Chinese EV startup Karma accused of stealing US rival's plans

The US company claims it shared its plans for a luxury Humvee with Karma last fall as part of a proposed partnership to produce the vehicle for the Ch
...
File photo used for representational purpose only (Bloomberg)
File photo used for representational purpose only

Chinese electric-car startup Karma Automotive LLC is being accused of stealing vehicle plans from a US company with which it discussed a joint venture. Michigan-based VLF Automotive, a niche carmaker co-founded by former General Motors Co. executive Bob Lutz, filed suit against Karma in California Superior Court in June. VLF claims it shared its plans for a “luxury Humvee" with Karma last fall as part of a proposed partnership to produce the vehicle for the Chinese market, only to have Karma try to cut it out of the deal.

VLF is asking for at least $18.5 million in damages to cover its investment in the Humvee project and its share of the projected profits.

The lawsuit comes as Karma, which is owned by Chinese auto-parts maker Wanxiang Group, is trying to capitalize on the rally in shares of EV makers such as Tesla Inc. and Nikola Corp., a hydrogen trucking startup that went public as a blank-check company in June. Karma told Bloomberg in early July it had raised a third of the $300 million it’s seeking by selling stakes to private equity investors.

Also check these Vehicles

Find more Cars
Mg 4 Ev (HT Auto photo)
UPCOMING
BatteryCapacity Icon64kWh Range Icon350 km
₹ 30 - 32 Lakhs
View Details
Tata Sierra Ev (HT Auto photo)
UPCOMING
BatteryCapacity Icon69 kWh Range Icon420 Km
₹ 25 - 30 Lakhs
View Details
Tata Harrier Ev (HT Auto photo)
UPCOMING
BatteryCapacity Icon50 kWh Range Icon400 Km
₹ 22 - 25 Lakhs
View Details
Honda Elevate Ev (HT Auto photo)
UPCOMING
₹ 18 Lakhs
View Details
Tata Punch Ev (HT Auto photo)
BatteryCapacity Icon35 Kwh Range Icon421 km
₹ 10.99 - 15.49 Lakhs
Compare
View Offers
Mg Comet Ev (HT Auto photo)
BatteryCapacity Icon17.3 kWh Range Icon230 km
₹ 7.98 - 9.98 Lakhs
Compare
View Offers

Karma Chief Strategy Officer Greg Tarr declined comment on the lawsuit. A lawyer for VLF also declined to comment.

Also Read : Chinese company to invade US EV space with cheapest electric cars

VLF claims that, despite signing a non-disclosure agreement, Karma Chief Executive Officer Lance Zhou used the shared designs to secretly contact the US company’s manufacturing partners in an effort to bring the electric Humvee to market in China on its own. According to the lawsuit, Karma was motivated to steal by financial desperation.

Formed in 2014 after Wanxiang Group bought failed luxury hybrid maker Fisker Automotive, Karma has struggled to make a dent in the US market. A revamped version of Fisker’s hybrid sedan, the $135,000 Karma Revero, debuted to poor reviews in 2017. The company sold just 1,000 cars last year.

Also Read : Alibaba boosts investment in Chinese EV maker Xpeng before New York IPO

“The combination of dismal sales and unfathomable losses created a vicious financial vortex for the company’s owners," VLF’s lawsuit alleges. “This financial reality resulted in the Wanxiang Group putting extreme pressure on Karma’s CEO, Defendant Dr. Lance Zhou, to turn the company around using any means possible."

Fisker founder Henrik Fisker, famed as the designer of the Aston Martin DB9, helped launch VLF in 2012 with Lutz and former Boeing Co. executive Gilbert Villareal. Henrik Fisker also has a separate electric-car venture, Fisker Inc., that plans to merge with a blank-check company late this year.

First Published Date: 06 Aug 2020, 10:00 AM IST
NEXT ARTICLE BEGINS

Please provide your details to get Personalized Offers on

Choose city
+91 | Choose city
Choose city

Want to get the best price for your existing car?

Powered by: Spinny Logo
By clicking "View Offers" you Agree to our Terms and Privacy Policy
Dear Name

Please verify your mobile number.

+91 | Choose city
Couldn't verify the OTP.
It's either expired or it's incorrect.