• Jan 3, 2013
When hundreds of Fisker Karma plug-in hybrids sitting at Port Newark were destroyed by a flood of seawater during Superstorm Sandy, it was clearly an "act of God," in the parlance of the legal profession. But the reason those Karmas were there in the first place, and not delivered to happy customers is a bit more mundane.

Turns out, the Karmas were waiting at the port because they needed their cooling fans replaced. You remember the cooling fans, the ones that caused Fisker's voluntary recall back in August, right? They are why, apparently, the Karmas were sitting instead of out on the roads. Jalopnik ferreted out this little detail in the court documents:

Although more than 900 other Fisker vehicles from the same ocean shipments previously had been transshipped to inland conveyances through FAPS, the 338 vehicles remaining in port were delayed to address various service requirements. All or virtually all of the vehicles were subject to a safety recall requiring the replacement of cooling fans before they could be distributed lawfully to retail dealerships. In addition, some of the vehicles required replacement of lithium ion batteries and software updates. These requirements resulted in delays of varying lengths in transshipping the vehicles to dealers via domestic conveyances.

Fisker's senior director of global corporate communications & PR, Roger Ormisher, sent AutoblogGreen the following statement:

Fisker lost 338 vehicles in the flooding at Port Newark caused by Superstorm Sandy. Fisker has a property insurance policy with XL Insurance America (XL) and, obviously, believes that XL is obligated to cover this loss under the policy that Fisker purchased from XL. Fisker attempted in good faith to resolve its claim directly with XL but has been frustrated and disappointed by XL's denial of coverage. As a result, Fisker determined that it was, unfortunately, necessary to file a lawsuit in order to resolve this matter. Fisker is confident that it will ultimately receive adequate compensation from XL for this loss

As suggested, the vehicles, as is commonly known, had to have cooling fans replaced as part of the recall that we were doing and also all have software upgrades to current specification performed at port. We also ship from Valmet in larger shipments at a time as that is more economically viable
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  • 23 Comments
      gslippy
      • 1 Year Ago
      Fisker can't afford any more bad luck. However, the insurer is lame if they try to blame the vehicles' destruction on the recall issues making them more susceptible to fire.
        SVX pearlie
        • 1 Year Ago
        @gslippy
        The Insurer isn't going to pay for things not covered out of the goodness of their icy, black heart.
      Alfonso T. Alvarez
      • 1 Year Ago
      It all depends on the shipping conditions that were defined in the insurance policy. FAS - free alongside ship - means that the shipping insurance coverage goes to the consignee once the cargo has been unloaded from the ship. DAP - delivered at place - that would be open to interpretation, but my (NON-Lawyer) opinion would be that until delivered to the final destination would still be the responsibility of the shipping insurance coverage
        SVX pearlie
        • 1 Year Ago
        @Alfonso T. Alvarez
        If Fisker refuses to specify a final destination, and/or refuses shipping / delivery, aren't they the proximate cause for the situation? For our Logistics team, if there are additional storage fees which would be incurred, along with additional storage insurance, then those costs would have to be paid by the owner.
      Marcopolo
      • 1 Year Ago
      Good grief, what a lot of armchair experts speculating about a insurance lawsuit, the intricate details and outcome of which will be decided in due time, between either the parties involved. with out any input from media or self-appointed commentators! However, the high number of defects and mishaps Fisker Motors have experienced from it's supply chain, must create doubt about Fisker Automotive's continued existance . From the beginning, Fisker has been dogged by one supplier failure after another. It's difficult to blame Fisker's management for any individual incident. All Fiskers suppliers were well established companies with solid reputations for quality products. (even A123, was at one time considered 'cutting edge'). As a result of these component failures, Fisker Automotive has experienced expensive delays, and attracted unnecessary adverse publicity. The Fisker Karma was designed to be an American designed, high quality, EREV GT, with European styling and 'attitude'. In theory, Fisker's Karma achieves those goal's brilliantly. It's hard to identify exactly what's gone wrong, since every incident has a different origin. Fisker haters, will try to blame some systematic failure by Fisker Automotive, but a more objective analysis reveals that Fisker's management has coped remarkably well with so many mishaps. How ever unfair the circumstances, (and ignoring rabid anti-fisker prejudice), by any objective analysis, Fisker's ability to continue as an independent manufacturer is doubtful. The chances of a small, underfunded, specialist manufacturer surviving, let alone becoming profitable, once it's principle product has become tarnished, must be considered extremely unlikely. Unlike Tesla, Fisker has no billionaire owner. Nor has Fisker engineered a truly unique vehicle whose drive train can power a 'family' of vehicles. Fisker Automotive is basically as coach-builder. The appeal of it's products is styling. The weakness of Fiskers manufacturing model, is the same that has dogged so many specialist auto-manufactures over the years. Fisker's products will always be judged by the quality of big OEM products. The failure of any individual supplier, is not such a disaster for an OEM with the resources to either replace the supplier (in house if necessary) or rely on the reputation, and income from the rest of it's range of vehicles. IMHO, the most responsible action that Fisker's board of directors can undertake, is a merger (or alliance) with an OEM, or a corporation with sufficient resources to keep the marque alive. The problem with 'high fashion' vehicles like Fiskers Karma, is fashion quickly changes. These sorts of cars have a naturally short window of appeal. If Fisker can't regain momentum, (and I don't believe that's now possible without massive assistance) Fisker can't recover.
