/2011 7:45am PDT

    George - you are totally right. The thing that makes no sense on the Karma is that the engine is a 2.0L turbo, the same setup (diff brand) as my EVO that gets 19mpg highway. From day one it made no sense for them to select such an inefficient (and loud) engine for this purpose.
     
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  19. MichaelThwaite avatar Michael Thwaite Posted: 10/21/2011 8:17am PDT

    I think that the root of the mistake was to choose simplicity over efficiency. There was no way imo that the engine driving a generator to charge batteries and power the motor was going to be as efficient as simply taking the rotational energy straight to the wheel. That, and to your point about the engine choice; pushing 260BHP out of a 2.0L engine means high turbo pressures, low compression engine and heavy internals.
     
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  20. fb_100002494343393 avatar Jason Hendler Posted: 10/20/2011 7:26am PDT

    Now that I’ve had 24 hours to sit and digest the news, I have better perspective.
    When the Volt styling ended up different from the prototype, everyone said it wouldn’t sell, yet GM is selling all it can make. When GM reported that the Volt actually engages the engine directly to the wheels it rare instances, everyone said it wouldn’t sell, yet GM is selling all it can make. When the EPA reported that the Volt would get 35 AER and 37 mpg CS, instead of the 40 AER and 50ish mpg CS as everyone had expected, everyone said it wouldn’t sell, yet GM is selling all it can make.
    When the EPA reported that the LEAF would only go 73 miles per charge, instead of the 100 mileseveryone said that it wouldn’t sell, yet Nissan is selling all it can make.
     
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  21. xecretcode avatar Nick Prudent Posted: 10/20/2011 8:25am PDT

    Yeah, great recap. Reminds me of the news cycle after each Apple announcement. "The iPhone4S will flop: it looks the same!". Cue to Apple selling 4Million units on first weekend.

    The general public doesn't listen to crittics & crittics don't buy cars.
     
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  22. fb_100000351085371 avatar Richard Joash Tan Posted: 10/22/2011 7:14am PDT

    I agree, Jason. that cursed Limbaugh and the Karma, must be des-TROH-YEDD, so the Leaf and the Volt will once again sell like pancakes, for future gener-RAH-SHIONS.
     
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  23. fb_100002494343393 avatar Jason Hendler Posted: 10/20/2011 7:28am PDT

    While all these companies failed to manage / meet expectations, they are all selling all they can produce in the near term. You can’t say that about Th!nk, and other EV automakers who totally missed the boat.
     
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  24. xecretcode avatar Nick Prudent Posted: 10/20/2011 8:16am PDT

    I give them credits just for actually producing the car. Extra points if the build quality is on par with BMW.

    I believe Fisker (more than Tesla) was created to be sold to BMW, Audi or Daimler as a turnkey luxury EV brand. Their biggest asset is the exclusivity of the brand. So on that basis, mission accomplished.
     
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  25. Ebarneyr avatar Emerson Robinson Jr. Posted: 10/20/2011 9:31am PDT

    A 20 mpg for gas mode is a combined HWY/City mileage. Can you find out for me what the EPA Hwy gas mpg and the EPA City gas mpg are?
     
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  26. fb_100000124280289 avatar Arie Korving Posted: 10/20/2011 2:08pm PDT

    Another blog post mentions that these cars are made in Finland with motors and batteries sourced from China. I don't mind people using their own money to build rich man's toys, we know that people like Al Gore, Leonardo DiCaprio and other fat cats can afford cars in this price range, but should the American taxpayer subsidizing their conspicuous consumption?
     
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