Moreno Valley, Calif., population 201,175, isn’t a town where you would typically expect to encounter exotic luxury cars. It’s basically a national guard airstrip, some warehouses and a few burrito joints. During the summer it’s not unusual for the temperature here to break 100 degrees, and there isn’t an inch of shade—just endless sun and some guy getting paid minimum wage to jump around on a street corner wearing a full-body, green-and-yellow chicken suit and waving a sign for a check-cashing store in the plaza behind him. But in the last year this hardscrabble desert community— just 50 miles but a world away from the sea breezes and conspicuous consumption of Orange County—became the birthplace of one of the most dramatic and eye-catching luxury cars on the market: the Karma Revero, an updated version of the late, lamented Fisker Karma, one of the first plug-in hybrid electric luxury cars. The first Reveros are just beginning to roll off the line at Karma’s new factory, so seeing one on the streets, as people are today, is a new experience for most of the town’s residents.

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“What’s this?” A man wearing a white tank top and baggy jeans in the Starbucks parking lot asks, peering at the car.

“It’s a Karma,” says Barney Campbell, a marketing executive for the company. “We make them here.”

“No. For real? Damn. Is it expensive?”

“Of course it is,” says the man’s girlfriend, standing next to him in embroidered low-rise jeans. “Just look at it.”

The man’s shock at seeing the Karma wasn’t surprising; unlike Detroit, Moreno Valley has never been a center of the auto industry. But the new Karma—the company has changed its name from Fisker—wanted its factory close to its Orange County headquarters to ease quality control. And the car certainly is beautiful; it’s low and aggressive, with classic proportions and a fluid form that catches the eye. But as beautiful as it is, the Karma’s story is complicated. The car in the Starbucks parking lot was a 2012 Fisker Karma, and it wasn’t actually made in Moreno Valley, but in Finland. From the outside, though, it was virtually indistinguishable from the 2017 Karma Revero, the car that is being built right down the block. Despite auspicious beginnings, Fisker suffered from engineering, financial and political setbacks and declared bankruptcy in 2013. So, while the new factory in Moreno Valley is a good first step, Karma still must prove it can truly make a comeback.

Karma CEO Tom Corcoran (right) and CMO Jim Taylor with a mock-up of the 2017 Revero in Orange County, Calif., June 2016. Photo by John Gilhooley


The first Fisker Karma, designed in the U.S. but built in Finland, was delivered in July 2011. Its creator was legendary Danish automotive designer Henrik Fisker, the man behind the iconic Aston Martin DB9 and V8 Vantage. Fisker aspired to make electric cars cool. “Environmentally friendly cars really were terrible-looking cars that nobody was interested to buy,” Fisker says now. “They were usually small and ugly and strange. My idea with the Fisker Karma was to show that you can design an absolutely stunning and beautiful vehicle that’s also environmentally friendly.”

From the beginning, Fisker was in competition with Tesla, though the two companies had different visions. The Tesla Model S was electric only, and its new technology induced range anxiety in an American public unfamiliar with electric cars. The Karma was a range-extended electric vehicle. It had an electric motor that propelled the car and massive batteries like the Tesla. But it also had a gas-powered generator that could kick in to either help the batteries or take over entirely if they were depleted. The real selling point, however, was the design. Motor Trend’s “First Drive” review, an industry standard, described the Fisker Karma as “a jaw-slackening design manifesto from its fangy grille to its turbulent tail, with those giant wheels…punctuating it like the paws of a big jungle cat.” Car and Driver dubbed it “EcoChic” and “the lewdest wedge of car porn to hit the pavement since the onset of the 5-mph bumper.” Automobile magazine awarded the car 2012 Design of the Year, while Top Gear magazine dubbed it the 2011 Luxury Car of the Year. And Top Gear TV show host James May chose it as the 2011 Car of the Year. Early buyers loved it too: “It’s almost like when I met my wife—I couldn’t stop thinking about her,” says Jeff Gerson, a New York-based wealth advisor who purchased a Karma in 2012 after seeing one on display at a private airport in Westchester County.

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But on two fronts there were warning signs that all was not right under the hood. Fisker, like Tesla Motors, depended on a large tranche of low-interest loans from the U.S. Department of Energy, part of a federal program to finance the development of advanced fuel-efficient vehicles. In 2010, the DoE announced it would give Fisker a loan for $528 million, split into two parts: $169 million to support the U.S. development of the Karma, which would be built in Finland, and an additional $359 million for a mass-production car built in the U.S. Fisker also benefited from friends in high places. Vice president Joe Biden was a powerful supporter of the investment, as Fisker had promised to reopen a shuttered auto plant in his home state of Delaware. Former vice president Al Gore was a partner at private equity firm Kleiner Perkins Caufield and Byers, which footed a large percentage of the more than $600 million in private sector funds that had been raised for the company, according to a report from the Center for Public Integrity. But Fisker missed key production deadlines it needed to meet in order to access the second batch of money. Then, with the 2011 bankruptcy of Solyndra, another green technology company backed by the DoE, the continued funding of the car company became increasingly uncertain.


It also quickly became apparent that the Fisker Karma had some problems. In December 2011, Fisker issued a recall for the first 239 Karmas because of a coolant leak and a risk of battery fires. More issues followed. On May 2, 2012, Jeremy Gutierrez, an up-and-coming energy executive, parked his Fisker Karma in his Sugar Land, Texas, home’s garage. “It was a beautiful car. It drove great, turned a lot of heads—it was a fun car to drive,” says Gutierrez. Just a few weeks old, it still had its dealer tags. Gutierrez’s wife, mother and child were waiting for him in the house. Less than three minutes after Gutierrez parked the $107,000 car, it burst into flames.

“I came home at the end of the day—the house was six months old,” Gutierrez recalls. “I pulled in and next thing you know I smell smoke, and there’s this black smoke coming out of the garage and the hood. I get everyone out of the house.” Then, Gutierrez’s beautiful new car “just flamed up.” The fire destroyed a wing of his house, and the family lived in a hotel for a year. To make matters worse, the fire also destroyed Gutierrez’s Mercedes-Benz SUV and Acura NSX.

A few months later, in August 2012, another Karma owner parked his car in the lot of a grocery store in Woodside, Calif., and it burst into flames. The fire department put out the blaze, but something was clearly wrong. A week after the Woodside fire, Fisker recalled every car it had sold, roughly 1,000 vehicles. The fires were apparently caused by problems with a cooling fan. But the recall couldn’t save the young company; the automotive press was relentlessly covering the car fires, and the company was hemorrhaging money. Perhaps the final blow came in November when Hurricane Sandy hit the Northeast. The storm destroyed 338 unsold Karmas (worth approximately $33 million) parked in a New Jersey parking lot that flooded. Fisker’s insurer refused to pay for the vehicles, and the company was forced to go to court. In November 2012, just one year after the first cars were delivered, the company ceased production. Fisker declared bankruptcy in November 2013. A bidding war for the remains ensued. The winner, after some finagling, was Chinese auto-parts conglomerate Wanxiang Group, which won the company for the cut-rate price of $149 million, a fraction of its early valuation.

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Years later, Karma lovers rave about the beauty of the car and lament the management failures that led to its demise. “When you drive it, people look at it with awe. They look at it like Batman just drove by in the Batmobile,” says Ramin Pourteymour, an owner of a 2012 Karma. “It wasn’t a product failure, it was a business failure,” says Jim Taylor, a longtime automotive executive who is now chief marketing officer at Karma. “The problem with Fisker primarily was the ownership,” especially Kleiner Perkins, says Karma CEO Tom Corcoran, who has been investing alongside Wanxiang for decades. “Private equity is driven by internal rate of return, and the enemy of IRRs is time,” Corcoran says. “The car business is huge capital investments and long timelines. It’s not ideal for private equity.” Corcoran contends Kleiner Perkins pushed the company to release the car before it was ready to be taken to market, and the results were disastrous. Now, though, under Wanxiang, “we don’t have the private equity gun to our head,” Taylor says. “We have patient capital.” Kleiner Perkins did not respond to requests for comment.


Wanxiang founder Lu Guanqiu, worth roughly $6.2 billion, started out as a blacksmith’s apprentice in the eastern Chinese city of Hangzhou. He lost that job in 1962 during the Great Leap Forward, according to the Wall Street Journal. So Lu, his wife and five others pooled $500 and opened a tractor repair shop. In 1973 he began making tractor blades out of old cannons.


Since then, Wanxiang has grown into one of the world’s largest auto-parts manufacturers and generates $23.5 billion in revenue annually. And it has quickly diversified into electric cars. In 2013, Wanxiang purchased American battery manufacturer A123 Systems out of bankruptcy. A123 made the defective batteries that were used in the original Karma and had been a beneficiary of DoE loans. (Corcoran is now chairman of A123.) When Lu bought Fisker the following year, he succeeded in creating a vertically integrated electric car manufacturer. “Here’s the battery, here’s the car and here are the parts—kind of like GM in the old days with its parts company and its power train divisions,” Karma’s Taylor says of Wanxiang’s strategy.

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When it acquired Karma, Wanxiang quickly decided to move the factory from Uusikaupunki, Finland, to Southern California. The new 550,000-square-foot factory represents tens of millions of dollars in investment. In the first year it will produce only around 1,000 vehicles, but it is capable of making up to 10,000 cars per year. Wanxiang plans to invest as much as $3 billion in Karma and is not expecting to make a profit until at least 2022, according to Corcoran, particularly since the current Revero platform cannot be manufactured profitably. “There are a lot of sunk costs that are going to take a lot of years to amortize,” says Matt DeLorenzo, managing editor at Kelley Blue Book. “One of the things about having a Chinese company with deep pockets is they have more of a tradition of taking the long view.”

There are a couple of reasons for this massive investment. One is that Karma is a bit of a vanity project for Lu, who was not available for an interview. “It’s my dream to build cars,” Lu says in a quote emblazoned on company literature.

“The whole point of restarting this company is creating the most beautiful cars. Anything less will be a disaster for us.”
—Alexander Klatt, Karma’s vice-president of global design.

Commercially, Karma has the potential to unlock a key segment of the market in China. The Chinese government has heavily subsidized production of electric cars, to the tune of 30 billion renminbi (roughly $4.6 billion) over the past decade, and is implementing further incentives for car companies that meet sales targets, according to a May 1 report in the Financial Times. To tap into that market, Karma plans to add new models; a new platform will be implemented in 2018 to address the limitations of the current Revero, followed by a station wagon in 2019, then small and large SUVs and a convertible, according to Corcoran. More important, while the Revero, the company’s halo car, will continue to be made in California, the new platform will initially be manufactured in China. “Then, after China, we need to build another plant, probably in Mexico, for North America and Europe,” Corcoran explains.


For Karma, the pressure of the past is enormous. “The car has to be perfect,” Corcoran says. “We can’t make the same mistake the second time. It has to be absolutely perfect, and it will be.”

After it bought the company, Wanxiang made a crucial choice: The design of the Fisker Karma had such intrinsic value that it wasn’t going to devote time and money to a major redesign. Consequently, the new Revero is virtually indistinguishable from the old Fisker Karma, with only minor cosmetic adjustments to the front and rear. There have been some modernizing tweaks: The dashboard display and console have been redesigned to meet modern expectations and function with smartphones. The interior’s once dowdy suede has been replaced with supple leather. The old Fisker logo—two Brutalist columns against an orange-and-blue field—is replaced by a blue-black disk surrounded by an orange glow. The Revero will have a hand-painted badge on its front, making each one unique.

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Most important, the electronics at the root of the original Fisker Karma’s problems have been replaced. The Fisker Karma “had 300 defects in the car, according to some reports” Corcoran says. “Internally, I think we tallied 600.” To reinvent the car’s electronic innards, Corcoran brought in Carl Jenkins, a Welsh automotive engineer with a history of handling turnarounds and hopeless causes.

Jenkins started his career conducting durability tests for the UK Ministry of Defense, spent 14 years in Detroit and immediately before Karma was the chief vehicle engineer for Google’s self-driving car program. “My biggest appeal for coming here is the excitement of this rebirth,” Jenkins says. “You’ve got this gorgeous-looking vehicle, but it just let itself down a bit.” Jenkins and his team have reworked the layout of the wiring harnesses and the body panels, which determine where key wires and power conduits run. An upgraded solar panel on the roof is now capable—given enough time—of fully charging the car.

Long, low and curvaceous, the Fisker Karma took cues from nature—waves, rose petals, sand dunes—and classic midcentury design, such as Mies van der Rohe chairs. The other key design element is the car’s proportions—a long hood, low-slung body and big wheels—which mimic classic cars from Bugatti and Mercedes, says Alexander Klatt, vice president of global design at Karma and employee number three at the original Fisker. These elements give the Karma its timeless quality. “All of the [collectible] cars above $10 million have long hoods,” Klatt says. They look like they’re simultaneously from the future and the 1950s. “They’re all very wide, and they all sit very far backwards and low. By keeping this ratio moving forward, we believe that we can create timeless value.” As Klatt puts it, “Because it is so beautiful, there is no Rolls-Royce in a junkyard. There is no Ferrari in a junkyard.” The Karma does seem to have aged well, says Kelley Blue Book’s DeLorenzo: “One of the strengths, even though it’s a six-year-old design, is it still has its striking looks. It has not aged. It still looks fairly contemporary.”

From a distance, Henrik Fisker has his doubts about the Revero. “Things have moved a lot since 2008,” Fisker says. “I’m not sure this power train is up to spec in today’s environment…their technology underneath the Karma was created almost 10 years ago.” In terms of design, Fisker says the car was originally intended to be “what the 911 is to Porsche,” a brand-defining classic. And, truthfully, functionality isn’t really the Revero’s main selling point; rather, its design makes it not just a car but a piece of art in motion.

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According to the company, the current target buyer of the Revero is a man between 40 and 60 years old, with an income over $300,000, who most likely is already a car collector and takes his personal style very seriously. It’s safe to say that the people who bought the original Fisker Karma were comfortable making a statement. Leonardo DiCaprio bought the first one, and Justin Bieber, while appearing on the Ellen DeGeneres Show, received a Karma from his manager Scooter Braun and R&B star Usher as an 18th birthday present. But the competition is strong—it’s an impressive group of cars such as the BMW i8, Tesla Model S, Mercedes-Benz S550e and Porsche Panamera S E-Hybrid. Still, Karma may have one big advantage in this competitive marketplace: Because Fisker had such a brief life, many consumers may come to the brand looking for something different and be moved by its good looks.

The Revero “is striving for perfection,” Klatt, the designer, says. “The whole point of restarting this company is creating the most beautiful cars. This is our task. This is our challenge. Anything less will be a disaster for us.”