Starting a new car company? Check out Tesla v. Fisker

Starting a new car company? Check out Tesla v. Fisker

by Todd Lassa Filed under: Corporate, Motor City Blogman, Hybrids

What's the story behind one fledgling "green" automaker suing another?

As one grizzled veteran told me, it's an easy way for an under-funded company to get capital. (These days, "under-funded automaker" sounds redundant, at least in the U.S.) Tesla Motors, which has been late getting its $98,950 electric-powered Roadster on the road, has filed suit against Fisker Coachbuild/Automotive for delaying its second car, the WhiteStar sedan. Tesla alleges fraud, breach of contract and good faith, violation of trade secrets and unfair competition against the eponymous Fisker, which has sold a handful, maybe, of kustom koachwork -- er, sorry -- custom coachwork BMWs and Mercedes-Benzes, and plans to launch its own $80,000 plug-in hybrid-electric luxury sedan next year.

Tesla's suit names Henrik Fisker and his chief operating officer, Bernhard Koehler as defendants, along with Fisker's company.

The facts are these: Tesla Motors, owned by the co-founder of Pay Pal and founder of SpaceX with the Vonnegutian name Elon Musk, says it hired Fisker Coachbuild in 2006 to design its plug-in electric-powered sedan, the WhiteStar.

Tesla says the contract was worth $875,000. The lawsuit contends that Henrik Fisker, the former BMW and Aston Martin designer, had no previous experience with hybrid technology (which raises the question, how many freelance designers out there do have such experience?).

What really seems to frost Tesla is that the company believes Fisker was working on his own plug-in lux sedan from late '06 to late '07, when it was supposed to be working on Tesla's. Which is why Fisker's January '08 Detroit showcar, the "$80,000 Karma" is important probable evidence in this case.

Fisker delivered his design for the plug-in hybrid sedan to Tesla last year.

Tesla was "ultimately presented with a poor design," says Tesla's lawyer, Adam Belsky.
Fisker and his companies received a great deal of proprietary, technical information during its work with Tesla Motors, Belsky says. In other words, Tesla will try to prove that Fisker (the man and his company) provided a substandard design to Tesla while Fisker was working on his own competing car, and then used its proprietary technology to design that car, the Fisker Karma.

What technology? "There's no way of knowing, exactly, what he took," says a Tesla spokesman. Until the case gets to the discovery stage, at least.

Tesla's suit says Tesla paid $800,000 of the $875,000 contracted, to Fisker. The suit seeks return of that money, plus an unknown amount caused by delay of its WhiteStar redesign and punitive damages against Fisker, the company and/or the man (the amount depends on its/his worth, of course).

As is typical for defendants under such circumstances, a spokesman says Fisker Automotive has no comment on the suit.

Meanwhile, both automakers continue work on their plug-in hybrids. When Henrik Fisker revealed his Karma, he said the car uses plug-in hybrid technology called Q Drive, from Quantum Technologies. CEO Alan Niedzwiecki says Quantum developed the technology for the U.S. Army's Delta Force - this will make the discovery fun.

What's been hard to believe is Fisker's claim that he'll have an $80,000 plug-in hybrid luxury sedan on the market before GM starts building its Chevrolet Volt. Never mind that his concept car was a four-door hardtop with no b-pillars.

Over at Tesla, WhiteStar development continues apace. The company's spokesman says it will get the car on the market some time in 2010, despite the delays it says were caused when the company rejected Fisker's drawings and hired new designers for the car.

Tesla has a loan guarantee from the U.S. Department of Energy to develop and manufacture green technology.

Its $250-million development costs, for the life of the WhiteStar program, will be paid for by a combination of debt and equity, the spokesman says.

Very conservatively, the Chevy Volt should cost GM at least four times that amount, including drivetrain technology. If you've forgotten how tough and capital-intensive this business is, see Angus MacKenzie's March 7 blog post, "So, how hard is it to build a car, anyway?" Or give Cerberus a call.

As for the Roadster, Tesla has had five cars in production since March 17. Its spokesman says it is about to deliver its second and third Roadsters. Anyway, if it goes to court, Tesla v. Fisker will be a wonderful insight into the quixotic world of modern day automaker start-ups.