Business & Economy

Why is a Chinese auto parts company making cars in Southern California?

Fisker Automotive recently agreed to lease a 555,6700-square-foot industrial building in Moreno Valley, where it plans to make its luxury, plug-in electric hybrid Karma sports car.
Fisker Automotive recently agreed to lease a 555,6700-square-foot industrial building in Moreno Valley, where it plans to make its luxury, plug-in electric hybrid Karma sports car.
Fisker Automotive

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For the first time since GM left Van Nuys in 1992, cars will be rolling off an assembly line in Southern California.

Fisker Automotive recently agreed to lease a 555,670-square-foot industrial building in Moreno Valley, where in June it announced plans to make its luxury, plug-in electric hybrid Karma sports car, according to Colliers International, which represented Fisker in the transaction.

When most people think electric luxury cars they think Tesla, which has been a darling of Wall Street. Fisker, which was founded in Anaheim, has driven a rockier road. Two years ago, it filed for bankruptcy, and last year it was bought at auction by Wanxiang Group, a Chinese auto parts company. Which raises the question: Why would a Chinese company want to make cars in the Inland Empire?

“That’s a great question,” said Eric Lyman, vice president of industry insights at TrueCar.

“It is a bit puzzling,” said Jessica Caldwell, a senior analyst at Edmunds.com. 

Caldwell says that even though labor is expensive in California, there is a lot of local talent with the expertise to design and manufacturer the Karma, which is the only model the company has ever built.

“Southern California is the hotbed for green vehicles,” said Caldwell.

The company plans to hire about 150 high-skilled workers at the facility; it held a job fair last month for positions that paid as high as $26 an hour, according to the Press Enterprise.

Lyman points out that Southern California is also home to a lot of wealthy environmentally conscious consumers who can afford the cars' $100,000-plus price tag, which makes distribution easier.

“There is a philosophy in the automotive industry that you build them where you sell them,” said Lyman.

The plant is also close to the ports of Long Beach and Los Angeles, which makes it easy to send and receive components. 

"It is a very accessible plant," said Lyman.

Another appeal for Fisker: it received incentives from Moreno Valley, including a discount on its electricity bill, according to Colliers. 

Lyman said it's still an open question whether Americans will want to buy cars made in China. Volvo is about find out when it begins selling its Chinese-made S60 in the U.S. later this year.