Karma Automotive partners with BMW to survive in the tough global auto market

Karma AutomotiveKarma Automotive is transitioning beyond the original Fisker Karma electric-drive system through a new partnership with BMW, using its latest powertrain components. Karma, which recently opened a manufacturing plant in California, plans to begin selling its flagship luxury car late next year that will start with a $115,000 price tag. Owned by Chinese auto parts giant Wanxiang Group, Karma Automotive has contracted with BMW to supply its battery charging system and some of its electric-drive technology.

Sharing components through automaker alliances has become a common practice in global auto manufacturing in recent years. With BMW’s successful i Series electric drivetrain used in the i3 and i8 models, it was probably inevitable that a partner company entering the luxury electric vehicle space would make an alliance with the German automaker.

For startups like Karma and Tesla Motors, relationships with large, established automakers has been essential for breaking into the capital-intensive, competitive automotive space. Tesla was able to go that route to cut time and cost through acquiring the Lotus chassis for the Tesla Roadster. Tesla also gained investors and corporate clients selling its powertrain components to Toyota and Daimler for their electric vehicles. While the Tesla/Toyota deal is ending, the Japanese automaker’s investment in Tesla, and turning over its old NUMMI plant in Fremont, Calif., to Tesla, were important steps for the startup electric carmaker to survive and move forward.

Karma’s battery will be provided by A123 Systems, a company Wanxiang also purchased out of bankruptcy. A123 was the original supplier to the Fisker Karma, but has developed a new battery for the Karma model coming out late next year. BMW will supply high-voltage battery charging systems and a wide range of hybrid and EV systems.

The year 2012 was devastating for Fisker Automotive and A123 Systems. In January 2012, 239 Fisker Karmas were recalled due to A123 battery defects blamed for causing fires under the hood. In March of that year, Consumer Reports called the Karma “undrivable” from its testing site. The year wrapped up in November with Hurricane Sandy causing a New Jersey port to be flooded, which took out more than 300 Karmas parked there waiting for carrier trucks.

Karma Automotive thinks that the alliance with BMW will lead to other new vehicle announcements, according to Karma Chief Marketing Officer Jim Taylor. One of them will be a battery-electric model. “Carmakers buy parts from other carmakers, especially in expensive areas like powertrain technology. As we launch the vehicle under the new name Karma, using BMW components will be a big help to the brand,” Taylor said.

Karma Automotive will be assembling its cars at its Moreno Valley, Calif., 555,670 square-foot facility.  Its headquarters office is located in Costa Mesa, Calif. The company currently has about 300 employees, with about 40 working at the plant.

Chinese automakers are expected to play a vital role in the future of electric vehicles in the U.S. and China. Along with Wanxiang Group bailing out Karma Automotive and A123 Systems, there are several other alliances picking up steam:

  • Santa Rosa, Calif.-based three-wheel electric carmaker Zap nearly went out of business until its merger a few years ago with Chinese company Jonway Auto. Dong Feng Motor Corp. expects delivery of at least 3,000 electric vehicle minivans from Zap and Jonway by Dec. 31, 2015. Dong Feng expects its order to increase to at least 2,000 units per months starting in January 2016.
  • Faraday Future, owned by Leshi Internet Information and Technology Corp., is developing an electric vehicle to compete with rival Tesla Motors. The start-up is based in Gardena, Calif.
  • Atieva Inc., based in Menlo Park, Calif., is also working on a new electric car. That company is also backed by Leshi, as well as by Beijing Automobile Industry Holding Co.
  • Coda Automotive, a battery electric carmarker based in California, has gone bankrupt. Coda had partnered with Chinese battery company Lishen, and carried that technology over to its Coda Energy battery energy storage company after Coda Automotive went out of business.
  • Chinese automaker BYD, which impressed Warren Buffet’s Berkshire Hathaway enough to bring them in as a major investor, has set up U.S. headquarters in Los Angeles. BYD is lining up contracts to deliver electric buses to transit agencies in the region.

Big Picture: Archrivals Tesla and BMW cooperating on EV charging, What might Iraq conflict mean for gasoline prices?