        Rotation
        • 1 Year Ago
        @Marcopolo
        It's not high quality. Its not really a GT (by performance). I have no idea why you are angry at others for commentating and then feel like you are justified in unloading 20 paragraphs yourself. If you can talk about supplier issues (apropos of nothing), then others on here can surely talk about insurance issues in an article talking about insurance issues. In the end, I don't think any quality problems even contributed to this. The reason these cars were in this lot is not because they were unable to be corrected, it's because they were unable to be sold. They didn't have buyers (even wholesale buyers, i.e. dealers) yet, so they were being stored. The fact that they hadn't fixed battery problems or fan problems yet is almost immaterial. These cars had nowhere to go, so they remained here. And then Sandy rolled in. Along the way, Fisker may not have noticed they were trying to use transit insurance to cover cars that probably weren't really in transit.
          Letstakeawalk
          • 1 Year Ago
          @Rotation
          "It's not high quality. Its not really a GT (by performance)." You're welcome to your opinion. However, many would certainly disagree. The Karma definitely qualifies as a Grand Tourer due to its ability to cover large distances at high speeds in luxurious comfort.
          Rotation
          • 1 Year Ago
          @Rotation
          Marcopolo: There's no difference. You post is full of speculation and your own conclusions too. You cloak it with statements to the effect of "any sane person would agree", but that doesn't make it your own speculation. Why is it only you are allowed to express opinion on there? What evidence do I have of why the cars are here? The fact that these cars existed, in the US and the dismal sales of Karmas mean they had extra inventory. Their statement even says this "We also ship from Valmet in larger shipments at a time as that is more economically viable." They admit they shipped over more cars than they could sell at this time. And far from it being spiteful malice, I point out how it is good business to leave the cars there, save money on shipping, don't spend money on retrofitting cars any earlier than you need to and you might even save money by not retrofitting them twice if there is a second retrofit before a car is shipped out. I give good business reasons why these cars are there, I give them credit for doing so, and you call it spiteful malice. Come on. I did not make a statement that no one in the USA wants to buy a Fisker Karma. I said these cars could not be sold. People are buying Karmas, but the rate of sales means these cars were not needed to be prepped for sale at this time. This is not an attack on Fisker sales rates, it is merely a statement about inventory management. You somehow, like many people, see your opinions as valid and factual while you say others are just speculating. And you see attacks where there are none. I would suggest you stop attacking others for their comments and look at yourself for a minute.
          Marcopolo
          • 1 Year Ago
          @Rotation
          @ Rotation Here's the difference, what you have written is speculation about an insurance claim. Speculation for which you have absolutely no evidence. All insurance claims are are complex and specific to the circumstances and details of the insurance policy. Since you, (nor I) are privy to the entire details of the claim, any speculation amounts it amount to little more than idle gossip. As for your conclusion that the reason Fisker had so many cars on the dock at that time because nobody wants to buy a Karma, again, what evidence have you to justify such a conclusion ? (outside of spiteful malice) . Do you have access to Fisker Automotive's order book ? Do you posses telepathic knowledge that no one in the USA wants to buy a Fisker Karma ? Have you contacted Fisker Automotive and verified such information ? You are entitled to express an opinion, malicious or not. (that's your first amendment right), However, opinions based on speculation without any evidence, are just idle gossip. In contrast, my opinions were also just opinions, but relevant to the automotive industry as a whole, Fisker specifically, and an attempt to analyse verifiable evidence. I may not be correct, but I at least try to draw my conclusions from known facts.
