Fisker Karma: Fires, Recalls, Funding Problems – and a New CEO

Fisker, maker of the $100,000 hybrid sports sedan Karma, announced the hiring of a new CEO this week - and he has his hands full. The company is beset by financial worries, as well as by bad publicity surrounding quality questions. Its most recent headache is a Karma that caught fire in Woodside, California last week, becoming the second one to mysteriously go up in flames.

Ray Lane, a Fisker director, told Reuters today that the company needs $150 million if it is to keep operating.

"We need money on our balance sheet," he told the news service. "And we need money to fund the development of the next car."

The next car referred to is the Atlantic, another four-door model that Fisker had planned to put into production in Delaware by now but has had to delay. Lane indicated that, even if Fisker gets the money, it will have to lean on its investors again in 2013, or search out new ones.

This is despite the company having raised $1 billion in private funding since its inception in 2007, Reuters says.

One setback has had to do with a $529 million Department of Energy loan that the company was eligible for as a maker of alternative-energy vehicles. Fisker received $193 million before the loan was halted due to government concerns about the company's business model, according to The Detroit News.

A December recall of the first 240 Karmas to address coolant leaks thought to be a fire hazard didn't help. Nor did it help in March that the Karma bought by Consumer Reports conked out after less than 200 miles and had to be returned to the dealer on a flatbed.  

Fisker issued a statement regarding the Karma fire in California last week. The company said that, working with the Pacific Rim Investigative Group, it had determined that the fire had nothing to do with the Lithium-ion battery pack or exhaust routing, and was outside the engine compartment. The car was reportedly parked at the time of the fire, and was not charging.

There are approximately 1,000 Fisker Karmas on the road, with owners including Leonardo DiCaprio (also an investor) and Justin Bieber (it was while driving his Karma that he was pulled over for speeding from photographers last month).

The company's new CEO is Tony Posawatz, who headed Chevrolet's Volt program until his retirement a month ago. He replaces interim CEO Tom Lasorda.

"Tony is the perfect CEO for Fisker. He has been at the forefront of the industry's technological revolution and one of the few people in the world to bring an EV to mass production," LaSorda told the Detroit News. "Part of my assignment at Fisker was to recruit a long-term CEO, and I cannot think of a better person than Tony to take us forward. He is a real product guy for a product driven company."

Here's hoping.