Rumours condense around Karma insolvency


Karma Automotive will apparently soon file for Chapter 11 insolvency, meaning a chance for restructuring under court supervision. Several months ago, there were already reports that had raised substantial doubts about the company’s business practices.

+ + Kindly see our update below + +

According to Jalopnik who cited several sources within the company, there were further redundancies in mid-May and Karma Automotive is planning to reduce its workforce to 38 employees by the time the insolvency proceedings are opened.

The company did not respond to either the report or requests for comments from Jalopnik. The insolvency under Chapter 11 is supposed to enable the company to restructure itself under its management with court supervision. During the financial crisis of 2009, Chrysler and General Motors had also filed for Chapter 11 insolvency. In addition to Chapter 11 with the aim of restructuring, there is also insolvency under Chapter 7, which is aimed at liquidating an insolvent company.

Already in April, Jalopnik reported that the technical specifications in the manufacturer’s announcements were more or less fake and that the presented E-Flex platforms were not much more than “movie props”. At the time it seems that Karma Automotive wanted to offer its investor from China, the Wanxiang Group, a ‘magic show’ as a last attempt to keep the financing going.

Shortly before that report, Karma Automotive had just presented its electrified platform called E-Flex and its first BEV model, the Karma Revero. Senior employees in charge at the time such as COO Kevin Pavlov are said to have left the company in the meantime.

As Jalopnik now writes, at the time of the April report, several Karma employees contacted the editorial office to confirm the information. The report spoke of an “alarming litany”, ranging from bad treatment of employees to poor workmanship, downright deception and even a problem with fruit flies in their cafeteria. The company responded to its employees with an internal letter to the employees where the company said that many facts had been misrepresented.

Karma Automotive emerged from Fisker Automotive, a company founded by Henrik Fisker, and since 2015 it has been part of the Chinese automotive supplier Wanxiang, which has apparently stopped supporting it. Henrik Fisker himself is now active with his new company Fisker Inc. and wants to launch a new electric SUV, the Ocean. The Karma Revero is basically still based on the layout of the Fisker Karma as an electric car with range extender.

Update 01 July 2020: Meanwhile Karma Automotive has reacted to the Jalopnik article and denied that they are planning an insolvency after Chapter 11 and massive job cuts. “This article, along with a similar article published on April 23, 2020, contains both untruths and misrepresentations,” the company said. The “fictitious nature of this content” could easily be identified.

Nevertheless, Karma admits that the situation is currently complicated. “The entire automotive industry was extremely hard hit by the pandemic. Despite these challenging conditions, Karma will aggressively focus on pursuing ambitious and exciting opportunities that benefit from its unique technologies, products and solutions,” the statement said. Wanxiang Group “fully agrees with these activities and has provided additional financial support”.

The statement, which is not attributed to any manager personally, concludes by saying “We are here today, we will be here tomorrow and we will be better than ever before. We look forward to building that future together with you.”, update via email


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