Kleiner Perkins investing in alternative powertrains – Fisker Automotive

Last week was the Detroit International Auto-show. This is the largest gathering of its type in the United States where largely the large automakers around the world, especially the US big 3, show off their latest car models etc. Traditionally this event has attracted automotive engineers and salesmen of all sorts, and media that was more nostalgic about the automotive past than the real future. This year, at least to me, seemed very different. For one, this year’s show coincided with the primaries in Michigan and hence all the major presidential candidates showed up to demonstrate their unity with the auto-workers etc.

…but that was hardly the big news for me. The big news this year has been the focus on green technologies in the automotive sector and the focus on alternative drive-trains. And the big news has been the inclusion of a new type of investor in the automotive world – top notch venture capital firms. I had just finished writing about Vinod Khosla’s investments in alternate powertrains that I read about Fisker Automotive, a plug-in electric hybrid car-developer/manufacturer that just got over $10million of investment from Kleiner Perkins Caufield and Byers.

I have written before about Tesla Motors, probably the most prominent among this new generation of car developers that promise excitement in our mobility solutions while simultaneously providing solutions to the automotive industry’s carbon foot print. The technologies deployed by such car makers are typically very impressive: light weight fiber composite structural materials, electric or hybrid drive-trains, next generation battery systems, etc. And the performance is equally impressive as well: sports-car accelerations, long mileage on single electric charges, impressive fuel economy and cabin comfort.

But the question that they must face, in addition to those around the CO2 and other emissions of the coal power plants that feed electricity into the plug-ins’ batteries, is around the supply chains that they must establish to consistently produce high quality cars in a timely fashion. Can these upstarts get dependable supply chains established (that took traditional auto-makers decades to establish?), and will they be able to reduce costs at a pace that will be necessary for mass-production? VCs will probably look for VC returns in some reasonably short period of time, and more importantly, to maximize the societal/environmental impact one would want many such vehicle son the road as quickly as possible. Hence the scalability of the solution matters tremendously. I continue to look for optimistic signs for them…

Here’s a nice article from Wall Street Journal on these new car-investments from key VC firms:

http://online.wsj.com/article/SB120027887033287745.html

Electric-Car Firms Get Star Investors

By NORIHIKO SHIROUZU and REBECCA BUCKMAN
January 14, 2008; Page A2

DETROIT — The race to develop an electric car is heating up and drawing increasing interest from the same venture-capital investors who helped build Silicon Valley.

The latest entrant is expected to be announced today at the North American International Auto Show in Detroit when Fisker Automotive Inc. unveils an $80,000 battery-powered luxury car it aims to begin delivering in late 2009. The Fisker Karma, a so-called plug-in hybrid, can go 50 miles on electricity before a small gasoline engine kicks in to generate electricity to charge a lithium-ion battery pack on board. The company has backing from Kleiner Perkins Caufield & Byers, perhaps Silicon Valley’s best-known venture-capital firm and a backer of household tech names such as Netscape Communications, Amazon.com Inc. and Google Inc.

The announcement comes at a show in which auto makers are scrambling to offer alternatives to traditional gasoline-fueled vehicles. Auto makers also announced plans for next-generation diesel-powered cars and efforts to develop more ethanol-based fuels. (See related article.)

The luxury-electric-car deal, finalized last week in Irvine, Calif., where Fisker Automotive is based, is one of the first deals in which former Vice President Al Gore provided advice for Kleiner, which Mr. Gore joined in November as a partner. Mr. Gore wasn’t heavily involved in the Fisker deal, although “he wants to order” a car, said Kleiner Managing Partner Ray Lane.

The precise size of the investment in Fisker wasn’t disclosed, but Mr. Lane said it was more than $10 million and “one of our bigger investments.” Mr. Lane, the former No. 2 executive at software company Oracle Corp., will join Fisker’s board.

Thanks to Kleiner’s investment, “we have all the capital we need to move forward according to the plan,” said Henrik Fisker, a Danish-born former BMW AG and Aston Martin designer and now chief executive of the company he helped set up last year. Palo Alto Investors, a venture-capital concern, invested in Fisker in an earlier round of fund raising. “We’re still going to raise money later in the year, but we don’t see that as a big issue,” Mr. Fisker said.

Mr. Fisker’s vision is to sell 15,000 electric cars a year. Mr. Fisker said the Karma is environmentally responsible and capable of going 125 miles per hour, consistently. It can hit a speed of 60 mph in 5.8 seconds, equivalent to the performance of a gasoline-powered V8 sports sedan, he said.

Entrepreneurs across Silicon Valley are starting all sorts of green companies, from solar to biofuel to geothermal outfits, because they see a potentially vast market for alternative energy amid rising oil prices and increasing worries about global warming.

Silicon Valley money is backing an array of green-car projects that include little-known upstart companies such as Aptera Motors Inc. and Phoenix Motorcars Inc., both southern California companies. Tesla Motors Inc., the high-profile company that is close to shipping a $98,000 electric sports car, has raised $105 million from investors, including VantagePoint Venture Partners, Technology Partners, and Draper Fisher Jurvetson.

Former tech executive Shai Agassi, formerly the products chief at German software behemoth SAP AG, announced last year that he was turning his energies toward electric cars. Mr. Agassi, who runs Project Better Place, a start-up based in Silicon Valley, has raised $200 million for a venture that would sell electric cars designed by auto makers such as France’s Renault SA and set up a network of stations where drivers could charge or replace batteries.

When his company first invested in Tesla two years ago, “I think people were really questioning, ‘Would we ever have electric cars? Would they be viable?”‘ said Stephan Dolezalek, a managing director at VantagePoint Venture Partners. Now, he says, “it’s no longer about will we, it’s about when.” Vantage Point has invested in Mr. Agassi’s new company.

Venture-capital concerns are searching for new sources of profit as it has become tougher to take public traditional technology companies, such as business-software and telecom companies, after the collapse of the dot-com stock boom. Kleiner has said about a third of its money is going into green-tech start-ups.

Big auto makers are rushing to develop their own electric cars, and it would be an embarrassment to them if they are beaten to the market by a start-up. General Motors Corp. has a working prototype of its Concept Chevy Volt and will hype its progress this week. Toyota Motor Corp. will show its plug-in hybrid based on the Prius, while Chrysler LLC will unveil three battery-powered concept cars.

Mr. Fisker believes his company is a couple of years ahead of bigger rivals because the design of the car has been finalized. “The car we’re showing in Detroit is not your usual show car; it’s actually a preview of the production car you can buy,” Mr. Fisker said.

The Karma, Mr. Fisker said, will use lithium-ion batteries, the most-promising next-generation energy-storage technology for automotive use so far. Some of those batteries, however, have been found to overheat. In 2006 and 2007, reports surfaced that lithium-ion batteries for laptops and cellphones were catching fire, leading to several recalls.

Mr. Fisker wouldn’t say what kind of lithium-ion battery the Karma will use, but he said safety concerns have all been “resolved.”

Write to Norihiko Shirouzu at norihiko.shirouzu@wsj.com and Rebecca Buckman at rebecca.buckman@wsj.com

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8 Responses to Kleiner Perkins investing in alternative powertrains – Fisker Automotive

  1. SPRECHEN SIE DEUTSCH OFT DAS DIAMLER BENZ AUTO COMPANNIGG

  2. […] turn to electric-hybrid for next gen cars I have argued before that plug-in electric cars that also have a small diesel or gasoline fueled engine, for […]

  3. […] are basically outsourcing the vehicle completely to the likes of Lotus, it remains to be seen what Fisker will […]

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