Fisker
is the latest electric vehicle maker to cut prices for its EVs. The stock is falling, as the move raises more questions about demand and pricing.
Fisker (ticker: FSR) announced it was cutting the price of its Ocean Extreme trim to about $61,500 from $69,000. It’s $7,500 off. What’s more, reservation holders who have already agreed to pay the higher price will get a $7,500 credit.
“It is essential that Fisker responds to competitive realities in the rapidly growing EV market,” CEO Henrik Fisker said in a news release. “We want our customers to have greater access to the Ocean and to be able to take advantage of its exciting combination of innovative features, striking design, sustainable materials, and class-leading range.”
The Extreme is the highest trim-level of the SUV. The Ocean Sport starts at around $37,500. Car makers typically start out making higher-end versions of vehicles. It’s more revenue. Fisker made just over 1,000 Ocean SUVs in the second quarter. It plans to make more than 20,000 in 2023. Fisker uses auto parts giant
Magna International
(MGA) to build the Ocean. Magna owns the plant.
Fisker stock is down 4.4% at $5.20 a share. The
S&P 500
and
Nasdaq Composite
are down 0.7% and 1% respectively.
Investors don’t like price cuts. It can signal less demand or more competition. Both are likely true.
Tesla
(TSLA) has been cutting prices aggressively in 2023 to offset the impact of higher interest rates on buyers. Higher rates equal higher monthly payments for vehicles bought with financing. Tesla’s price cuts have also pressured just about every other EV maker to do the same.
The positive side of lower prices is demand growth has been maintained. U.S. EV sales hit about 313,000 units in the third quarter, up about 50% year over year. It’s come at the expense of profits though. Tesla reported a third-quarter operating profit margin of less than 8%, down almost 10 percentage points year over year.
Fisker ended the second quarter with about $15 million in customer deposits on its books, implying about 61,000 reservations. That is flat with the end of 2022. The state of current reservations isn’t known. The company didn’t immediately respond to a request for comment about order intake.
It’s been a tough few months for shares. Fisker stock is down about 12% over the past three months and off about 28% over the past year. Fisker stock dropped 4.7% in Friday trading while the Nasdaq fell 1.5%.
The price cuts show that things aren’t getting any easier.
Write to Al Root at [email protected]
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