Exclusive: Behind Electric Vehicle-Maker Karma's Plans to Go Public

Rachel Uranga

Rachel Uranga is dot.LA's Managing Editor, News. She is a former Mexico-based market correspondent at Reuters and has worked for several Southern California news outlets, including the Los Angeles Business Journal and the Los Angeles Daily News. She has covered everything from IPOs to immigration. Uranga is a graduate of the Columbia School of Journalism and California State University Northridge. A Los Angeles native, she lives with her husband, son and their felines.

Exclusive: Behind Electric Vehicle-Maker Karma's Plans to Go Public
Courtesy of Karma

Luxury electric car company Karma is in talks with investment banks to help it go public, company officials told dot.LA.

Karma is hoping to ride the Tesla wave of success and capitalize on the soaring valuations of its competitors.

"We want to take advantage of the fact that the market is red hot right now, so we want to be fast," said Mikael Elley, chief of staff at Karma Automotive.


The Chinese-owned automaker hopes to go public either through a merger with a special purpose acquisition company or through an initial public offering in the U.S. or Hong Kong over the next six months, he said.

Elley didn't say how much the company, headquartered in an office park in Irvine, was hoping to raise but it's in the midst of carrying out ambitious plans to increase its production of cars by at least ten times its current output. It's also developing delivery vans and selling an electric vehicle startup platform to manufacturers.

"We know a lot of Tesla owners, they feel like 'it's my Silicon Valley Camry', right? I mean everybody else has got one, so they're looking for something else. There's definitely a void in the market."

Billing itself a "high-tech mobility incubator," the company says it can help larger car companies that are investing billions of dollars into capital for new green cars manufacture, design and engineer them.

"We are talking with investment bankers right now to take us down that path," he said. "I think that everybody realizes that there is still a void, there is still an opportunity to get into the EV space."

Courtesy of Karma

Elon Musk's publicly traded Tesla became the most valuable car company in the world this July. And while it only produces a fraction of the world's new cars, its skyrocketing share value has given momentum to the $95 billion electric vehicle market, with sales expected to quadruple by 2025.

Electric vehicle maker Rivian, which plans to sell electric pickup trucks next year, announced it raised $2.5 billion earlier this month. It was followed by Los Angeles-based Fisker's news that it will go public in a deal with a SPAC valued at $2.9 billion. Both are direct competitors, although neither is on the market yet.

"If you are an EV company, now is the time to go to market," said Asad Hussain, mobility tech analyst at Pitchbook. "Right now sentiment on EVs is so positive that less-established EV companies — even companies without a product — are getting high valuations, but that could change."

With production facilities in Moreno Valley, Karma is the only U.S.-based electric vehicle startup that is producing and selling vehicles other than Tesla. Last year it rolled out about 550 of its Revero GT, an ultra luxury electric vehicle that starts around $135,000.

But Elley said that Karma wants to ramp up production of the Revero GTE, set for release mid-year 2021, and bring down cost to $100,000 so the car appeals to a broader market.

"We think that we can get the price down to take advantage of more volume and still be the luxury premium space," he said. "We know a lot of Tesla owners, they feel like 'it's my Silicon Valley Camry', right? I mean everybody else has got one, so they're looking for something else. There's definitely a void in the market."

Inside Karma Automotive's manufacturing plant in Irvine, California.Courtesy of Karma

He expects to produce 5,000 to 10,000 of the new cars. Meanwhile, the company is tweaking a branding campaign that can extend its luxury reputation and building lifestyle events around their vehicles such as wine tasting or trips. It's also eyeing a new generation of drivers. Karma has created a partnership with TikTok to raise the company's profile.

"It's a step in the right direction. But it's still a competitive market," Hussain said.

The company is up against Porsche and Tesla in that price range, both with vehicles that have a reputation for better performance, he said. But Karma's "exceptional design" has made it attractive to enthusiasts.

Aston Martin designer Henrik Fisker created what is now Karma as Fisker Automotive in 2007 before it filed for bankruptcy in 2013. It was picked up the following year by auto parts manufacturer Wanxiang Group Corp. and renamed Karma. Four years ago, Henrik Fisker created an eponymously named competitor - which plans to sell its SUV Ocean in 2022.

Wanxiang has pumped about $2 billion into Karma, which has struggled to catch on. Earlier this month, president of Wanxiang's U.S. business Pin Ni said Karma secured $100 million from private investors and has been looking to raise $300 million through shares as it seeks to expand its line of cars. Elley said as part of the financing effort, its parent company has agreed to set the company down the path to an IPO. It comes amid an executive shake-up and layoffs at Karma earlier this year.

