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Karma Automotive cranks out $130,000 cars in Moreno Valley

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The employees of Karma Automotive cheer as Krishnan Menon, of Los Angeles, drives away as the first customer to take delivery of the new Revero built at their Moreno Valley factory on Monday, June 5, 2017. (Stan Lim, The Press-Enterprise/SCNG)

Karma Automotive aspires to “take customers to a place they didn’t expect,” according to president and CEO Dennis Dougherty.

It got a little closer to that goal Monday when it delivered its first commercial car to its first customer.

Karma was once Fisker Automotive, which went bankrupt in 2013 after several years of missteps in bringing its luxury hybrid EVs to market. It was revived in 2014 and now has headquarters in Costa Mesa and a factory in Moreno Valley as well as a presence in Detroit.

Moreno Valley was the scene of Monday’s ceremony as company executives gathered to hand Los Angeles businessman Krishnan Menon the keys to its only model, the 2018 Revero, priced at around $130,000.

Applauding employees made way as Menon got behind the wheel and rolled out of the 550,000-square-foot facility.

“Watch your knees, boys,” chief revenue officer Jim Taylor told factory workers. “He might make that circle a little wide.”

The Moreno Valley factory, which doubles as a warehouse, has 198 employees in an industry that has been absent in Southern California for 25 years. Once, 15,000 workers turned out half a million cars a year in places like South Gate, Maywood, Pico Rivera and Long Beach. That era ended with the closure of General Motors’ Van Nuys facility in 1992.

The Bay Area’s Tesla Motors, a key competitor in the luxury market, has headquarters in Palo Alto and a factory in Fremont. In 2016, Fortune and Bloomberg News reported its Model S was the best-selling luxury sedan in the nation, followed by Mercedes-Benz.

But the market for electric cars is not large, less than 1 percent, according to Kelley Blue Book analyst Tim Fleming.

“People right now want SUVs,” he said. “They aren’t thinking about fuel efficiency.”

Dougherty said for now Karma is building one car a day.

“From the get-go, they’ve been straightforward. They’re not trying to be a volume manufacturer,” said Akshay Anand, also with Kelley Blue Book.

“There are inevitable comparisons to Tesla. They’ve already told people they’re not trying to be Tesla. Karma has described the brand as ultra luxury. They’re going for a certain brand image and not volume or a sales quota.”

Menon had two specifications for his Revero: that it be Borrego Black, one of Karma’s eight colors, and that it be numbered 007.

“This car actually makes me feel like James Bond,” he said. “This is something I’m going to be able to tell my friends and kids, when I have them – if I have them. Right now my cars and my puppies are my kids, so this is amazing.”

Menon is founder and CEO of a marketing company called Phenomenon and an enthusiast of Tesla Motors.

Menon entered what Taylor called Karma’s “very elite space” several months ago when the Costa Mesa company was looking for ways to promote Revero.

“Krish had a lot of great ideas how we ought to take our vehicle to market and specifically how we should be selling them to customers like him,” Taylor said in the key hand-off ceremony. “He’s now rapidly changing from Tesla to Karma.”

Menon’s drive from the factory floor to the front parking lot was his first time behind the wheel of a Revero.

“It was incredible,” he said. “It felt sturdy and solid, just substantial, but so quiet, which is exactly what you want in an electric vehicle.”

Menon said the Revero is going to become his daily drive for awhile.

“If you’re in the car business, this is one of the days you wait for. It’s kind of like having your first child or grandchild,” Taylor said. “Especially when you’re a startup company because the car business is a tough business to be in and to get all the moving parts that have to come together to actually deliver a car is huge.”

In mid-day, Karma sent two demo cars each to 10 dealerships. Taylor said interest in the demos has been high. Karma’s immediate goal is to translate that interest into more sales.

“Like golf, you can’t just hit the ball once. You have to hit it again and again and again. … The next is actually the hard part about the business, keeping everybody happy.”

Hannah Madans and Richard K. DeAtley contributed to this report.

KARMA TIMELINE

2008: Fisker Automotive’s Karma four-door luxury plug-in hybrid sedan is unveiled.

2009: The U.S. Energy Department agrees to lend Fisker $528.7 million.

2011: The first Karmas are delivered, two years behind schedule. In December, Fisker recalls 239 of them.

2012: Fisker discloses that the Energy Department cut off $336 million of its loan after the company missed key sales and development milestones. A $107,850 Karma breaks down during a driving test by Consumer Reports.

2013: Fisker lays off workers and goes into bankruptcy.

2014: Wanxiang Group buys Fisker.

June 2015: Fisker announces Moreno Valley plant. It holds a job fair in July.

October 2015: Fisker changes its name to Karma Automotive.

September 2016: Karma unveils Revero at a Laguna Beach launch party.

Read more: http://www.pe.com/2017/06/05/karma-delivers-glossy-luxury-car-to-first-customer/

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