Electric vehicle company Fisker recently issued a going concern warning amid continued production and supply chain challenges.

Background

In prior Supply Chain Matters commentaries, we have highlighted ongoing production and supply chain challenges related to high profile EV start-ups Rivian Automotive and Lucid.

Our commentary published at the end of February profiled and contrasted the 2023 financial and operational performance from both of these start-ups. Our perspective was that both of such niche market segment start-up players would be able to financially sustain themselves if industry demand for respective products were robust and that supporting supply chain and production strategies were well managed. Instead, the EV industry segment remains challenged, and so is this industry’s supply networks.

Fisker’s Financial Performance and Subsequent Warning

In conjunction with the reporting of 2023 financial performance, California based Fisker announced that the company would lay off upwards of 15 percent of its current staffing, amid cash and ongoing business and supply chain related challenges.

The company additionally issued a formal going concern warning, in essence warning that the company’s ability to continue operating as a business over the next twelve months is dependent on critical milestones including an added cash infusion. The company reported a cash balance of slightly over $325 million at the end of 2023.

According to a published report by The Wall Street Journal (Paid subscription), this asset light company has recently elected to transition its business model to an auto dealership based vehicle distribution model.

In 2020, Fisker went public as an asset-light company under a special-purpose acquisition company (SPAC). This auto designer’s original plan was a direct to consumer vehicle distribution and delivery model, similar to that of Tesla.

Being asset light, vehicle production was planned to be outsourced. In February of 2021, Supply Chain Matters highlighted a memorandum of understanding with global contract manufacturing provider Foxconn Technology for volume production. At the time, reports had indicated that this MOU agreement included the capacity to produce upwards of 250,000 vehicles annually.

Since that time, the company’s first model was subsequently outsourced to industry contract manufacturing services provider Magna Steyr utilizing a production facility located in Austria.

The company’s CEO now acknowledges that the EV industry is transitioning within a rather turbulent market demand period. Shipping new vehicles from Austria to the U.S. market also comes with logistical challenges, hence the stated need for a U.S. based dealer network.

The report indicated that upwards of 10,000 vehicles were produced in 2023 vs. a stated target of 13,000 vehicles. Reportedly, only 4,900 vehicles have been delivered to customers, the remaining in finished vehicle inventory and valued at half a billion dollars in tied-up capital.

Once more, the company has a stated goal to produce upwards of 22,000 vehicles in 2024.

Potential Tie-Up

The latest development surrounding Fisker is a published report from Bloomberg, citing informed sources as indicating that the EV start-up is in talks with Nissan Motor for a financial lifeline. According to this report, Nissan may invest upwards of $400 million in Fisker’s EV truck platform and planned pick-up truck.

Added Thoughts

If Fisker’s efforts for added liquidity are not successful, it would represent a further casualty of high-flying and innovative start-ups that were seeking to disrupt the industry with differing business, supply chain and production ramp-up strategies. Brands such as EV parcel van producer Arrival and EV auto designer Lordstown Motors have already succumbed to bankruptcy or liquidation.

 

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