Is the future of Fisker threatened?

The electric car manufacturer Fisker warns in its latest annual report that it may be unable to continue operations. The current resources are not sufficient to cover the next twelve months.

Such warnings occur from time to time and do not necessarily result in the insolvency of a company. In this way, Fisker’s management draws investors’ attention to the increased risk and thus protects itself, especially in the US, from possible investor lawsuits if insolvency does occur.

Additional capital needed

However, one thing is clear: the company needs additional capital and has announced that it will reduce its workforce by around 15%. In the fourth quarter alone, the company posted a net loss of $463.6 million, or €428.7 million. In Q4 2022, the loss was 170 million dollars.

Turnover in the final quarter of 2023 was $200 million, falling well short of analysts’ expectations of around $310 million. It has been known for months that things are not going well at Fisker. The company had lowered its production forecast for 2023 several times, from over 42,000 units initially to 10,000 vehicles most recently.

The most recent revision of the forecast was released in December. The reason given for the move was to produce fewer vehicles in December than previously planned to “prioritize liquidity and free up over $300 million in working capital, which creates additional business flexibility”.

Too dependent on the direct sales model?

“2023 was a challenging year for Fisker, including delays with suppliers and other issues that prevented us from delivering the Ocean SUV as quickly as we had expected,” says CEO Henrik Fisker.

In January, Fisker had already announced its intention to establish dealerships in addition to the familiar direct sales model. According to Reuters, the company has already signed up 13 dealerships in the US and Europe. Fisker said its business plan is “highly dependent” on the successful transition to the new dealer partner model this year.

Partner search

The company also cited two other potential lifelines. Fisker is negotiating with a major car manufacturer about a possible investment and a development partnership. Reuters thinks to know who it is: “Nissan is in advanced talks to invest in electric vehicle maker Fisker, in a deal that could provide the Japanese automaker with access to an electric pickup truck while giving the struggling start-up a financial lifeline, according to two people familiar with the negotiations.”

The deal would reportedly involve Nissan investing $400 million in Fisker. It would also involve Nissan building the Alaska pickup truck unveiled by Fisker last year at one of its US plants. On top of that, Nissan could use the Alaska platform to build its electric pickup truck. Neither Nissan nor Fisker commented on the report.

Fisker’s stock dropped by more than 50% today after its earnings release, but the stock recovered a bit after the report that Nissan is considering investing.

Lean company

Fisker does not have its own production facilities and wants to be a lean design and development company. The Ocean is built at Magna in Graz, while Fisker has partnered with the contract manufacturer Foxconn for the announced Pear small car.

In addition to the talks with the major car manufacturer, Fisker said that talks were being held with a debtor about a possible investment. No further details are known on this. Fisker’s production forecast for 2024 is a range of 20,000 to 22,000 Ocean cars (i.e., around half of the original 2023 target).

To achieve this volume, Fisker says it already needs additional financing. If this does not materialise, the company will be forced to reduce production of the Ocean, cut investments, and cut further jobs.

Future models like the Pear and the Alaska e-pickup are also on hold. “We do not plan to start external spending on our next projects until a strategic partnership is in place,” said Henrik Fisker in an analyst call.

Not easy for start-ups

Other American eMobility start-ups, like Rivian and Lucid, had previously presented their annual figures and reported high net losses. However, Rivian and Lucid are not questioning their own continued existence. Nevertheless, both companies expect production to remain at the previous year’s level in 2024 and, therefore, do not anticipate growth.

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