Karma is trying to penetrate a market that traditional carmakers from Audi to Hyundai are trying to establish a foothold. Despite the pandemic, most carmakers haven't pulled back electric vehicle investment, a sign of just how much the market is expected to grow.

But Karma executives said the company is not relying on its sporty car for success, it has pivoted to become a car and technology company, an acknowledgement that car-making alone is too capital-intensive to sustain.

Courtesy of Karma

Inside their corporate headquarters five so-called platforms, these modular engine and frames that make up the undergirding design of their electric car, are laid out just beyond the lobby. Using their show floor for these boxy, under-the-hood products is a nod to just how central that strategy has become.

"It is a strategy we have to improve our efficiency and reduce the complexity," said Kevin Zhang, Karma chief technology officer. The modules can be used for Karma's own cars or be sold to larger manufacturers, he explained.

There's appetite for these. Earlier this year, Hyundai Motor Group - one of the world's largest carmakers - tapped Torrance-based startup Canoo for their platform . The terms of the deal weren't disclosed, but a similar deal between the Korean automaker and UK-based Arrival catapulted the startup to unicorn status.

Karma is also working on developing a delivery van that it hopes to sell to major fleet operators like Amazon, FedEx and UPS. Already, competitor Rivian has secured a commitment from Amazon for 100,000 cars.

"Amazon has much higher demand than the hundred thousand they're gonna get from Rivian. They also have a much higher demand for different types of vehicles..Same thing for UPS. Same thing for FedEx," Elley said. "There is a tremendous opportunity there."

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🤠Musk Picks Texas and 🔥Tinder AI Picks Your Profile Pictures
Image Source: Tinder

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Tinder is altering dating profile creation with its new AI-powered Photo Selector feature, designed to help users choose their most appealing dating profile pictures. This innovative tool employs facial recognition technology to curate a set of up to 10 photos from the user's device, streamlining the often time-consuming process of profile setup. To use the feature, users simply take a selfie within the Tinder app and grant access to their camera roll. The AI then analyzes the photos based on factors like lighting and composition, drawing from Tinder's research on what makes an effective profile picture.

The selection process occurs entirely on the user's device, ensuring privacy and data security. Tinder doesn't collect or store any biometric data or photos beyond those chosen for the profile, and the facial recognition data is deleted once the user exits the feature. This new tool addresses a common pain point for users, as Tinder's research shows that young singles typically spend about 25 to 33 minutes selecting a profile picture. By automating this process, Tinder aims to reduce profile creation time and allow users to focus more on making meaningful connections.

In wholly unrelated news, Elon Musk has announced plans to relocate the headquarters of X (formerly Twitter) and SpaceX from California to Texas. SpaceX will move from Hawthorne to Starbase, while X will shift from San Francisco to Austin. Musk cited concerns about aggressive drug users near X's current headquarters and a new California law regarding gender identity notification in schools as reasons for the move. This decision follows Musk's previous relocation of Tesla's headquarters to Texas in 2021.

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Top LA Accelerators that Entrepreneurs Should Know About

Los Angeles, has a thriving startup ecosystem with numerous accelerators, incubators, and programs designed to support and nurture new businesses. These programs provide a range of services, including funding, mentorship, workspace, networking opportunities, and strategic guidance to help entrepreneurs develop their ideas and scale their companies.


Techstars Los Angeles

Techstars is a global outfit with a chapter in Los Angeles that opened in 2017. It prioritizes local companies but will fund some firms based outside of LA.

Location: Culver City

Type of Funding: Pre-seed, early stage

Focus: Industry Agnostic

Notable Past Companies: StokedPlastic, Zeno Power


Grid110

Grid110 offers no-cost, no-equity programs for entrepreneurs in Los Angeles, including a 12-week Residency accelerator for early-stage startups, an Idea to Launch Bootcamp for pre-launch entrepreneurs, and specialized programs like the PledgeLA Founders Fund and Friends & Family program, all aimed at providing essential skills, resources, and support to help founders develop and grow their businesses.

Location: DTLA

Type of Funding: Seed, early stage

Focus: Industry Agnostic

Notable Past Companies: Casetify, Flavors From Afar


Idealab

Idealab is a renowned startup studio and incubator based in Pasadena, California. Founded in 1996 by entrepreneur Bill Gross, Idealab has a long history of nurturing innovative technology companies, with over 150 startups launched and 45 successful IPOs and acquisitions, including notable successes like Coinbase and Tenor.

Location: Pasadena

Type of Funding: Stage agnostic

Focus: Industry Agnostic, AI/Robotics, Consumer, Clean Energy

Notable Past Companies: Lumin, Coinbase, Tenor


Plug In South LA

Plug In South LA is a tech accelerator program focused on supporting and empowering Black and Latinx entrepreneurs in the Los Angeles area. The 12-week intensive program provides early-stage founders with mentorship, workshops, strategic guidance, potential pilot partnerships, grant funding, and networking opportunities to help them scale their businesses and secure investment.

