Electric Car Company Admits Insufficient Funds for the Next 12 Months, Stock Price Plummets to 40 Cents

In a recent business report, Fisker, the electric car company founded by automotive designer Henrik Fisker, admitted that they may not have enough money to survive another year. The company stated that there is “significant doubt about Fisker’s ability to continue as a going concern.” To sustain their operations for the next 12 months, Fisker will need additional funding from investors. As a result of this announcement, Fisker’s stock plummeted to just 40 cents, down from 75 cents at the end of trading on Thursday.

The company is currently in discussions with an existing investor about the possibility of injecting more money into the company, although no further details have been disclosed. In an effort to cut costs, Fisker will also be laying off 15% of its workforce.

In the fourth quarter of 2023, Fisker reported a loss of $463.6 million, with $200 million in revenue. This loss includes a $325 million adjustment related to convertible bonds, while the company’s operating loss stood at $103.5 million.

Fisker operates under a unique business model where they completely outsource the production of their current model, the Ocean electric SUV. The Ocean is manufactured in Austria by Magna, a company that has also produced cars for Mercedes-Benz, BMW, and Jaguar.

Henrik Fisker commented, “2023 has been a challenging year for Fisker, including delays with suppliers and other issues that have prevented us from delivering the Ocean SUV as quickly as expected.”

Last year, Magna produced over 10,193 Fisker SUVs, but less than half of them were delivered to customers in the calendar year. Fisker plans to deliver around 20,000 vehicles this year.

Fisker failed to submit a complete annual report for 2023, stating that they needed more time to finalize the report, which will be submitted by March 15.

Fisker initially planned to sell its vehicles directly to customers without independent dealerships, following in the footsteps of Tesla. However, this year, Fisker has changed its strategy and started registering authorized dealers. So far, the company has registered 12 dealers in the United States and Europe.

This is Henrik Fisker’s second automotive venture, with his first company, Fisker Automotive, producing the luxury plug-in hybrid car called the Fisker Karma. That company went bankrupt in 2013.

Competition in the electric car market is intensifying as traditional automakers and start-ups strive to fill exhibition halls. The inventory of electric vehicles is starting to increase, putting pressure on newcomers like Fisker, especially as market leaders like Tesla have decided to lower prices this year to stimulate demand.

“It will be very challenging to compete with larger-scale competitors. No start-up has the financial situation to enter the market,” said Mark Wakefield, managing director at consulting firm AlixPartners.

In response, Fisker’s CEO admitted last July that the current environment has become less “friendly” to new brands like Fisker. “There will be a big battle for consumers. The ‘pie’ will be somewhat split in 2026,” he said. However, the CEO remains optimistic that it’s not too late for Fisker to enter the market, as consumers may not be strongly loyal to any particular brand.

Fisker went public in 2020 when investors were enthusiastic about EV start-ups.

The Ocean SUV is the first model among the three planned releases by Fisker. The smaller, more affordable crossover named PEAR is expected to hit the market in early 2025. The Alaska pickup truck was originally scheduled for release in August 2023 but has been delayed.

According to experts, Fisker’s electric vehicle production process still requires a significant amount of money. The brand itself needs to be aware of its strengths in order to compete with established names like Tesla or Lexus.

Just a few months ago, the CEO stated that the company did not need to raise additional capital immediately due to the advantage of leveraging contract manufacturers. However, the current situation seems to have changed significantly.

Source: CNN