Wanxiang Group makes $24.7m bid for Fisker Automotive
China’s Wanxiang Group has submitted a $24.7 million offer to acquire the bankrupt Fisker Automotive, with a court decision and potential auction expected by late January 2014.
Wanxiang Group, the largest automotive components supplier in China by revenue, has made a $24.7 million bid to acquire Fisker Automotive, the bankrupt US-based company known for the Karma plug-in hybrid luxury car. The bid was submitted late on Monday and is now subject to US court proceedings. The court will decide whether Fisker will be sold to Hybrid Technology LLC, a firm backed by Hong Kong billionaire Richard Li, or if the process will move to an open auction allowing additional bidders.
Wanxiang Group Bids for Fisker Automotive
Details of the Bid and Court Proceedings
A final hearing is scheduled for late January 2014. At this hearing, a judge will determine whether to approve the sale of Fisker to one of the current bidders or to open the process to further competition. If the judge rules in favour of an auction, other interested parties could still enter the bidding for Fisker’s assets and business.
Wanxiang’s bid is significant not only because of its value, but also due to the group’s plans for Fisker’s future. According to court documents, Wanxiang intends to restart production of the Karma as early as April. The proposal includes moving manufacturing from Valmet’s plant in Finland to a facility in Michigan, USA. This shift is expected to help reduce production costs and streamline operations.
Wanxiang’s Plans for Fisker and the Karma
Wanxiang claims it can lower production costs and aims to sell more than 1,000 Karma plug-in hybrid models in the US and around 500 in Europe within the first 18 months after relaunching production. By localising manufacturing in Michigan, Wanxiang hopes to revive the Karma brand and re-establish Fisker as a player in the luxury plug-in hybrid segment. The company’s strategy relies on renewed demand for environmentally friendly, high-end vehicles in both the US and European markets.
Fisker’s Bankruptcy and Loan History
Fisker Automotive began selling the Karma in July 2011, after missing its initial launch target of 2009. The company secured a conditional $528.7 million loan from the US Department of Energy. However, Fisker only drew $192 million before the government froze the credit line in May 2011 due to missed project milestones. As a result, Fisker’s financial situation deteriorated rapidly.
Operations at Fisker ceased in July 2012, and development of a second model was halted, despite company claims that the project was about 90 percent complete. By the end of 2012, the company had stopped all development activities. Fisker filed for Chapter 11 bankruptcy protection on 22 November 2013, with its assets and business subject to competing bids from Wanxiang and Hybrid Technology LLC. At the time of its closure, Fisker had produced approximately 2,450 Karma vehicles.
Potential Outcomes and Industry Impact
The outcome of the court proceedings will determine whether Fisker’s assets and the Karma nameplate are revived under new ownership or potentially broken up and sold off. If Wanxiang’s bid is successful, it would mark a significant move by a Chinese automotive group into the US electric and hybrid car market. The shift of production to Michigan could create new jobs and bring renewed attention to the Karma brand. Alternatively, if the judge opts for an open auction, the process could attract further interest from other automotive or investment groups.
The decision is being closely watched by industry analysts and stakeholders, as it may influence the future of luxury plug-in hybrid vehicles in both the US and international markets. The case also highlights the challenges faced by start-ups in the automotive sector, particularly those relying on government loans and ambitious production targets.
Summary of Key Events
- Wanxiang Group places a $24.7 million bid for Fisker Automotive.
- Competing bid from Hybrid Technology LLC, linked to Richard Li.
- Court hearing set for late January 2014 to decide sale or auction.
- Wanxiang aims to restart Karma production in Michigan and sell in US and Europe.
- Fisker previously received a $528.7 million conditional loan from the US Department of Energy but only accessed $192 million before funding was frozen.
- Fisker ceased operations in 2012 and filed for bankruptcy in November 2013, with about 2,450 Karma cars produced.
