Fisker's rebirth benefits electric vehicle industry

Automaker has opportunity to break down barriers

Tesla Motors Inc and Fisker Automotive Inc, both pioneers in the electric car industry, both recipients of grants from the US Department of Energy, started down the same road only to arrive at very different destinations.

Tesla's vehicles made it into the garages of luxury homeowners. Fisker ended up getting sued by its investors.

In February, Wanxiang Group, a Chinese automotive components manufacturer led by well-known businessman Lu Guanqiu, acquired Fisker shortly after purchasing the assets of the company that once supplied Fisker's batteries, A123 Systems LLC.

It's expected that the half-blooded Fisker, owned by China but created in the US, will soon enter the Chinese market, though a question remains - will Chinese consumers embrace Fisker?

In short-cycled industries such as computers and information technology, there are many Chinese companies exploring the global market. However, in long-cycled industries, there are few Chinese corporations with a strong international presence.

By combining electric car components from different component manufacturers, the "hybrid model" advocated by Wanxiang Group deserves more attention to determine whether it will succeed and whether it is worth copying.

Only six years passed from Fisker's founding to its bankruptcy. In 2006, Danish designer Henrik Fisker created the electric car company. Soon after, the company's hybrid electric model, called the Karma, was made public. About 3,000 fervent followers, including actor Leonardo DiCaprio, paid the deposit and awaited the first Karmas to roll off the assembly line.

Fisker was known for its streamlined design. Almost all of its core components were sourced from other enterprises such as A123 Systems. Even though Fisker's vehicles were assembled in Finland, it didn't stop the US government from offering the company $528 million in loans in 2009, far more than it offered to Tesla. Fisker also received $600 million in venture capital.

No more than 3,000 Karmas were ever delivered, however. The company had to stop manufacturing the vehicle because of a battery problem.

Fisker was focused on design, but it turned out that its core value was also the seed of its failure. Although they are totally different from traditional automobiles, electric cars still require a smooth breaking-in among different components. It took a century for the auto industry based on the internal combustion engine to develop. Many mistakes were also made along the way.

Before it went bankrupt, Fisker used batteries made by A123 Systems, which was co-founded by Yet-ming Chiang, a professor at the Massachusetts Institute of Technology. In October 2012, A123 Systems applied for bankruptcy protection after batteries turned out to be fire hazards.

It was around this time that Wanxiang Group turned up. In August 2012, Wanxiang Group provided a considerable amount of financial aid to Fisker, and offered to purchase 80 percent of its shares for a total $465 million. Despite some resistance from the US government, Wanxiang managed to win A123 Systems with a $260 million bid after abandoning its government-related business.

Wanxiang went through a similar process when it bid for Fisker. A bankruptcy court in Delaware made it a drawn-out case. But the patience of Wanxiang paid off. Although there was some controversy over Fisker's value and its technologies, Wanxiang's experience in acquiring overseas companies can serve as a model for other Chinese companies to follow.

Chinese companies have already bought assets around the globe. The next challenge is to map out a global marketing campaign. Wanxiang's further success will largely depend on whether it can step up integration of technology, corporate structure, business strategy and global marketing.

The new Fisker needs the US market, but vigorous growth should occur in China. From the very beginning, Fisker was Tesla's rival. Nowadays, as Tesla builds its brand in China, Chinese consumers are expecting a new brand that can compete with it.

Chinese consumers have different requirements than those in the US, such as the requirement for battery cruising capability. However, these two markets are expected to create many opportunities for cooperation. For example, if Fisker can team up with Tesla or BYD in building a nationwide battery charging network, it would be a boon for electric car owners and the industry as a whole.

Tesla knocked down its "wall of intellectual rights" shortly after Wanxiang acquired Fisker, causing a heated debate. In the future, Fisker may contribute to breaking the barrier between the US and Chinese markets, to create a better electric automobile industry.