Manufacturing Super-Luxury Autos in the US, and Hoping for Karma Points
Fisker Automotive, the maker of the Karma luxury hybrid electric vehicles that counted celebrities among its fans and the U.S. Department of Energy among its benefactors, flamed out in 2013 after selling 2,300 cars across 20 countries. The following year, Wanxiang Group, a Chinese auto parts conglomerate, bought the rights to Fisker’s designs, engineering and manufacturing, as well as the Karma name.
James Taylor, a veteran GM executive, joined the new company, called Karma Automotive, in 2014, helping shepherd the move of the old Fisker vehicle assembly from Europe to Riverside, Calif.
At the Society of Automotive Analysts’ annual Automotive Outlook Conference on January 8, Taylor talked about where Karma Automotive is headed, now that its $130,000 hybrid electric vehicle, the Revero, is in the early stages of production. The company’s workforce has grown from 20 carryovers of the old Fisker to about 1,000 employees today.
The immediate goal is to “bring the brand back into business,” then “bring more cars to market and create some business sustainability,” Taylor told the crowd. “It’s a pretty simple direction and it’s up to us as the leadership team to fill in the blanks.”
On Karma’s Workforce
One would think it would be an easy sell to [entice job candidates] to come to California. But it’s not. Detroit feeds on itself, loves itself and people love living here and being in the industry. You go to a normal city, like Newport Beach (Calif.) where we are, and it’s not as auto-centric and consumed with the business. Funny enough, we’ve had quite a challenge drawing people out. With the [auto] industry booming, people are doing well [in Detroit]; there’s lots of employment if you’re a good engineer. So it’s been quite challenging and also competitive for us to draw people out there. But we have grown to the fighting mass that we need to be launching our vehicles and to be successful with the first set of portfolio editions.
On Karma’s Manufacturing
We decided to bring manufacturing back here to America. Manufacturing was done in Finland. It was contract manufacturing, and our opinion was to be a credible OEM, to fulfill our first objective, we needed to own our own manufacturing—and do it literally in our backyard.
We literally went all over the United States, checking all of the big states that want to write huge checks to incentivize you to come. But at the end, the conclusion was non-economic.
It was strategic to say that our best shot at high-quality, quick turnaround with our engineering solutions—which is the real part of the auto industry—was to be very close to our engineering headquarters, and where the bulk of our people would be.
So we built a brand new plant in Riverside. We moved over all the tools—the body shop tools came from Finland, but other than that it’s a brand new paint shop, brand new general assembly that’s purpose-built for very low volume.
Our volume is less than a rounding error [compared to the big OEMs]. There are no real plants in this country that specialize, as they have for 100 years in Europe, building Lamborghinis, Maseratis and Aston Martins at extremely low line rates and annual volumes. So we had to be creative and look around to find a manufacturing solution that actually fit a completely different formula than all the other U.S. [auto] plants.
On Getting Things Off the Ground
We’ve made 50, 60 cars, so we’re still in the engineering part of the production that goes to high mileage testing, miles on the road. Software, over-the-air updates, debugging, validation testing—all of that. Cold weather testing—some of my guys drove up here over Christmas and produced a pretty good long list of cold-weather testing [issues]. As far as the plant’s considered, it’s validated, and it’s moved through its stages. We’re still in the final stages of engineering validation, so you should be seeing cars in the next few months.
On Karma’s Customer Base
A good start for us and a huge part of the asset purchase wasn’t just part of the physical assets; it was buying those original customers. A lot of the original owners are still driving their Fiskers and loving them. You think what they had to go through to survive with their vehicles as far as no service, no dealers, no parts and they still maintained and kept those vehicles—these are super-passionate owners.
We went around the country several times having parties, one-on-ones, meet and greets, cocktails, and meeting at dealers—every avenue you can think of to understand what really kept these people so passionately attached to their car and what they were looking for in their next car. … Overwhelmingly the first thing that came up is good looks. They want to stand out in the normal “sea of luxury vehicles” in northern California.
Luxury is about 10% of the U.S. market. Only 40,000 vehicles sold in this category are ultra-luxury. A “sliver of a sliver” are the people we’re going after. So that out of necessity has to be extremely surgical marketing. With the success of the Bolt, the Leaf, the Tesla, I think the [electric] space has been validated enough that people aren’t viewing it as a big challenge, but still a relatively small space.
