Karma Automotive is accelerating from a cautious comeback, into a significant retail presence last year, and now is speeding into meaningful competition with Tesla and other players in the exclusive and still-forming all-electric vehicle market.
The Fisker Karma enjoyed a brief production run six years ago, selling more than 2,300 units at prices up to $115,000, before the company ran into a perfect storm of financial and operational problems.
Now, under new ownership, Karma Automotive is carefully making and fastidiously distributing $130,000 Karma Revero luxury super cars through a solid and gradually expanding network of dealers. Its presence is growing but still tiny, volume-wise—and that’s exactly the way the reconstituted company wants it.
“The code phrase we use for our market is ‘a sliver of a sliver’,” Jim Taylor (above), chief revenue officer for Irvine, Calif.-based Karma, told brandchannel. “What are our volume aspirations? They’re very low. And in that way, we can grow carefully and build our brand properly to be a long-term player.”
Chinese investor Wanxiang Group purchased Fisker’s assets in 2014 and re-launched the brand as Karma Automotive. Revero is Karma’s first and only model so far. It can travel 50 miles on a full battery charge, and with the onboard gas generator another 250 miles for a total range or 300 miles.
Karma has opened space in 13 luxury car dealerships in the North America so far, including Los Angeles, Long Island, N.Y., and Miami, Fla., as well as in Toronto and Montreal. It also opened a company-owned brand experience center in Newport Beach, California, in the heart of SoCal luxury country.
brandchannel talked with Taylor about making and marketing the new Karma brand and the EV market.
Why does Karma believe it can be a long-term player in a luxury EV market that is increasingly crowded? Is there enough of a niche there?
A lot of new EV companies as well as the large OEM’s have announced that they’re going to be big players in this space, including of course Tesla. Most of them are chasing much higher volumes and not really in the high end of luxury where we are focused. It’s a fact that the current general EV market is still very small; it’s a niche and the luxury EV market is even smaller. But most forecasters agree that it is going to grow rapidly.
Our volume aspirations are only in the hundreds short term and only the thousands in the long term. Where we will play is open space. What’s going to get very crowded is the high end of the premium market, the Audi and Mercedes and BMW market. This is both a Customer play but clearly also a fuel-economy play inside their portfolios so that they can comply with new regulations. They are not pure-EV companies like Karma and Tesla. People will be attracted to our brand as we will not be a large mass marketer of luxury vehicles.
Who is the Karma customer in terms of mindset? And how do you find them and then engage that cohort?
Our car’s breathtaking beauty places us within a set of people who really appreciate design, like fine art or jewelry. For some people, the unique design is enough. The fact that it is also a low-volume EV makes it even more unique and distinct, which is what our Customers want.
The people we attract not only have the wealth to afford an expensive car, they also want to purchase something different. They have probably owned all the German brands that everyone else has, which are very nice vehicles obviously, but nothing is distinguished about them. It’s like going to a black-tie event as a man in a sea of tuxedos but all the women get to dress up in something different.
With Karma, you can make a statement but still within the overall boundaries of being sophisticated and classy. Internally, you’re enjoying not buying the same thing you already have in your garage or others have bought. And you enjoy a bit of rock-star status that wherever you drive it, you’re going to draw a crowd. If you don’t want to be noticed, don’t buy this car.
Your social media and overall marketing stance invoke a certain California approach to luxury. How does this approach appeal to the Karma buyer you’ve described?
If we look like the other guys, they will buy the other guys is what we say. They have outstanding products and in most cases a 100 years of history. If we look like Porsche then we’re not an alternative, no different and of no value to the customer—so we did try to wrap a more creative and non-automotive face to our marketing to give it a different appearance and feel. Our copy has a simple, casual, people-to-people conversation approach as opposed to coming from an impersonal company. Its California casual and California approachable and still very sophisticated. California is a tremendous blend of personalities as well as the influence of entertainment, music, art and tech cultures.
How’s it going with establishing a dealer network? And what sets aside your flagship retail experience in Newport Beach?
One of the first decisions in our strategy three years ago was whether to avoid the franchise system and have all our own stores like Tesla, or use the franchise system. Not all states allow that flexibility but fortunately California is friendly to both options. So, we set up our own store in Newport Beach and are using a franchise Dealer in L.A. We have the advantage of being able to experiment and run both plays and in a year or two from now we’ll see which one works better. We’re very early in this process.
When you have your own store, you have a direct link to customers and you get immediate feedback. It’s our only location dedicated to Karma and we can see the benefits. It’s very early as I have said, but so far it is going quite well and our sales there are higher than for any of the other stores in the country.
One example of direct marketing and selling. We’ve been displaying our cars in the Fashion Island mall here, and we’ve sold a number of cars just by people going to the mall to go to Tiffany’s or Niemen Marcus and then seeing our car for the first time. They fall in love—head to our store and buy it. It’s just amazing. We’re also looking at the possibility of company-owned outlets in San Francisco and Los Angeles; but we haven’t made any final decisions yet.
We’re expanding the franchised dealer network too but we don’t want to accelerate too fast. We’re ramping up dealers in parallel with our manufacturing acceleration. Our plan is to have 20 Dealers by the end of this year and next year expand toward 30.
You are currently selling cars exclusively in the U.S. Do you have aspirations for growth in other global markets?
Absolutely. We started here to get our feet on solid ground. Build our Brand reputation. We didn’t want to bite off more than we could chew and bury ourselves in complexity. To be a successful luxury car company, customers need to recognize and see you in the important areas of the luxury world. China is the largest market for luxury so that’s where we’ll go next. And Europe is the home of luxury, so we’ll be expanding there too.