Fisker's new owner teams up with Lutz on V-8 Karma

WILMINGTON, Del. (Reuters) -- Fisker Automotive's new owner says the Karma sports car will come roaring back with a supercharged V8 engine -- with the help of former General Motors executive Bob Lutz.

The U.S. unit of Wanxiang Group of China received approval on Tuesday to acquire Fisker's assets for $149.2 million. Plans to revive the Karma as a traditional gas-guzzling sports car were revealed in U.S. Bankruptcy Court documents and by a person briefed on them.

Fisker, founded in 2007, sought to plant its flag as the first manufacturer to put a hybrid engine in a sports car with an eye-catching design. Celebrity backers included movie star Leonardo DiCaprio, who was drawn to the project by his concern about climate change. After technological glitches and management missteps, Fisker ceased production in 2012.

Lutz, a high-profile critic of Fisker's environmental approach, will get a chance to prove his contention that luxury car owners want firepower under the hood more than a reduced carbon footprint.

Wanxiang plans to team up with Lutz and his partner Gilbert Villarreal, who have established VL Automotive. Lutz' involvement with the Karma goes back several months, but he wasn't linked to Wanxiang's bid until now.

'Soul of Fisker'

In a presentation to creditors, Wanxiang called VL the "soul of Fisker" and praised the company for building the "first true American luxury grand touring sedan in decades, the VL Destino."

The Destino takes a Karma body and combines its external beauty with the internal brawn of a Corvette ZR-1 drive train, to produce an car that can hit 200 miles per hour.

Lutz did not immediately respond to a request for comment. Last year, he conceded in a blog post for Forbes.com that a thundering Destino was not going to appeal to everyone.

"Some 'greenies' are already hyperventilating on blogs over the obscenity of converting an 'earth-friendly' electric car to gas. What they don't realize is that their fanatical all-organic-tofu enthusiasm isn't shared by the bulk of the luxury-car buying public," Lutz wrote in the January 2013 post.

At the time, Lutz said he might price the Destino at $180,000, compared to the $100,000 tag for a Karma.

The plan is a far cry from the initial vision for a Fisker as a luxury "green" car company. The U.S. Department of Energy threw its support behind the original plan by providing Fisker with a clean-energy loan of up to $529 million to jump-start production at a former GM plant in Delaware.

Wanxiang insisted it will not totally abandon Fisker's green car roots. In its presentation to creditors, Wanxiang said it plans to build hybrid Karmas along with Destinos, and will continue to develop next-generation cars combining battery power with a gasoline engine to extend the vehicle's range.

Wanxiang bought Fisker's battery supplier, A123 Systems, in 2013 through a similar bankruptcy auction process. In court documents, it called A123 the "heart of Fisker."

Restarting production

Wanxiang plans to restart auto production in the coming months, first at Fisker's plant in Finland. After working through the inventory in northern Europe, it will begin to produce cars at VL's facility in Auburn Hills, Mich., near Detroit. The company has also mentioned making use of the Delaware plant.

Wanxiang emphasized a slow-growth approach to skirt some of the problems that dogged Fisker. The company anticipates selling 1,000 combined Karma and Destino cars in the United States in first 18 months, and another 500 Karmas in Europe.

Fisker sold 1,800 Karmas before it suspended production in 2012, falling far short of initial projections that it would sell 11,000 sedans by early 2012.

The company burned through more than $1 billion in private investment, in addition to the U.S. government loan, which had $168 million outstanding when Fisker filed for bankruptcy.

A U.S. Bankruptcy judge ordered Fisker's assets be put up for sale to raise money for its creditors.

Despite the troubled history, there was intense bidding for Fisker's assets, a collection of patents and designs, a dealer and customer network and production facilities.

Wanxiang and its founder Lu Guanqiu outbid a company controlled by Richard Li of Hong Kong in a battle of Chinese billionaires. Bidding started at $55 million and went through 18 rounds before Wanxiang emerged victorious on Friday.