By E.J. Thomas
After two days and 19 rounds of bidding, China’s Wanxiang Group outbid Richard Li’s Hybrid Tech Holdings LLC by putting $149.2 million on the table for the assets of Fisker Automotive Holdings Inc. in a Delaware bankruptcy court. The deal was approved on February 18, but is still subject to clearance under the US Hart-Scott-Rodino Antitrust Improvements Act of 1976.
If cleared by antitrust regulators, Wanxiang will acquire 18 Fisker patents that cover grille designs, a fender vent, and electric-vehicle drivetrain technology. The deal also includes an abandoned General Motors Co. plant in Wilmington, Del. that Fisker purchased in 2010 for $20 million. Secretary of Energy Ernest Moniz has stated that the winner of Fisker’s assets will need to keep manufacturing and research in the United States.
Fisker Automotive, an automaker that produces a luxury plug-in hybrid called the Karma, first ran into trouble in 2011 when it violated the terms of a $529 million Department of Energy (DOE) loan, which stipulated that all Fisker vehicles be manufactured in the United States. When the DOE learned the vehicles were being manufactured in Finland, they froze the loan after already distributing $193 million.
Fisker stopped production of the Karma in July 2012 due to mechanical failures after only 2,500 vehicles were produced. Consumer Reports said that the test vehicle broke down after traveling just 200 miles. Some mechanical failures included battery and cooling-fan defects. Fisker’s battery supplier, A123 Systems Inc., went bankrupt in October 2012, just three months after Fisker started having trouble with its batteries. Wanxiang purchased the assets of A123 in January 2013.
After many setbacks with the Karma, Fisker filed for bankruptcy in November 2013 with nearly $1 billion of debt. Hybrid Tech, the company that entered into a bidding competition with Wanxiang, paid $25 million to take over Fisker’s defaulted loan from the DOE in November 2013 with hopes of later acquiring more of Fisker’s assets. Hybrid Tech will remain a lender to Fisker, and Wanxiang will have to pay it back.