US electric car maker Fisker Inc filed for bankruptcy late on Monday as it seeks to salvage the business through asset sales and debt restructuring after burning through cash to expand production of its Ocean SUV.
In the competitive EV market, several companies, including Proterra, Lordstown and Electric Last Mile Solutions, have filed for bankruptcy in the past two years as they grapple with operational challenges due to declining demand, financing obstacles and global supply chain issues.
The company, founded by car designer Henrik Fisker, raised doubts about its ability to stay in business in February and was then forced to scale back after failing to secure investment from major automakers.
The breakdown in talks with an automaker, reported by Reuters to be Nissan Motor Co., has forced Fisker to explore its options after it was denied $350 million in funding from an unnamed investor that was contingent on the automaker investing.
“Like others in the electric vehicle industry, we face a variety of market and macroeconomic headwinds that impact our ability to operate efficiently,” Fisker said.
Fisker Group, the company’s division that filed for Chapter 11 bankruptcy in Delaware, estimated its assets at between $500 million and $1 billion and liabilities at between $100 million and $500 million.
The company’s 20 largest creditors include Adobe, Alphabet Inc.’s Google and SAP, according to the filing.
Unfinished business
Fisker went public in late 2020 through a merger with a blank check company, giving it a market capitalization of $2.9 billion and injecting more than $1 billion in cash onto its balance sheet.
Going public was a second chance to build an auto business for the company’s Danish CEO and founder: His first company, Fisker Automotive, filed for bankruptcy in 2013 after falling victim to the 2008 financial crisis and battery problems in its Karma hybrid sedan that led to a massive recall.
At the time of its IPO, former Tesla design consultant Henrik Fisker said the company wanted to become the Apple of the auto industry by outsourcing its car manufacturing.
The “asset-light model” was intended to shorten vehicle development time and reduce the costs of bringing vehicles to market.
But the company’s Ocean SUV has been plagued by software and hardware problems, leading influential nonprofit Consumer Reports to call the vehicle “unfinished business.”
The car is under regulatory scrutiny for problems including braking issues, issues shifting into park and other modes and doors that sometimes wouldn’t open.
Fisker was able to deliver less than half of the more than 10,000 vehicles it produced last year, so it abandoned the direct-to-consumer approach pioneered by Tesla Inc. and shifted to a dealer-based distribution model in January.
The company had agreements with 15 dealers in the United States and 12 partners in Europe, but was still unable to clear out its inventory of more than 5,000 vehicles.
“Fisker has been on life support for several months now, so today’s announcement is not a surprise. The company is not the first EV startup to declare bankruptcy, and we don’t expect it to be the last,” said Garrett Nelson, vice president and equity analyst at CFRA Research.
