Wow that;s a STEEP cut.....
The Austrian-made Fisker Ocean EV was a much-anticipated launch for the California-based independent brand with a distinctive SUV style. It offers up to 360 miles of estimated electric range, with prices that range from less than $40,000 to more than $70,000
“FISKER OCEAN 2020”
They could not have imagined it, and it has occurred in a stunning reversal that highlights the inhumane nature of the fledgling electric car industry with failed EV maker Fisker being granted by a court to sell a large part of its remaining stock at an extremely low fraction of the purchase price. It is a drastic, though harsh, step in the desperate efforts of the company to control its Chapter 11 bankruptcy operation and offer a certain degree of clarity in the face of its current financial crisis.
The implication of such a transaction is that the average cost per Fisker vehicle is about 14,000, which is an unbelievable 80 percent discount of the 70,000 price tag that a fully-loaded Ocean SUV fetched last year. Prior to its aggressive discounting, the models were priced between $39,000 and $70,000 with the highest end Ocean Extreme experiencing a reduction of its price by as much as 61,500 to 37,500 in March alone. This is a drastic fall that underscores the deep financial crisis that has swallowed the company.
The desperation behind such a fire sale is tangible, and the lawyers of Fisker are stressing the fact that the company is in urgent need of funds to meet its operational costs. More importantly, the company has indicated that the sale of even 200 of these vehicles within a shortened timeframe would generate the much-needed cash to cover payroll next month, a harsh reality of the bare corporate requirements that even startups with promise have to fulfill to stay alive.
Fisker, which was once billed as a possible competitor to the industry leader, Tesla, has been walking a fine line of misfortune and unprofitable business practices. The history of the company, its early potential, and its present bankruptcy protection search provide a powerful case study of the difficulties of growing an automotive company, particularly in the extremely competitive and capital-intensive electric vehicle market.
The origins of Fisker’s failure can be traced almost as far as its flagship Ocean SUV was released into the market in 2023. The eponymous founder, Henrik Fisker, had dreamed of an EV empire but this dream was quickly shattered by a combination of operational mistakes, production problems, and major quality control problems that have plagued the vehicle since its inception.
In 2023, the faults in the ambitious plans of Fisker became more obvious. The automaker missed its production goal in the second quarter, producing 1,022 Ocean SUVs instead of the expected 1,400 to 1,700 vehicles. In order to finance its activities, Fisker declared in July that it would sell $340 million of convertible debt, with net proceeds of approximately 297 million expected to be used in general corporate purposes and future product development.
The financial pressure saw Fisker reducing its production plans to about 10,000 vehicles a year in December 2023, down from about 40,000 cars per year a year earlier, an amount it had optimistically projected. This move was taken in an attempt to release $300 million in working capital which is an indication of bigger issues than had been initially realized.
The Ocean SUV itself was a point of concern, and it had a long list of safety and performance problems. The National Highway Traffic Safety Administration (NHTSA), which is the federal safety regulation agency, began an investigation into the braking issues after 19 complaints were received by January 15. These grievances were as far as total loss of brakes to problems with the gear shifter, a driver door that would not open, and even the hood of the vehicle flying off unexpectedly on the highway.
Cases of vehicle malfunctions were still on the rise. As of February 9, customers had documented more than 100 individual loss-of-power incidents, and problematic key fobs that locked drivers in or out, seat sensors that could not detect the presence of a driver, and the repeat problem of the front hood opening unexpectedly at high speed. Fisker claimed at the time that it felt that these issues were infrequent and mostly addressed through software updates, which did not provide much relief to the owners who were affected.
To make its predicaments even worse, the NHTSA began a second inquiry of the Ocean SUV on February 16, after four complaints of the vehicle rolling away unintentionally, which led at least to one reported injury. This cycling chain of quality problems severely undermined consumer trust and increased the financial misfortunes of the company.
In March 18, Fisker made the radical move of halting the production of its electric Ocean SUV in six weeks, wildly seeking a cash injection. Regulatory filings showed that the company only had a small amount of cash and cash equivalents of $121 million and accounts payable of a significant amount of 182 million and thus there was a substantial doubt regarding the company ability to remain in business without new capital.
To make the crisis worse, a potential investment and collaboration with a large automaker (which was reportedly Nissan) was canceled on March 25. This shattering news endangered a separate, short-term rescue funding proposal. The New York Stock Exchange halted Fisker shares trading and delisted the company on the same day, finding it no longer suitable to list because of the abnormally low price levels.