          Marcopolo
          • 1 Year Ago
          @Rotation
          @ Rotation, Well you've got me baffled ! Your last post is so full of contradictions ! I took your remark: " They didn't have buyers (even wholesale buyers, i.e. dealers) , so they were being stored. " to mean Fisker , "didn't have buyers !'' Now you say, it really means "People are buying Karmas, but..etc " ! But then you contradict yourself again, (without evidence) and state "the dismal sales of Karmas mean they had extra inventory." Who can tell, what you mean at any one time ? You also seem to be trying to have it both ways, on the one hand you say you have no malice toward Fisker, yet every second sentence of your post contains a negative statement about the Karma. You also write "Why is it only you are allowed to express opinion on there?" is answered by my statement "You are entitled to express an opinion etc" . Cutting through the hyperbole, it appears that what you are now saying, is that Fisker Automotive was using the Port holding facility as a storage facility, for reasons unrelated to transport, and that's contrary to the terms of the insurance policy. That would be consistent with the insurance companies argument. However, such an argument would have to be determined by a complex definition and interpretation of the terms of the policy, representations made at the time of contract, precedents, and a myriad of other factors. It may be that the Fisker's underwriter may simply be seeking to enjoin the Port Authority (or operator) for allowing a storage facility, beyond reasonable activity, or all sorts of other factors. As I said, you are not privy to all the complex details of this insurance dispute,( nor am I ) so any speculation is only of interest to those involved in the insurance industry. No doubt somewhere on the internet, there is a forum dedicated to informed opinion about the intricacies of insurance litigation, but on ABG, it's either idle speculation, or an opportunity to further attack an already wounded small auto-manufacturer. Fisker's problems are not as you're trying to infer, due to a lack of market for the Karma, but due to a series of supplier failures. Inevitably, the delays, recalls and doubts created by these continual mishaps will eventually tarnish the Karma's image. 'High fashion styling" vehicles, like the Karma, enjoy only a short window of popularity. Delays and problems can prove fatal.
        Joeviocoe
        • 1 Year Ago
        @Marcopolo
        Marco, I agree that speculation as to the true insurance liability is a fools errand. But there is more to Fisker's failings than mere, misfortune. There DOES appear to be systemic problems with the company and their choices so far. I've always regarded Fisker as a brilliant designer, who neglected to hire equally brilliant engineers. Entering the ranks of automakers is probably the most difficult thing one can do... Tesla had/has a very risky plan... but the key to Tesla was the fact that their Roadster could compete performance wise with ICE sports cars in the same price range. Fisker is a riskier gamble IMO since there are cars out there that are just as beautiful, and spank the Karma in performance. The Karma has the "Green" cred... but that only goes so far with rich people who don't care about spending on fuel. I wish Fisker luck, and do hope they turn things around soon. It will hurt the movement to see them fail too. We do need all the EV/PHEVs we can get... at any price range. And Fisker does have great potential.
          Marcopolo
          • 1 Year Ago
          @Joeviocoe
          @ Joeviocoe Joe, Fisker Automotive believed it had the necessary 'Engineering' expertise from Quantum Technologies supplier of it's ' Q-Drive' hybrid drive-train. Karma was originally conceived in 2006. The concept was to equip a brilliant design with components sourced from high quality suppliers, thus avoiding a great deal of capital investment, plant and equipment, and R&D. In theory outsourcing component manufacture is a great idea. However, in practice this is only true when hand building cars to order. (and with very patient clients). Fisker had problems from the very beginning. In 2008, Elon Musk launched an expensive and bitter litigation against Henrik Fisker alleging that Henrik Fisker stole Tesla's Model S hybrid technology and is used it to develop the Karma. Musk also claimed that the design for the Model S was deliberately substandard and Fisker diverted the best ideas to the Karma. In the end, Elon Musk lost the case, including being forced to pay $1,144,285 for Fisker's legal costs. But the problems continued. From the very beginning, the entire stock of unique leather used by the seat manufacturer was destroyed by fire, causing delays at Valmet Automotive in Finland. Since then problems with one supplier or another , has continued continued to plague Fisker. ( even nature, in the form of Sandy !). The Karma proved it ability to attract buyers and win awards. The problems that have dogged Fisker's reputation have been the result of being unable to control the logistics of component supply problems. If the Karma was manufactured in conjunction with a major European or Japanese OEM, it would never have attracted the hate club that seems to have formed against Fisker, and by now it's current detractors would complaining why the US can't build cars as beautiful !
