Starting a Car Company and Turning A Profit: Tesla, Fisker, and Porsche’s Pedigree [Part I]
Getting started is always the toughest part. It’s pulling yourself up by your bootstraps. Putting your head down and powering through. Whether it’s starting a new job, a new workout routine, living in a new city, or starting a new business – it’s a (rewarding) grind. Starting something new, especially something challenging, is a long, arduous, and often thankless path. In the car industry – as brands like Saturn, Mercury, and Scion have shown – it’s a whole lot tougher than that. And those brands started under the umbrella of existing organizations with all of their existing resources and knowledge. But how difficult is it to start from scratch?
Currently, there’s a lot of hoopla surrounding Fisker Automotive and its far-too-recently-delivered Karma, and when you look at it on paper, it’s easy to see why. It’s electric (even if it gets terrible mileage), has Henrik Fisker’s peerless seal of approval, and might even come out with a wagon body style. Someday. Maybe. But probably not.
As we’ve seen with Tesla, it’s really incredibly unimaginably stupendously tough to make couture electric cars for only $100,000 and to return a profit while doing so. Especially when you’re a start-up company with no factories, tooling, or even expertise to handle such a monumental task. At $100,000, making a few hundred or even a few thousand cars does not a strong business case make when you don’t have an entire line-up of profit-producing cars to fund your project. Companies like Porsche have bread und butter models like the Cayenne und Panamera to stuff their coffers with cash, allowing them the freedom to develop the most amazing $100,000 car in the world: the 911. Compare this to Tesla’s funding model, which relies entirely on investors injecting cash (private, public [TSLA], and the US government) rather than sales profits.
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