To make its operational mess even more complicated, Fisker lost the millions of dollars in customer payments temporarily as it ramped up deliveries. A self-audit, which started in December, and took months to be finished, revealed loose internal practices, some vehicles even being delivered without any payment being received.
Hundreds of additional workers were laid off by the end of May and it is believed that there are only around 150 individuals left at the company. The story that came out of within Fisker, as recounted on May 31, was that of a failure that was premeditated with hubris, power politics, and the inability to establish fundamental processes, which are central to any car manufacturer, and the imperfect Ocean SUV was at its center.
Fisker recalled the first Ocean SUV only a few days before it filed bankruptcy, on June 12, stating that it had issues with warning lights showing incorrect fonts, colors and not lighting up, making them uncompliant with Federal Motor Vehicle Safety Standards. At last, Fisker filed Chapter 11 bankruptcy protection on June 18, a year after the initial, inexorable struggle, and estimated assets of between 500 million and 1 billion dollars and liabilities of between 100 and 500 million dollars.
The functionality and support of their vehicles is the immediate concern of the owners. In theory, a Fisker Ocean EV will not stop functioning, because the company is still in business in Chapter 11. Nonetheless, third-party providers deal with cloud-connected functions, including navigation and roadside assistance. There were reports of roadside assistance being already reduced because of non-payment.
CONTINUED:
The Austrian-made Fisker Ocean EV was a much-anticipated launch for the California-based independent brand with a distinctive SUV style. It offers up to 360 miles of estimated electric range, with prices that range from less than $40,000 to more than $70,000
They could not have imagined it, and it has occurred in a stunning reversal that highlights the inhumane nature of the fledgling electric car industry with failed EV maker Fisker being granted by a court to sell a large part of its remaining stock at an extremely low fraction of the purchase price. It is a drastic, though harsh, step in the desperate efforts of the company to control its Chapter 11 bankruptcy operation and offer a certain degree of clarity in the face of its current financial crisis.
Fisker Fire Sale in Bankruptcy Mishaps
The core of this developing drama is that the deal is worth up to 46.25 million dollars, and the troubled automaker is on the verge of selling slightly less than 3,300 of its Ocean electric SUVs. This is a mass sale, a momentous compromise of the once-ambitious vision of the company, which will be sold to American Leasing, the company that offers vehicles to the thousands of Uber and Lyft drivers that are currently in operation in New York City.The implication of such a transaction is that the average cost per Fisker vehicle is about 14,000, which is an unbelievable 80 percent discount of the 70,000 price tag that a fully-loaded Ocean SUV fetched last year. Prior to its aggressive discounting, the models were priced between $39,000 and $70,000 with the highest end Ocean Extreme experiencing a reduction of its price by as much as 61,500 to 37,500 in March alone. This is a drastic fall that underscores the deep financial crisis that has swallowed the company.
The desperation behind such a fire sale is tangible, and the lawyers of Fisker are stressing the fact that the company is in urgent need of funds to meet its operational costs. More importantly, the company has indicated that the sale of even 200 of these vehicles within a shortened timeframe would generate the much-needed cash to cover payroll next month, a harsh reality of the bare corporate requirements that even startups with promise have to fulfill to stay alive.
The Ambitions of Fisker and their Awakening and Fall
Fisker, which was once billed as a possible competitor to the industry leader, Tesla, has been walking a fine line of misfortune and unprofitable business practices. The history of the company, its early potential, and its present bankruptcy protection search provide a powerful case study of the difficulties of growing an automotive company, particularly in the extremely competitive and capital-intensive electric vehicle market.
The origins of Fisker’s failure can be traced almost as far as its flagship Ocean SUV was released into the market in 2023. The eponymous founder, Henrik Fisker, had dreamed of an EV empire but this dream was quickly shattered by a combination of operational mistakes, production problems, and major quality control problems that have plagued the vehicle since its inception.
In 2023, the faults in the ambitious plans of Fisker became more obvious. The automaker missed its production goal in the second quarter, producing 1,022 Ocean SUVs instead of the expected 1,400 to 1,700 vehicles. In order to finance its activities, Fisker declared in July that it would sell $340 million of convertible debt, with net proceeds of approximately 297 million expected to be used in general corporate purposes and future product development.
The financial pressure saw Fisker reducing its production plans to about 10,000 vehicles a year in December 2023, down from about 40,000 cars per year a year earlier, an amount it had optimistically projected. This move was taken in an attempt to release $300 million in working capital which is an indication of bigger issues than had been initially realized.