BMW i3 vs. Tesla Model STesla Motors took more steps in sharing technologies, one of them taking place through meetings with its top competitor in the luxury electric vehicle space. Executives from Tesla and BMW met last week and discussed working together on charging stations that could fuel different types of electric cars. The automakers discussed ways to raise popularity of battery electric vehicles to overcome consumer stumbling blocks related to range anxiety, having access to enough charging stations, and how long it takes to charge them. “Both companies are strongly committed to the success of electro-mobility and discussed how to further strengthen the development of electro-mobility on an international level,” a BMW spokesman said in a statement. Tesla CEO Elon Musk said there had been talks with BMW about how to promote EV adoption, and how to make better use of Tesla’s network of charging stations. (Editor’s note:  there’s also rumor that Nissan would like to join these conversations with Tesla and BMW.)

In that spirit, Musk posted a statement on the company’s blog last week that Tesla’s wall of patents has been removed: “in the spirit of the open source movement, for the advancement of electric vehicle technology. Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology.” Musk has also recently made statements about EV charger companies taking up its “Supercharger” standard for fast charging; fast chargers will need to have higher power levels and shouldn’t charge people on a per-charge basis, he said. And in other news, Tesla had a favorable comment made by the automakers’ trade group, the Alliance of Automobile Manufacturers about the state-by-state legislative battles dealers are having with Tesla over franchise laws. The legal balance is weighted too heavily toward dealers and needs to be balanced out. “At the request of local dealer groups, states set up a labyrinth of protectionist laws that make the car-buying experience difficult and costly for our customers,” said Gloria Bergquist, a spokeswoman for the Alliance of Automobile Manufacturers, which represents 12 automakers but not Tesla.

And in other clean transportation news……….

  • What do energy experts think about the conflict in Iraq and how it may affect gasoline prices? What’s the latest on gasoline and diesel prices, and alternative fuel prices? Check out coverage in Automotive Digest. And for charts and market analysis, subscribe to Green Auto Market – Extended Edition, and you’ll receive that June issue by email.
  • Municipal Equipment Maintenance Association, Long Beach Clean Cities, and CleanTech OC are hosting a symposium with the title “Clean Transportation: Stepping on The Gas.” It will look at how industry players are moving that dial further forward and the effects of that in Orange County. It’s taking place next Thursday, June 19 from 12:30 to 6:30 at Brandman University in Irvine. Here’s a link for registering. Hope to see you there.
  • First responder training was held at the City of Los Angeles’ General Services Yard by Rio Hondo College Professor John Frala.The group was made up of technicians, body shop technicians, training managers, supervisors, and Los Angeles parking enforcement. Three technicians in attendance were Rio Hondo Automotive Graduates working for the City of Los Angeles.  The program, funded through a US Department of Energy/Clean Cities grant, also focused on second responders providing towing and storage. California Fuel Cell Partnership’s Keith Malone attended and showed the new Hyundai Tucson Fuel Cell.
  • Check outNew Technology Reinvents Our Wheels” – in the latest Discover Magazine, written by Green Auto Market editor Jon LeSage. As the article’s intro says, “The future of driving is all about connectivity, sleek designs, and zero emissions.”
  • Minnesota is the first state nationwide to require its investor-owned utilities to offer a special rate for off-peak (overnight) EV refueling. Beginning in 2015, 1.3 million households will have access to a discounted rate for electric vehicle (EV) refueling. These utilities will also provide customers the option of zero-emissions EV refueling with renewable energy.
  • Georgia is now offering buyers of new electric cars a tax credit of up to $5,000, which is on top of the $7,500 income-tax credit offered by the Federal government. Atlanta residents get other incentives as well, including driver-only carpool-lane access and several charging stations. Georgia Power Co. also offers electric-car owners a low off-peak rate of about 6 cents per kilowatt-hour.
  • For those Californians looking for incentives, Honda just announced that those purchasing a new Civic Natural Gas vehicle are eligible for a $1,000 purchase credit provided by the California Energy Commission. Drivers will also get a “diamond lane” sticker – qualifying for single-occupant access to carpool lanes.
  • Ford Motor Co. and H.J. Heinz are working together to find more sustainable composite materials for use in vehicle manufacturing – with tomato fibers now being added to Ford’s list. Dried tomato skins could become the wiring brackets in a Ford vehicle or the storage bin a Ford customer uses to hold coins and other small objects, according to Ford and H.J. Heinz.
  • Six hydrogen production R&D projects selected yesterday by the US Department of Energy aim to produce, deliver, and dispense hydrogen at less than $4 per gallon gasoline equivalent; $20 million in grants were awarded.
  • National Biodiesel Board CEO Joe Jobe talked about the politics of the latest renewable fuel standard delays.
  • Why fleets can save $16,0000 in lifecycle cost using an electric vehcle.