Location: Los Angeles

Type of Funding: Pre-seed, seed

Focus: Industry Agnostic, Connection to South LA and related communities

Notable Past Companies: ChargerHelp, Peadbo


Cedars-Sinai Accelerator

The Cedars-Sinai Accelerator is a three-month program based in Los Angeles that provides healthcare startups with $100,000 in funding, mentorship from over 300 leading clinicians and executives, and access to Cedars-Sinai's clinical expertise and resources. The program aims to transform healthcare quality, efficiency, and care delivery by helping entrepreneurs bring their innovative technology products to market, offering participants dedicated office space, exposure to a broad network of healthcare entrepreneurs and investors, and the opportunity to pitch their companies at a Demo Day.

Location: West Hollywood

Type of Funding: Seed, early stage, convertible note

Focus: Healthcare, Device, Life Sciences

Notable Past Companies: Regard, Hawthorne Effect


MedTech Innovator

MedTech Innovator is the world's largest accelerator for medical technology companies, based in Los Angeles, offering a four-month program that provides selected startups with unparalleled access to industry leaders, investors, and resources without taking equity. The accelerator culminates in showcase events and competitions where participating companies can win substantial non-dilutive funding, with the program having a strong track record of helping startups secure FDA approvals and significant follow-on funding.

Location: Westwood

Type of Funding: Seed, early stage

Focus: Health Care, Health Diagnostics, Medical Device

Notable Past Companies: Zeto, Genetesis


KidsX

The KidsX Accelerator in Los Angeles is a 10-week program that supports early-stage digital health companies focused on pediatric care, providing mentorship, resources, and access to a network of children's hospitals to help startups validate product-market fit and scale their solutions. The accelerator uses a reverse pitch model, where participating hospitals identify focus areas and work closely with selected startups to develop and pilot digital health solutions that address specific pediatric needs.

Location: East Hollywood

Type of Funding: Pre-seed, seed, early stage

Focus: Pediatric Health Care Innovation

Notable Past Companies: Smileyscope, Zocalo Health


Disney Accelerator

Disney Accelerator is a startup accelerator that provides early-stage companies in the consumer media, entertainment and technology sectors with mentorship, guidance, and investment from Disney executives. The program, now in its 10th year, aims to foster collaborations and partnerships between innovative technology companies and The Walt Disney Company to help them accelerate their growth and bring new experiences to Disney audiences.

Location: Burbank

Type of Funding: Growth stage

Focus: Technology and entertainment

Notable Past Companies: Epic Games, BRIT + CO, CAMP


Techstars Space Accelerator

Techstars Space Accelerator is a startup accelerator program focused on advancing the next generation of space technology companies. The three-month mentorship-driven program brings together founders from across the globe to work on big ideas in aerospace, including rapid launch services, precision-based imaging, operating systems for complex robotics, in-space servicing, and thermal protection.

Location: Los Angeles

Type of Funding: Growth stage

Focus: Aerospace

Notable Past Companies: Pixxel, Morpheus Space



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🚁 One Step Closer to Air Taxis in LA
Image Source: Joby Aviation

🔦 Spotlight

Joby Aviation, a pioneering electric air taxi company, has achieved a significant milestone by successfully flying a hydrogen-electric aircraft demonstrator for 523 miles with only water as a byproduct. This groundbreaking flight showcases the potential for emissions-free regional travel using vertical take-off and landing (eVTOL) aircraft, eliminating the need for traditional runways. The company's innovative approach combines its existing battery-electric air taxi technology with hydrogen fuel cells, paving the way for longer-range, environmentally friendly air travel.

For LA residents, this development holds exciting implications for future transportation options. Joby's technology could potentially enable direct flights from LA to destinations like San Francisco or San Diego without the need to visit conventional airports, offering a cleaner and more convenient alternative to current travel methods. The company's progress in both battery-electric and hydrogen-electric aircraft positions it at the forefront of next-generation aviation, promising to revolutionize urban and regional mobility.

Notably, Joby Aviation has already made strides in Southern California by securing an agreement with John Wayne Airport earlier this year to install the region's first electric air taxi charger. This strategic move sets the stage for LA to be among the initial markets where Joby will launch its electric air taxi service. With plans to commence commercial operations as early as 2025 using its battery-electric air taxi, LA residents may soon have access to a fast, quiet, and environmentally friendly mode of transportation that could significantly reduce travel times and traffic congestion in the region. In the not too distant future, LA might find itself in an identity crisis without traffic and excess smog 🤞🤞.


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