For sale: A brand new luxury electric SUV for the holy-grail price of $25,000. There just might be a slight catch.
The California-based electric SUV company Fisker faces a real possibility of bankruptcy, and its stock is hovering just over 2 cents a share, far below its 2021 peak of $28.50.
And even though production has halted, the company still has SUVs to offer, so it’s having a sale. Prices for Fisker’s Ocean SUV have been cut by as much 39%. The catch, however, is that the car has received critical reviews rather than wide acclaim. And getting it serviced may not be easy.
The base sticker price for the top-of-the-line Fisker Ocean Extreme has been cut from about $62,500 to $37,5000. Prices for the Sport trim level have been cut from $39,000 to $25,000.
In announcing the price cuts, Fisker billed the move as a strategic shift rather than a fire sale.
“Fisker is strategically positioning the all-electric Ocean SUV to be a more affordable and compelling EV choice, competitively available to EV buyers in the broadest possible market,” the company said in announcing the price cuts.
The car itself has had some bad reviews. The Ocean was also the subject of a scathing review by American YouTube personality Marques Brownlee. His video was titled, “This is the Worst Car I’ve Ever Reviewed.”
“Do not buy this version of the Fisker Ocean,” reads the video’s description. Brownlee’s February 17 video has racked up more than 4.8 million views so far, and it sent Fisker’s stock price plunging after its release.
Fisker has said that problems with early versions of the vehicles’ software caused some of the negative responses. The company also said it plans to continue updating and improving the software through over the air updates that will be installed without the SUVs needing to be taken to a dealer or service center.
Fisker declined to say how the SUVs would be serviced in the event the company does go out of business. Fisker, founded in 2016 by a Danish auto designer named Henrik Fisker, had originally planned to sell and service vehicles itself, as other EV startups such as Tesla and Rivian do. Recently, though, Fisker shifted to recruiting independent dealers to sell vehicles the way more established automakers do.
By end of 2023, Fisker had signed up only 12 dealers in the United States and Europe, however.
Fisker had reported in early March that it could run out of cash to continue operations. Its SUVs are produced by the contract manufacturing company Magna Steyr in Austria. Last year, Magna produced more than 10,193 Fisker SUVs, but fewer than half of those were delivered to customers within the calendar year, the company announced in March.
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(Reuters) -Fisker on Thursday warned it might not be able to continue as a going concern as it struggled to sell its flagship electric vehicle after high interest rates have led to a slowdown in demand, sending its shares down 35% in extended trading.
The maker of Ocean electric SUVs said its current resources were “insufficient” to cover the next 12 months. Fisker said it would cut its workforce by about 15% and was in talks with a debt holder about a potential investment.
Fisker also said it was in talks with a large automaker about a deal that could include an investment in the startup, joint development of one or more electric vehicle platforms, and North America manufacturing. It did not disclose the name of the automaker or financials of the deal.
Fisker said it aims to deliver between 20,000 and 22,000 Ocean vehicles in 2024. If the additional financing plans do not materialize, the company said it might be forced to reduce production of Ocean, decrease investments, scale back operations and cut jobs further.
Fisker’s commentary followed disappointing production forecasts from larger peers Rivian and Lucid as high borrowing costs have sourced consumer sentiment and sharply slowed demand for EVs that are typically more expensive than gasoline-powered vehicles.
“2023 was a challenging year for Fisker, including delays with suppliers and other issues that prevented us from delivering the Ocean SUV as quickly as we had expected,” CEO Henrik Fisker said.
The company has been grappling with delivering its vehicles to customers. Though it made more than 10,000 vehicles in 2023 – less than a quarter of its initial forecast – it delivered only about 4,700.
Last month, Fisker said it would add dealerships alongside its direct-to-consumer distribution model to expand its delivery network. So far, Fisker has signed 13 dealer partners across the U.S. and Europe.
Fisker said its business plan was “highly dependent” on the successful transfer to the new dealer partner model this year.
Last year, Fisker unveiled a $45,000 electric pickup, Alaska, and a smaller SUV, PEAR, priced at $29,990. But the projects depend on the partnership.
“We are not planning to start external expenditure on our next projects until or we have a strategic partnership in place,” Henrik Fisker said on a post-earnings call with analysts.
On Thursday, Fisker reported preliminary revenue of $200.1 million for the fourth quarter, missing the average analyst estimate of $310.8 million, according to LSEG data. Net loss widened to $463.6 million from $170 million a year ago.
(Reporting by Zaheer Kachwala in Bengaluru and Abhirup Roy in San Francisco; Editing by Shailesh Kuber, Maju Samuel and David Gregorio)
Finally, some good news for Fisker(NYSE: FSR) investors! After a difficult third quarter that had production estimates slashed, a downbeat earnings report, a resigning chief accounting officer, and notice from the New York Stock Exchange for the late filing of its report, investors finally have some positive news heading into 2024. Let’s dig in and see if Friday’s stock price pop of roughly 15% is warranted.
Surprise
With so much pessimism surrounding the company, and a stock price testing new record lows, it didn’t take much to boost the price this past Friday when Fisker announced better-than-expected delivery numbers.
More specifically, Fisker grew deliveries by over 300% from the third quarter to the fourth quarter, reaching roughly 4,700 total deliveries. Fisker produced 10,142 units in 2023 with deliveries beginning in June and taking a big uptick in September and October.
Further, Fisker began deliveries in Canada during December and is now operating in 12 markets across the globe. The first Fisker Ocean Sport — the company’s entry-level trim — recorded its first delivery in the U.K. in December.
Before we surround those figures with a bit more context, it’s worth noting that Henrik Fisker, chairman and CEO, remained optimistic when speaking about the 4,700 deliveries: “This accomplishment represents substantial revenue, and as we accelerate our delivery pace in 2024, I am excited to see faster growth. We have a solid business with relatively low overhead and an award-winning vehicle that customers enjoy.”
Adding context
While the surge in deliveries was very much welcomed by investors, it’s fair to say there is some context worth adding. Investors have to remember that the California-based automaker originally estimated production between 20,000 and 23,000 units before slashing that estimate to between 13,000 and 17,000 units.
Finally, management lowered those estimates yet again to roughly 10,000 units as the company had been struggling with a cash crunch and decided to unlock over $300 million in working capital by reducing production.
Gaining momentum
Friday’s announcement likely confirmed to investors that some speed bumps were in the rearview mirror. Investors had hints that deliveries were accelerating when the company noted that over 1,200 vehicles were delivered in October alone, which exceeded the company’s entire third-quarter deliveries.
Fisker’s Ocean has won six different European awards in Germany, France, Denmark, and the U.K., delivered two important over-the-air (OTA) software updates in the fourth quarter, and expanded its physical footprint and customer engagement.
There’s no question the company is gaining some momentum heading into 2024, and the stock could certainly pop higher if the company proves it can expand its delivery infrastructure and close the gap between deliveries and production.
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Daniel Miller has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
