Quantum Fuel Systems Technologies Worldwide Inc.’s new deal to supply key vehicle operations software for the relaunch of the Fisker Karma and potentially other models rekindles a relationship that had soured before the luxury automaker crashed two years ago.
Lake Forest-based Quantum will license its plug-in hybrid control software to Fisker Automotive and Technologies Group LLC in Costa Mesa. The maker of hybrid cars was acquired in February in a bankruptcy court auction for $149.2 million by Wanxiang America Corp., a unit of one of the largest auto parts makers in China.
Quantum is working with Fisker engineers at the automaker’s headquarters to develop, update and code the software. The licensing deal is a signal that the long-dormant automaker is not dead and is now moving on plans to resume vehicle production.
“We’re in position to support those efforts,” said Chief Executive Brian Olson. “This is not something downstream. It’s a live program right now.”
A Fisker spokesperson declined to comment on the Karma launch or production schedule.
Fisker will pay Quantum $2 million before Nov. 27 and another $2 million by Oct. 27, 2015, under the licensing agreement.
The second payment will expand the software license to the long-planned Atlantic model, a hybrid four-cylinder that was expected to sell for about $50,000, roughly half the price of the sport luxury hybrid Karma.
The transaction provides a pathway for Fisker to co-own the software technology and IP with Quantum. That would be a first for Quantum as it seeks to monetize legacy IP and hardware technology from bets made before it refocused efforts on producing natural-gas fueling tanks and systems, its core business today.
“We don’t have a record entering these types of licensing arrangements,” Olson said. “We have an opportunity because of software and control mechanisms on hybrid or electric vehicles to continue to provide that technology.”
Quantum will regain its position as an exclusive software development partner until the joint-ownership option is exercised by Fisker, which would pay an additional $1.35 million for two more projects over the next 12 months.
Quantum held an exclusive designation about two years ago when Fisker planned to end the relationship, contending the cost of the components supplied was too high. Quantum denied those claims, setting off a legal showdown.
Fisker accounted for 24% of Quantum’s $17 million in revenue from its Electric Drive & Fuel Systems segment through the first nine months of 2012. Quantum also supplied Fisker with hybrid drive systems and secured a contract from the automaker for advanced product development on the Karma.
The escalating dispute never reached the courtroom.
Fisker Troubles
Fisker suspended production of the Karma, cut most its workforce at its former headquarters in Anaheim, and lost its original management team and founder Henrik Fisker in an executive shake-up on the way to burning through more than $1 billion in funding and government loans.
The company filed for Chapter 11 bankruptcy in November 2012.
Quantum, established in 2000, has tinkered with many business lines, including engine, transmission, and fuel tank production, as well as other parts that make hybrid vehicles go.
The company has acquired wind farms, developed propulsion systems, energy storage devices, and alternative fuel technologies, among others. That led some analysts to question the vision and direction of the company, which shifted its focus two years ago to natural gas fuel tank production for long-term growth and viability. It has divested most of its renewable energy portfolio.
Ways To Go
Quantum still has a ways to go in the highly touted, but modestly performing natural gas sector.
The company reported revenue of $5 million and a loss of $6.6 million in the recently ended quarter, both missing Wall Street expectations.
It has a backlog of $22.5 million in unfulfilled product orders and services, driven by demand for its newly developed integrated CNG fuel system for heavy-duty trucks and the gradual adoption of natural gas fuel by commercial fleets.
“We see opportunities that continue to grow this business,” Olson said. “We’re driving operations and our mindset in targeting and reaching a profitable level.”