          Letstakeawalk
          • 1 Year Ago
          @Joeviocoe
          "... but the key to Tesla was the fact that their Roadster could compete performance wise with ICE sports cars in the same price range." OT, but, no, it didn't. It accelerated very quickly, but top speeds and handling left much to be desired. That's why they sold so poorly.
          Joeviocoe
          • 1 Year Ago
          @Joeviocoe
          Handling was still good... not the best. but good. Top speed was of course poor, but acceleration is a much more desired trait than a top speed above 120 mph. After all, it is illegal to go that fast on public roads... and only a few people buy a $100,000 car for the drag strip. They didn't sell well for a myriad of reasons. 2008 was a terrible time economically for a startup. No credibility as an automaker at this time, delays, price increase... and the Roadster is a small 2 seater. But Tesla did manage to pull success out of the Roadster because of its true Sportscar appeal. The Karma, by contrast, has no performance credibility.
          Letstakeawalk
          • 1 Year Ago
          @Joeviocoe
          "From the very beginning, the entire stock of unique leather used by the seat manufacturer was destroyed by fire..." I'd forgotten about the loss of very time-consuming to produce leather from Bridge of Weir! Although, I do believe that was due to flooding, not fire. Faulty headlights and wiring harnesses also stalled initial production, and the Karma's exclusive eco-friendly water-based painted also proved quite difficult to actually implement. Many here blame Fisker's "choices" of suppliers, as if Fisker went bargain-basement in order cut every cost possible. What really happened was a maelstrom of misfortune from some of the world's best suppliers, who normally would never be expect to fail so spectacularly. Bridge of Weir leather DuPont Paint Visteon infotainment system A123 Battery
          Rotation
          • 1 Year Ago
          @Joeviocoe
          I'm with Lets: Roadster handling was lousy. It was a small car and got that dartiness advantage, but the actual handling was poor. It had a poor suspension too, seemingly because the underpinnings were not designed to carry as much weight as the rear battery presented. Anyway, similar to Joeviocoe, I don't think the performance was the reason the car sold nor the reason it didn't sell. People don't hot rod Tesla Roadsters. It sold because it was electric to those who wanted an EV. It didn't sell because it was electric (short range, slow refueling are a problem for many), because it was expensive, and because it only held two people (two seaters are a tiny fraction of the market). I'm not sure what's keeping the Karma from selling. It may not have a good rep amongst a certain crowd, but most people haven't heard any of that. They just don't seem to be considering it for other reasons, or maybe they get scared off after they look into it, I'm not sure.
      • 1 Year Ago
      only 20 karmas burned. the other 300+ were destroyed due to the 5 foot storm surge. those should be covered as the cooling fan had nothing to do with them being water damaged beyond repair.
        Rotation
        • 1 Year Ago
        See Doug's comment below. The argument doesn't appear to be the fan caused the fire, but that that the fire isn't covered by the purchased insurance.
      Ford Future
      • 1 Year Ago
      Upvoted for descriptiveness.
      Rotation
      • 1 Year Ago
      Sounds like Fisker was delaying fixing these cars until they needed to ready for sale. As they have excess inventory right now they could delay this. Push expenses out, bring revenues in. Good business. Not buying coverage for your cars you are storing until you need them and instead trying to pretend they are in transit may not be good business.
      Doug
      • 1 Year Ago
      I wish ABG had read the documents directly instead of taking Jalopnik's hackneyed interpretation. The important details are: "As of October 29, 2012, the 338 vehicles had been at the FAPS facility for periods of time ranging from a minimum of 80 days to a maximum of 363 days." and "Substantial numbers of the vehicles were categorized as 'unassigned' and had not been consigned to dealers." So all these cars arrived at the port before the cooling fan recall was issued and were basically being stored there. It seems a bit silly to say they were waiting for the fan replacement since Fisker had over 10 weeks to perform that service. What is more likely is that they were being stored at the port instead of being delivered to dealers due to low demand. Fisker is arguing that these cars should be considered as "in transit" in order to be covered by XL Insurance. Given that these car sat for 80+ days, that sounds like a difficult case to make. If Fisker was going to store these cars at the port, they probably should have bought some additional coverage for that specific situation.
        SVX pearlie
        • 1 Year Ago
        @Doug
        "If Fisker was going to store these cars at the port, they probably should have bought some additional coverage for that specific situation." Exactly so! Storage has its own costs for receiving, inventory tracking, term storage, and insurance.
        Rotation
        • 1 Year Ago
        @Doug
        Well, to add in what I said above, it's clear that these cars were not in transit. They were being stored until Fisker needed them, at which time they would be brought up to saleable spec and sold.
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