Electric-Car Bonanza Allows Irvine-Based Karma to Tap Lifeline
Wednesday, July 08, 2020
Irvine-based Karma Automotive, maker of the Revero plug-in hybrid luxury car, has raised $100 million from outside investors as the company and its parent seek to tap into an electric-car stock surge by seeking an additional $300 million.
The fresh funding coincides with at least the fourth makeover for a company formerly known as Fisker Automotive Inc. since past Aston Martin design director Henrik Fisker founded it in 2007, only to leave as it headed toward bankruptcy six years later. Owner Wanxiang Group Corp.,which bought the carmaker in 2014 and renamed it Karma, now aims to launch a new all-electric sedan, a supercar, and plug-in delivery vans.
Hoping to capitalize on soaring valuations of EV makers such as Tesla Inc. and newer entrants like Nikola Corp. and Workhorse Group Inc., Wanxiang is selling stakes in Karma to private equity partners. The Hangzhou, China-based company is committed to Karma and sees the boom in EV-maker shares as an opportunity to attract other investors, said Pin Ni, president of Wanxiang’s U.S. business.
“Karma has real production, real technology, and real dealers,” Ni said in a phone interview. “Look at Tesla’s value and you see Workhorse with their stock going up ten times recently.”
Karma will continue sales of the plug-in Revero after delivering 500 units last year, and it plans to sell the 560-horsepower Revero GTE battery-powered sedan by late spring next year, said Karma Chief Strategy Officer Greg Tarr. The GTE will offer around 300 miles of driving range. After that comes a supercar for wealthy buyers based on its SC1 concept that may boast as much as 1,100 horsepower.
Tarr said it’s a turnaround job, but he and Ni denied a recent report from the website Jalopnik that Karma was on the verge of bankruptcy. Ni said Wanxiang has invested “a couple of billion dollars” of its own money since taking over the automaker. Karma was approved for a Paycheck Protection Program loan of up to $10 million from the U.S. Small Business Administration, but Tarr said they never took out the loan.
To help cover its investment costs, the automaker plans to leverage its electric-vehicle platform by selling it to other manufacturers. The company said it will offer its drive motors, suspension, steering, battery, and electrical and other systems.
Karma’s longer-term goals include developing fully-electric delivery vehicles as well as hybrid versions that run on gasoline or diesel. By raising cash from investors in the U.S., company officials seek to reduce Chinese ownership below 50%, which would make it easier to win government fleet contracts.
“Investors aren’t rewarding you for just being a sports-car company,” Tarr said.
Karma is working on a deal with a commercial truck developer on a delivery vehicle and plans to have a prototype by the end of the year, Tarr said. If it does wade into the commercial EV market, Karma faces formidable rivals such as Rivian Automotive Inc., which is backed by Amazon.com Inc. and Ford Motor Co., as well as Workhorse, General Motors Co. and Germany’s Daimler AG.
“The market will be pretty flooded with electric trucks,” said Sam Abuelsamid, principal research analyst at Guidehouse Insights. “There will be a lot of competition.”
Karma is confident the field is still plenty open for the growing business of delivery vans.
“No one is going to buy from just one company,” Tarr said.
Category: Business News