Karma Automotive LLC is pushing back on rumors generated out of an automotive blog that it’s on the brink of bankruptcy.
Auto industry site Jalopnik first reported issues at Karma, including more layoffs at the Irvine-based luxury auto company, in April and followed that up more recently in late June with a piece suggesting bankruptcy was imminent. The report was based off accounts from anonymous sources.
The writer of those reports confirmed he had been invited to Karma headquarters to see company operations, but declined the immediate prospects of doing so citing the pandemic.
The automaker is looking to put those rumors to bed with its recent $100 million raise from outside investors, announced last week.
Karma, in a statement to the Business Journal, said the report “contained numerous falsities and misstatements of Karma’s directional strategies and capabilities.”
The automaker called the stories an attempt to “garner cheap clicks and sell ad space.”
The company refuted the report’s claim it planned to whittle its ranks down to 38 employees in preparation for a Chapter 11 filing.
“The entire auto industry was hit exceptionally hard by the pandemic,” the automaker’s statement read. “Yet, despite these challenging conditions, Karma will be aggressively focusing on pursuing ambitious and exciting opportunities capitalizing on its unique technologies, products and solutions.”
Parent Co. Commitment
Karma also reiterated its parent in China, Wanxiang Group, remains committed to the business and said the company has funneled new capital into its operations.
“We are collectively living through the most terrifying crisis of our lifetime and we remain firmly committed to doing everything we can to support our retail partners, collaborate with our suppliers and business partners, and creating a valuable future in the mobility industry.”
The company was approved for a Paycheck Protection Program loan for up to $10 million from the SBA, but never took out the loan, according to Bloomberg.
The Business Journal has been contacted multiple times by individuals voicing concern about the future and strategy of the company, none of whom were willing to go into detail about their alleged qualms or speak on the record.
The company doesn’t disclose vehicle sales or financial information. Thus, it’s hard to get a good read on the business.
The various tweaks to its strategy haven’t been a secret and it resorted to laying off workers that no longer fit with the re-tool of its operations as it’s sought to create new revenue streams outside of making and selling cars. That included a focus on design and licensing services.
The more recent push from a marketing perspective, during the pandemic-induced downturn, has been a focus on its E-Flex electric chassis as it’s touted the various vehicle configurations that can be built on the platform.
On the selling front, last month it opened two retail outposts in Florida, bringing its total in the state to four.
For its part, Karma maintains a rosy outlook on its future: “We are here today, we will be here tomorrow and we will be better than ever before.”
