Fisker Electric Vehicle Company: Survival Uncertainty and Financial Challenges
In a significant announcement made during its fourth quarter earnings on Thursday, Fisker, the electric vehicle (EV) company founded by renowned auto designer Henrik Fisker, disclosed potential financial instability that might threaten its existence beyond the next year. The company acknowledged a “substantial doubt about Fisker’s ability to continue as a going concern.” To sustain business operations for the subsequent 12 months, Fisker needs to secure additional financing from investors.
Fisker’s stock price closed at $0.75 per share on Thursday but fell further to around $0.40 in morning trading on Friday. The company is currently engaged in negotiations with an existing investor for potential funding, and it also plans to reduce its workforce by 15% as part of cost-cutting measures.
According to Fisker’s fourth quarter financial report, the company incurred a loss amounting to $463.6 million while generating only $200 million in revenue in Q4 2023. This significant loss included a $325 million adjustment related to convertible notes. Operating losses stood at $103.5 million for the quarter.
Fisker markets the Ocean electric SUV, an innovative vehicle with a unique business model. The company outsources the manufacturing of this single model entirely to Magna, a global automotive manufacturer that has previously collaborated with Mercedes-Benz, BMW, and Jaguar.
Henrik Fisker, the company’s founder and CEO, acknowledged the difficulties faced in 2023, which included delays from suppliers and other unforeseen issues that slowed the delivery of the Ocean SUV. Magna produced over 10,193 Fisker SUVs in 2023; however, fewer than half of these were delivered to customers within the calendar year. The company anticipates delivering approximately 20,000 SUVs in 2024.
Fisker failed to submit its official Form 10-K report, which comprises its full annual report, for 2023 due to the need for more time to finalize the document. The company stated that it would file this report by March 15, 2024. Fisker acknowledged a “material weakness in revenue and the related balance sheet accounts” that will be disclosed in the upcoming report.
Initially, Fisker’s business strategy involved direct sales to customers without an intermediary dealer, much like Tesla. However, the company altered its approach in 2023 and started signing up franchised dealers. As of recently, Fisker has secured deals with 12 such dealers across the US and Europe.
This is not Henrik Fisker’s first venture in the automotive industry. His initial company, Fisker Automotive, produced a plug-in hybrid luxury car called the Fisker Karma. Regrettably, this business went bankrupt in 2013 when a considerable portion of its inventory was destroyed by Hurricane Sandy.
