Fisker sought to make a hybrid vehicle and instead ended up riding the struggle bus. According to Reuters, Fisker has blown through $1.4 billion in its attempts to market Karma, an energy-saving sports car. Their faults essentially followed three steps.
First, the car itself wasn't profitable. Due to production delays caused by engineering flaws and "ambitious" deadlines, Fisker lost at least $35,000 on each car it sold. On top of that, the company ran up a large debt with its suppliers and continued to pay massive salaries to its top executives while laying off employees. Throw in an $80,000-100,000 event put on by Monaco and you see how responsible the manufacturer was with money.
These losses led to the U.S. Department of Energy cutting off a $529 million taxpayer-funded loan. Fisker was only able to acquire $129 million before it stopped receiving money, which brings us to the third and final final mistake: lying to shareholders.
While Fisker telling the Energy Department how broke the company was, it was also broadcasting a company capitalization of $2 billion dollars to its shareholders. The problem with that number? It included the entire $529 million loan (they didn't bother to say they lost it, instead calling it a "renegotiation") and a valuation of its plant (which the Energy Department described as "just a shell") at $700 million.
And that, friends, is how not to start a car company.