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Fisker aspired to build “the world’s most emotional and sustainable electric vehicles”. Instead, the company’s capital structure proved unsustainable as it filed for bankruptcy overnight Monday — no doubt an emotional moment for its founder Henrik Fisker and his wife who is the company’s chief financial officer.
The company had taken advantage of the pandemic Spac boom — partnering with Apollo Global — to list its shares, even as it was still proving its ability to manufacture cars.
Its listing raised roughly a billion dollars and it since got another billion from selling convertible bonds. Yet all it had to show for the full year of 2023 was 10,000 built Ocean SUVs — only half of which were actually delivered to customers — for total revenue of less than $300mn. At its 2021 public debut, it had forecast 51,000 in total deliveries and $3bn in revenue.
Entrepreneurship has proved tough in EVs as high interest rates have dried up fresh capital opportunities. Fisker and others have had trouble reaching the required scale in manufacturing necessary to generate the gross profit margins needed to self-fund production.
At the same time, Tesla and other big manufacturers have either big head starts or huge advantages in a technically complex product. Fisker has made the choice not to reorganise but to sell its assets, hoping some other deep-pocketed party wants to make a go of it.
In happier times, Fisker favourably compared itself to Apple. Like the iPhone maker, it wanted to rely on third parties — in its case Magna International — to outsource production and be “asset-light” and IP-heavy. Supposedly, Fisker margins would be higher and the price point for consumers, with an SUV for under $40,000, would be lower.
However, federal regulators at one point investigated if the Ocean’s braking system even worked and the company has not been able to file its most recent quarterly results.
According to the US Department of Energy, EVs now account for nearly a fifth of light vehicle sales in the US. But adoption has slowed because of high costs, concerns about charging infrastructure and even the politicisation of clean energy.
Lordstown Motors and Arrival are two other EV upstarts that have recently filed for bankruptcy. Others may soon follow. As these companies disappear, it will be interesting to see if their technologies are ultimately adopted by other incumbents. That wasn’t the plan but perhaps will still prompt some emotion.
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