America loves a great comeback story, and apparently, so do the Chinese. One comeback story soon to be playing on the open roads is that of luxury electric automaker Fisker Automotive.
Wanxiang Group, a privately owned Chinese auto-parts supplier, bought the troubled in early 2014 after Fisker had declared bankruptcy. The Chinese group now has plans to bring the Fisker back, and it’s investing big to do just that.
So, will the return of a high-end electric rival to Tesla Motors (TSLA) be a threat to Elon Musk and company? Will the rebirth of the Fisker Karma be bad juju for TSLA stock?
The short answer: Not likely.
Fisker Is a Serious Brand
As a confirmed Tesla stock bull, it’s hard to think of the flopped Fisker as anything more than a wannabe electric player. But I’m also a realist, and that means I don’t take any threats lightly — especially when you know how good a car the Fisker Karma actually is.
I also know that when big Chinese capital comes into a market, you had better pay attention.
On that front, Wanxiang America recently announced plans to re-launch the Fisker Karma, which will be built at a 555,670-square-foot factory in Moreno Valley, Calif. Of course, the company hasn’t yet said if the new Fisker vehicle will still be named the Karma. It also hasn’t released important details such as pricing, or any expected release date.
In an interview with the Wall Street Journal, Jim Taylor, a former General Motors (GM) executive now in charge of marketing for Fisker, said, “In many ways we are a startup again, but we have an existing product and a business.” Taylor added that the new owners are “totally invested and serious.”
One thing about the rebirth of Fisker that caught my attention is that the company plans to use new and more advanced batteries from A123 Systems.
A123 Systems’ CEO Jason Forcier told the Wall Street Journal that the new battery is set to begin production late next year. A123, which was Fisker’s battery supplier before the company declared bankruptcy, is (not coincidentally) also owned by Wanxiang.
What This Means for Tesla Stock
While the backing from Wanxiang is something to take note of for Tesla stock owners, I don’t think we’ll be seeing Fisker taking food out of Elon Musk’s mouth anytime soon.
I know this because Musk and company already left Fisker Automotive in the dust years ago.
Consider that TSLA had already been in business for several years when Fisker came on to the scene in 2007. At the time, Fisker Automotive garnered huge interest, and huge capital, from the biggest venture capital firms around, including giant Kleiner Perkins Caufield & Byers.
Fisker managed to rustle up over a $1 billion in startup capital from that initial surge. Then, in 2009, Fisker received a $529 million loan from the Department of Energy, which helped the company actually launch its Karma model in 2011.
That could have been the point at which Tesla was most vulnerable to a Fisker challenge.
Unfortunately for Fisker, that high-profile loan came at just the wrong time, as nobody wanted to hear about the government loaning money to make an electric car when the entire auto industry, as well as the banking industry, were on the brink of collapse.
Then there were technical issues with the first Fisker Karmas, such as battery failures and other new-model kinks. By November 2013, Fisker had had enough, and it declared bankruptcy.
Since Fisker’s 2013 bankruptcy, TSLA stock has just about doubled in value.
Bottom Line
For Tesla stock shareholders, the new Fisker is likely to be another case of imitation being the sincerest form of flattery — and definitely not a threat to TSLA.
As of this writing, Jim Woods was long TSLA.
