EV sales are up, but the companies that are hinging their entire existence on plug-in power are not doing so well. Production struggles, waning demand, and high interest rates are threatening to wipe some of them off the map. The latest is Fisker, the California-based company with big ambitions but dwindling cash.
Fisker said that there is “substantial doubt” that it will have enough money to make it through the year, the company said in filings with the Securities and Exchange Commission yesterday. As such, it’s embarked on a cost-cutting spree, laying off 15 percent of employees, while casting around for more investment. Fisker said it’s “in discussions with an existing noteholder about potentially making an additional investment in the company.”
“We are aware that the industry has entered a turbulent, and unpredictable period.”
“We are aware that the industry has entered a turbulent, and unpredictable period,” Fisker CEO Henrik Fisker said in a statement. “With that understanding and taking the lessons learned from 2023, we have put a plan in place to streamline the company as we prepare for another difficult year.”
The company recently made the switch from a direct-sale model, like Tesla, to franchised dealerships, which it said could produce some cost savings. As such, employees who were working in direct sales are the most likely to be let go. Fisker also said it would streamline its operations, including reducing its “physical footprint,” raising the possibility it would close offices or sales locations.
Despite these headwinds, Fisker said it’s still hoping to grow, especially if 2024 proves to be a better year for EV sales than predicted. It is in “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,” Fisker said.
For years, Henrik Fisker has preached the gospel of selling EVs that people can afford. But the company’s asset-light business model, relying on Magna Steyr, an Austrian contract manufacturer for Mercedes-Benz and BMW, to build the Fisker Ocean SUV, has yet to prove successful.
Despite these headwinds, Fisker said it’s still hoping to grow
Last year, a short seller released an explosive report alleging that Fisker’s current cash balance was tied up in undisclosed bank guarantees to Magna Steyr. It also claimed the Ocean’s platform is based on that of a Chinese crossover also made by the contract manufacturer. Fisker denied the claim.
Also, quality remains an issue. Some Ocean owners have complained that their EVs are losing power, and there are additional complaints of malfunctioning key fobs and hoods that suddenly open while in motion, according to TechCrunch. The company claims it has addressed most of these issues through software updates.
The landscape for pure EV companies has gotten more difficult in the past year, as some customers are proving reluctant to make the switch to full-electric vehicles, citing sticker shock and unreliable charging networks. EV sales are still growing but at a slower pace than expected. Meanwhile, hybrid vehicles are selling at a higher rate than battery EVs.
