Luxury hybrid ruled origin of fire

By Robert Arnold, Investigative Reporter, rarnold@kprc.com
Published On: May 10 2012 05:56:56 PM CDT
Updated On: May 10 2012 10:44:18 PM CDT

May 10, 2012: Local 2 Investigates discovers a link between tax dollars and a company that makes expensive electric cars-- cars that have been recalled and put back on the market. Robert Arnold reports.

SUGAR LAND, Texas -

According to Fort Bend County fire investigators, a large fire that ravaged a home in Sugar Land on May 2 started in a luxury electric vehicle manufactured by Fisker Automotive.

Investigators with the Fort Bend County Fire Marshal's Office told Local 2 Investigates the cause of the fire is accidental and that the fire originated in a Fisker vehicle called the Karma.

VIDEO: Luxury hybrid ruled origin of fire

When Local 2 Investigates first visited the home where the fire occurred, a large fence with a blue tarp was constructed around the driveway of the home, shielding the public's view of the work being done by forensic fire investigators. Local 2's helicopter also flew over the home and recorded workers grabbing another blue tarp to shield the Karma from public view.

According to the company's website, the Karma is a luxury electric hybrid that retails for just more than $100,000.

"I determined the fire came from within one vehicle parked inside the garage," said Senior Investigator Robert Baker with the Fort Bend County Fire Marshal's Office.

"Which vehicle would that be?" asked Local 2 Investigator Robert Arnold.

"As I learned, it was a Fisker Karma," said Baker. "The Fort Bend County Fire Marshal's Office ruled the fire accidental."

Baker said based on statements from the car's owner, his family, neighbors and other evidence, he determined the fire started in the Karma and spread to the two other cars in garage and eventually into the second story of the home.

When Local 2 contacted officials with Fisker, we received a written statement reading in part the "investigation is continuing". The statement adds "possible fraud or malicious intent" have not been ruled out. The statement further indicates "fireworks" and an "electrical panel" in the garage were also being examined.

Baker said none of the items listed in Fisker's statement contributed to the start of this fire.

"Everything we have leads back to inside that vehicle, or inside the engine compartment of that vehicle, which seems to be some kind of malfunction or whatever in there," said Baker.

Baker said both he and firefighters were aware of the fireworks in the garage from the beginning and ruled the devices out as a cause.

"There was no sign of explosions prior to this," said Baker.

Baker also addressed the issue of the electrical panel in the garage.

"What damage there is to the electrical panel appears to be from the outside, inward, not inward, outside," said Baker

Baker said he does not know exactly what started the fire, but added his ruling that the fire was accidental and that it started in the Karma will not change.

"There is nothing leading to anything else," said Baker.

Baker added officials with Fisker have contacted the Fire Marshal's Office.

"Fisker has called and, real defensive with us, but we deal with that a lot and we just come to our conclusion and that's our ruling," said Baker. "They seem to be overly worried, concerned that we are trying to manipulate something. That is absolutely not true, we don't have anything to gain out of this."

This is not the first time Fisker has addressed potential problems with the Karma. According to the company's website, all 239 Karmas were recalled at the end of 2011. Fisker officials stated company workers discovered a potential coolant leak in battery packs manufactured by A123 Systems could lead to electrical shorts. Fisker officials later stated the potential problem had been corrected in its Karmas.

According to Baker, the Karma at the center of this month's fire was purchased in April. In its statement to Local 2, Fisker officials wrote "the Karma's lithium ion battery pack was not being charged at the time and is still intact and does not appear to have been a contributing factor in this incident."

An attorney representing the car's owner, Jeremy Gutierrez, also sent Local 2 a statement reading the family was "stunned" by Fisker's statement that "fraud or malicious intent" were still possible outcomes of the investigation. Gutierrez's' attorney, Brendan Gilbert, wrote the family complied with all of Fisker's requests.

"(Fisker) descended upon the Gutierrez home in alarming numbers and immediately demanded a 24-hour lockdown of his home, including the remains of the Fisker Karma vehicle. They also cordoned off portions of the Gutierrez home with non-transparent tarps to block the view from the public. Fisker even had access to eyewitnesses, who were interviewed by Fisker investigators, and those investigators were shown video of the Fisker vehicle on fire before any other part of the garage," the statement read.

When contacted by Local 2, officials with the National Highway Traffic Safety Administration wrote in a statement, "NHTSA is aware of the incident and in contact with local authorities. The agency will continue to monitor the situation and take appropriate action as warranted."

Fisker officials said more than 1,500 Karmas have been manufactured and 800 of those vehicles are in the hands of consumers.

Before this fire, Fisker was already facing questions about millions of tax dollars used to help bring the Karma to market. According to the Department of Energy, Fisker received a $540 million loan guarantee to the company. Federal officials explained $169 million of that was used to support engineers who developed tools, equipment and the manufacturing process of the Karma. The larger bulk of the loan is to be used to support the US based production of another Fisker car called the Atlantic, a less expensive electric hybrid.

CLICK: Dept. of Energy loan program information

Fisker has not yet received that larger portion of the loan, because DOE officials said it is contingent on Fisker meeting certain benchmarks in acquiring and retooling an old General Motors plant in Delaware to manufacture the Atlantic. That plant is not yet operational. 

Department of Energy spokesperson Damien LaVera sent a written statement to Local 2 saying: "The Department's loan program invests in advanced hybrid electric vehicles because they have the potential to significantly improve performance and fuel economy for American consumers. Our loans and loan guarantees have strict conditions in place to protect taxpayers. Our loan documents require borrowers to meet certain milestones and other conditions prior to receiving loan proceeds. As has been widely reported, Fisker has experienced some delays in its sales and production schedule -- which is common for start-ups. As Fisker works through those issues and incorporates lessons learned from the production of the Karma, the Department is working with Fisker to review a revised business plan and determine the best path forward so the company can meet its benchmarks, produce cars and employ workers here in America."

In his statement to Local 2 LaVera also included a breakdown of the loan agreement with Fisker:

* Fisker's loan has two parts. The first includes $169 million to support the engineers who developed the tools, equipment and manufacturing processes for Fisker's first vehicle, the Fisker Karma.

* That work was done in Fisker's U.S. facilities, including its headquarters in Irvine, California which has 700 employees and plans to continue hiring.

* More than 45% of the components of the Fisker Karma sedan are manufactured by approximately 40 suppliers located in the U.S.

* The larger portion of the loan -- $359 million - is to support the production of Fisker's Nina vehicles (now called the Atlantic). Fisker plans to use this funding to bring a shuttered General Motors plant in Delaware back to life and employ more than 2,500 workers.

* According to public reports, this second Fisker car is expected to be approximately $50,000.

* To date, Fisker has drawn down less than $200 million of the $528 million loan.

* Fisker has successfully raised more than $1 billion in private sector investment to support its ongoing operations since closing its DOE loan.

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