Electric vehicle (EV) builder Fisker may be headed for bankruptcy soon. The company announced today that it will halt production of cars for at least six weeks while it works to avoid a collapse.
The company says the pause will help it “align inventory levels and progress strategic and financing initiatives.” But The Wall Street Journal last week reported that Fisker had “hired restructuring advisers to assist with a possible bankruptcy filing.”
The company announced $150 million in financing this morning, part of an agreement with “an existing investor.” But that amount will do little to keep a struggling automaker afloat.
A Culling of EV Startups Is Likely
Starting a new car company is one of the most expensive and difficult challenges in the business world. It requires an immense outlay of capital and tolerance for years of losses before the first profit. Tesla, for instance, had its first profitable quarter selling cars in its 18th year in operation. Profits came quickly for the company after that point – but not many rivals could absorb nearly two decades of expenses before breaking into the black.
Today’s EV startups may have a harder road, as Tesla was able to stay afloat in part by selling other automakers regulatory credits required under emissions laws. Now that most rivals build EVs, few need to buy the credits.
That’s why many analysts expect a culling of EV startups in the coming years. Many companies have launched in hopes of becoming the next Tesla. Most plan to skip building a dealership network and sell cars directly to consumers, Tesla-style.
Many are likely to fail.
Deep Pockets May Matter More Than Great Products
Some have significant financial backing. Rival Lucid, for instance, has attracted Saudi investment based on its successful Lucid Air sedan. That gives it some runway to work with.
Others, like Fisker, have less investor backing. Their products may be attractive – Fisker’s Ocean SUV is handsome, with many promising ideas including a well-designed interior and a solar roof to add an all-day trickle of charge into its batteries.
It also plans an affordable EV called the Pear, a pickup called the Alaska, and a high-performance convertible, the Ronin.
But deep pockets may matter more than great products. The Endurance pickup from startup Lordstown Motors, for instance, was announced as a finalist in the 2023 North American Car of the Year awards in the truck category shortly before that company’s bankruptcy.
Fisker is the second effort from famed car designer Henrik Fisker – the man responsible for the original BMZ Z8 and the look of the Aston Martin DB9. His first attempt delivered about 2,000 Fisker Karma sedans before filing bankruptcy in 2013.
Rescue Plan Still In Play?
The company still has one card left to play. In a press release this morning, Fisker says it is “continuing negotiations with a large automaker for a potential transaction which could include an investment in Fisker, joint development of one or more electric vehicle platforms, and North America manufacturing.”
That company is widely rumored to be Nissan.
