## 9/14/2016

### Cars Fisker Karma - Cars sport pro, auto pro sport

Fisker Karma
OK. I am no rocket scientist when it comes to business, but I found it interesting in today's announcement published in most newspapers today that Fisker Automotive, a California based maker of plug-ins has chosen a shuttered GM plant in Delaware for its new manufacturing facility. Delaware. OK. A recently shuttered GM plant is good for everybody. I am certain the costs are less to start up since this was recently closed as part of the GM debacle....so it is good for Fisker, good for GM creditors, good for the local economy and jobs....blah blah blah. I am just surprised at the local as the costs and union influences in this region would seem to make production costly. As with all newer technologies, it seems that the cost is a major driver

# Fisker Selects Delaware

OK. I am no rocket scientist when it comes to business, but I found it interesting in today's announcement published in most newspapers today that Fisker Automotive, a California based maker of plug-ins has chosen a shuttered GM plant in Delaware for its new manufacturing facility. Delaware. OK. A recently shuttered GM plant is good for everybody. I am certain the costs are less to start up since this was recently closed as part of the GM debacle....so it is good for Fisker, good for GM creditors, good for the local economy and jobs....blah blah blah. I am just surprised at the local as the costs and union influences in this region would seem to make production costly. As with all newer technologies, it seems that the cost is a major driver
Now this is a plug in electric car with reported performance figures for my racy friends. The reported MSRP is to be $48,000 or so. Good looking car with good performance for that tag. Since we have not a lot of data on plug in pricing, we think this will be a decent value.....certainly, if you are going to pay over$40,000for a Chevy Volt, you will have a serious look at this. And that brings me back to the point of choosing Delaware. They expect this new factory to pop out 100,000 cars a year. Since the costs of these new technologies tend to be lack of scale in materials needed for the new technology, and you assume this too will be the case for the Karma (although at 100,000, scale is definitely creeping in), it seems the last thing you would want to do is to settle in a union state, with union wages, and union state of mind. What would the labor costs be if they settled in an open shop state? Maybe it does not matter, the cost savings of taking over an recently closed GM plant may outweigh the longer term costs. Who knows? I just found it curious, but definitely look forward to this one coming out.
I wonder how many are willing to sign on buying a car from a small independent manufacturer?

Jay Tracy
Penland Corner Consultants