SAN ANTONIO – The federal lawsuit brought by Karma Automotive (Karma) against DeLorean Motors Reimagined (DMR) and select former employees of Karma has reached the stage where the company can respond publicly to the allegations.
The motives behind the suit against DMR, a newly formed venture, are deeply puzzling. DMR just launched its DeLorean Alpha5 concept vehicle at the 2022 Concours d’Elegance at Pebble Beach. DMR designed the Alpha5 from the ground up with its partner ItalDesign-Giugiaro (IDG), a wholly owned subsidiary of Audi, part of the Volkswagen Group. The timing of the suit appears intended to create the maximum amount of media coverage, coinciding as it did with the 2022 Concours d’Elegance and the launch of the Alpha5. DMR and the Alpha5 have nothing to do with the Project 88 project that forms the basis of Karma’s allegations.
The complaint is rife with selective quotes and characterizations of communications that portray a reality that never existed, while ignoring the key involvement and decisions of senior management at Karma and the parent company, Wanxiang Group Corporation (Wanxiang).
DMR hoped that the motions to dismiss filed by DMR and the other defendants would have spurred Karma to conduct due diligence into the merits of its claims. Those motions were supported by documentation that included a signed letter by Karma’s then-CEO enabling the individual defendants to explore opportunities to further the electrification project of the 1980’s DMC-12 (known within Karma as Project 88). Instead, Karma chose to continue this lawsuit after our initial response, purporting to question the authenticity of the evidence provided, even though that evidence has been available to it on its email servers since January 2021. Wanxiang was fully aware of this project since July 2020 through their liaison, Frank/Linyun Qi, currently Karma’s VP Corporate Development and Governance.
There are two main allegations in this lawsuit:
- DMR and the individual defendants stole Karma’s trade secrets (intellectual property or IP); and
- The individual defendants breached their fiduciary duties to Karma.
Regarding the IP allegations, Karma has failed to identify which part of the Alpha5 concept vehicle uses any of Karma’s alleged IP or which technologies our design partner IDG used that violate Karma’s alleged IP. The Alpha5 concept vehicle is a ground-up, 100% new design. It does not use any Karma IP.
Regarding the fiduciary duty complaints, the facts have already proven that Karma’s then-active C-suite executives, formalized in the approval letter executed by the former CEO, had decided not to make any equity investment into Project 88. While those executives are no longer at Karma – and current Karma CEO Jeff Wawrzyniak was not then part of the executive leadership team – that does not change the express written approval allowing the individual defendants to pursue the Project 88 opportunity.
Project 88 was intended as an opportunity for Karma to demonstrate that it could handle the engineering, design, and manufacturing required to produce a battery electric vehicle. But Karma was unable to fund or supply the required technology to pursue the project at that time. Indeed, DeLorean Motor Company, LLC – the owner of the rights to the DMC-12 vehicle that forms the concept behind Project 88 – has offered to allow Karma to pursue the Project 88 project. It simply has nothing to do with DMR or the Alpha5.
In summary, the individual parties are saddened by the lawsuit on a personal level as they dedicated many years of their lives trying to make Karma successful, in many cases going well outside the realm of their individual responsibilities.
On a professional level, our company is prepared to defend itself with the facts of what really happened in 2020 and 2021. We are looking forward to letting Karma’s current management understand that filing baseless complaints against innovative electric vehicle manufacturers will not help Karma build a successful B2B business, which appears to be Karma’s new direction.