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CNBC ON DIGG

Can Hybrid Luxury Automaker Thrive With Old GM Plant?

Published: Monday, 26 Oct 2009 | 10:49 AM ET

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By: Phil LeBeau
CNBC Correspondent

The White House will herald it as proof America's auto industry is changing. Leaders in Washington will say this is the blue print for taking the shrinking big 3 and putting their abandoned plants to good use. For all the "feel good" cheer surrounding the announcement a former GM plant in Delaware will be renovated to build high-end hybrid cars, keep the hype in check.

Tomorrow, Vice President Joe Biden will be in Delaware to announce Fisker Automotive is taking over the old GM plant in Wilmington. Fisker won't confirm or comment about Tuesday’s events. But at a White House where pushing next generation cars/trucks is a priority, there's great enthusiasm for Fisker taking over the old GM plant. Who can blame them? After two years of auto plants closing and thousands being laid off, it's welcome news to see an automaker stepping up and kick starting mothballed assembly lines.

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But make no mistake; Fisker has its work cut out. The company's first model, The Karma, comes out in the middle of next year. CEO Henrik Fisker believes there will be robust demand for a luxury hybrid. In fact, The Karma is expected to price at more than $80,000. That's a lot of money for a gas-electric car — especially with gas prices holding at a modest price.

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Skeptics will say Fisker is misguided betting on high-end gas electric hybrids.

They'll say it's tough enough for a start-up to get its first models right and establish a following. Funny, people said the same thing when Tesla stated up. Remember how skeptics said Tesla will have just a few celebrities and rich people buy its luxury electric car and the company will struggle to grow. Tesla has proven those critics wrong. Now Fisker hopes to do the same thing.

So when the White House talks about a new day dawning for America's auto industry on Tuesday, remember this is still an industry trying to find itself after two brutal years. That should happen over the next two years. And when things settle out, Fisker is counting on its plant in Delaware as being a key in pushing America toward gas-electric hybrids.