The automaker, which hasn't produced a single car since last year, laid off about three-fourths of its workers at its California headquarters on Friday. The company issued a statement saying it is pursuing "strategic alternatives" to manage its way through its financial woes, but couldn't avoid the layoffs.
"The company regrets having to terminate any of its hard-working and talented people," the company said in its statement. "But this was a necessary strategic step in our efforts to maximize the value of Fisker's core assets."
Fisker's troubles show how hard it is to break into the auto industry. Cars cost a lot of money to develop, build, and eventually sell. They consist of thousands of parts that can act unexpectedly once customers get their hands on the vehicle -- a lesson Fisker learned the hard way after a couple of its vehicles caught fire.
It's the second alternative car maker to start circling the drain in the past few weeks. Carbon Motors, which was trying to make a high-powered fuel-efficient police car, recently packed up its belongings from its plant in Indiana and stopped operating. Its CEO, William Santana Li, did not return emails from AOL Autos.
The company stopped making its $100,000 Karma plug-in hybrid car last year when its battery supplier filed for bankruptcy protection. The automaker has been plagued with problems: Some of its cars set on fire. The Department of Energy decided it wasn't going to live up to its promise of lending Fisker $336 million. And its co-founder, Henrik Fisker, resigned resigned in March over a disagreement in business strategy.
Fisker has been looking for a investors, a buyer or a company to align with. Despite bringing in Tony Posawatz, who led General Motor's Chevy Volt development, the company has been unable to find a way to make the Karma successful.
Fisker said it has sold about 1,800 Karmas, but production was halted last year when battery producer A123 Systems Inc. went into bankruptcy protection. The Karma is Fisker's only model, but it was developing a lower-cost car - the Atlantic coupe - which would sell for around $55,000.
Friday's layoffs cast doubt on Fisker's ability to repay a loan from the U.S. Department of Energy that was made to help the automaker get started. In 2011, the Energy Department suspended the $529 million loan after introduction of the Karma was delayed due to trouble with battery packs. Fisker got $193 million from the government before the payments were stopped in May of 2011.
Fisker's troubles show just how difficult and costly it is to start a car company and introduce a new technology. Gas-electric powertrains allow the Karma to go 30 to 40 miles on battery power before a backup engine kicks in. The engine eliminates anxiety over running out of electricity.
The company was started in 2007 by Henrik Fisker and a business partner. It has raised more than $1.2 billion from private investors - including actor Leonardo DiCaprio. Justin Bieber owns a shiny metallic one, but even those big name investors and customers didn't raise the company's profile. When Beiber called 911 once to report paparazzi following him, the 911 operator couldn't understand what kind of car he was driving.
Fisker has had other stumbles. Consumer Reports magazine last year gave the Karma a failing grade, citing numerous dashboard glitches and a battery that failed while the car was being tested.
Posawatz said Fisker was overly ambitious and tried to bring the Karma to market too quickly.
Last fall, in an appearance in Detroit, Posawatz declined to say which companies Fisker is negotiating with as potential buyers or partners. But he said the company's hybrid system is very valuable to other companies. Fisker uses an engine from General Motors in the Karma and plans to use a BMW engine in the Atlantic.
Fisker brought a Karma to Detroit for that trip, and even though AOL Autos didn't get to test-drive the Karma, just sitting in it showed the car needs more refinement. The driver's door squeaked loudly when opening and closing (something a little WD-40 could have fixed before presenting the car to a hundred or so journalists). And the trunk lid was slightly askew, leaving a big gap between the trunk lid and the side of the car.
The Associated Press contributed to this report.