Mounting Safety Concerns
By the time 2024 started, Fisker was still grappling with sales. The firm was nowhere near its publicly announced objective of providing 300 electric SUVs in a day across the world. Fisker in North America, where most of its inventory and sales activities were focused, was typically selling between one and two dozen Ocean SUVs per day, nowhere near its internal goal of 100 to 200 cars per day.The Ocean SUV itself was a point of concern, and it had a long list of safety and performance problems. The National Highway Traffic Safety Administration (NHTSA), which is the federal safety regulation agency, began an investigation into the braking issues after 19 complaints were received by January 15. These grievances were as far as total loss of brakes to problems with the gear shifter, a driver door that would not open, and even the hood of the vehicle flying off unexpectedly on the highway.
Cases of vehicle malfunctions were still on the rise. As of February 9, customers had documented more than 100 individual loss-of-power incidents, and problematic key fobs that locked drivers in or out, seat sensors that could not detect the presence of a driver, and the repeat problem of the front hood opening unexpectedly at high speed. Fisker claimed at the time that it felt that these issues were infrequent and mostly addressed through software updates, which did not provide much relief to the owners who were affected.
To make its predicaments even worse, the NHTSA began a second inquiry of the Ocean SUV on February 16, after four complaints of the vehicle rolling away unintentionally, which led at least to one reported injury. This cycling chain of quality problems severely undermined consumer trust and increased the financial misfortunes of the company.
Financial Freefall
By February 29, when Fisker announced it was laying off 15 percent of its staff, the financial distress had become critical, and the company openly acknowledged that it probably did not have sufficient cash to last 12 months. The company was also trying to make a drastic strategic change and transition to a dealership network, which was a direct-sales model, in the face of extreme liquidity constraints.In March 18, Fisker made the radical move of halting the production of its electric Ocean SUV in six weeks, wildly seeking a cash injection. Regulatory filings showed that the company only had a small amount of cash and cash equivalents of $121 million and accounts payable of a significant amount of 182 million and thus there was a substantial doubt regarding the company ability to remain in business without new capital.
To make the crisis worse, a potential investment and collaboration with a large automaker (which was reportedly Nissan) was canceled on March 25. This shattering news endangered a separate, short-term rescue funding proposal. The New York Stock Exchange halted Fisker shares trading and delisted the company on the same day, finding it no longer suitable to list because of the abnormally low price levels.
To make its operational mess even more complicated, Fisker lost the millions of dollars in customer payments temporarily as it ramped up deliveries. A self-audit, which started in December, and took months to be finished, revealed loose internal practices, some vehicles even being delivered without any payment being received.
Layoffs to Liquidation: The Last Fall
In April, layoffs resumed, with the company looking to protect itself under bankruptcy in 30 days unless new funding was obtained. By May 3, Fisker was no longer paying the engineering company that assisted in the development of its intended low-cost Pear EV and the Alaska pickup truck, and was accused of holding intellectual property wrongfully. On May 10, a fourth federal safety investigation into the Ocean SUV was launched, in regards to allegations of unintentional Automatic Emergency Braking.Hundreds of additional workers were laid off by the end of May and it is believed that there are only around 150 individuals left at the company. The story that came out of within Fisker, as recounted on May 31, was that of a failure that was premeditated with hubris, power politics, and the inability to establish fundamental processes, which are central to any car manufacturer, and the imperfect Ocean SUV was at its center.
Fisker recalled the first Ocean SUV only a few days before it filed bankruptcy, on June 12, stating that it had issues with warning lights showing incorrect fonts, colors and not lighting up, making them uncompliant with Federal Motor Vehicle Safety Standards. At last, Fisker filed Chapter 11 bankruptcy protection on June 18, a year after the initial, inexorable struggle, and estimated assets of between 500 million and 1 billion dollars and liabilities of between 100 and 500 million dollars.
The Market and Fallout of Fisker Owners
To the current owners of Fisker Ocean, the filing of the bankruptcy immediately triggered a phase of severe uncertainty. Although a Chapter 11 filing will protect a company against creditors, enabling it to reorganize, it does not ensure its survival. The Heights Capital Management, the largest secured creditor of the company, subsequently stated that it was planning to convert the bankruptcy to Chapter 7 liquidation, which would essentially wipe out Fisker permanently.The functionality and support of their vehicles is the immediate concern of the owners. In theory, a Fisker Ocean EV will not stop functioning, because the company is still in business in Chapter 11. Nonetheless, third-party providers deal with cloud-connected functions, including navigation and roadside assistance. There were reports of roadside assistance being already reduced because of non-payment.
CONTINUED:
