Tuesday, October 2, 2012

Fisker Looking for Alliances to Share Costs and Technology

The AP Reports today (10/2) that Anaheim-bases Fisker Automotive is searching for partners in the auto industry, with whom the fledgling, hybrid car maker would share some of its trade secrets, but also its escalating development costs. 

Fisker and its sporty Karma has been a favorite of the eco-conscious high-end consumer (think Leonardo DiCaprio) since first entering the market in 2007. Now, with development costs skyrocketing ahead of a rumored IPO, Fisker is hoping to parlay their advanced knowledge of hybrid batteries (Karmas can travel up to 40 miles on a charge, event at high speeds) into a partnership with a more established auto company to reduce costs. 

A Karma will set the average consumer back over $100k. Tesla, a competing California-based plug-in hybrid producer, has had success forming partnerships with Toyota and Daimler AG. By doing so, Tesla reduced their costs to the point where a mid-range offering, cars selling in the mid-$50k range, became feasible. 

Our question: What does this say about the future of green auto technology? About the U.S. auto industry in general? The barriers to entry in the industry are steep, and market leaders like Toyota and GM are so entrenched, it may be impossible for start-ups here implement any sort of profitable cost structure. No doubt, demand for these autos is strong. How soon before we see more consolidation in this space and true daily-drivers, priced in the low-to-mid $20s, with plug-in capabilities?  


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