A case of good Karma for Fisker as green car firm raises $115m

California-based Fisker Automotive has confirmed that it has raised $115m (£70.6m) in equity to help finance construction of its Karma plug-in hybrid sports car.

This fresh funding enables the company to meet the terms of a $528.7m conditional loan offer from the US Department of Energy, effectively removing the final hurdle for the company's plans to manufacture the Karma and develop a less expensive sedan model plug-in hybrid.

The loan is now expected to close over the next month, providing the company with the funds to finish engineering work on the Karma ahead of its slated launch later this year, and invest $359m in its Project Nina initiative to develop a new, more affordable plug-in hybrid sedan.

The company is also expected to complete the $18m purchase of a former GM assembly plant in Delaware by the end of March, where it hopes to manufacture its new sedan model from 2012.

"Raising $115 million in these times speaks volumes about the value of our business
model and the vast potential of plug-in hybrids," said chief executive Henrik Fisker.

The Karma, which will be manufactured in Finland by Valet Automotive, is expected to travel up to 50 miles on its battery before switching to a conventional engine.

The funding announcement came just a day after Karma confirmed a multi-year battery supply deal with A123 Systems. The battery company joined Silicon Valley-based venture capital firm Kleiner Perkins Caufield & Byers as one of the investors in the latest funding round.

Boston Consulting Group concluded in a study this month that electric cars, including hybrids, could capture about a quarter of the market for new cars – some 14 million vehicles a year – in major developed countries by 2020, with the market for electric car batteries reaching $25bn by then.