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Fisker, the U.S. electric vehicle (EV) maker, filed for Chapter 11 bankruptcy protection on Monday. After exhausting cash reserves to scale up Ocean SUVs’ production, the company aims to sell assets and restructure its debt.
The hyper-competitive EV market has witnessed multiple bankruptcies in recent years, including Proterra, Lordstown, and Electric Last Mile Solutions. These companies have faced declining demand, fundraising challenges, and global supply chain disruptions.
Company Background:
The company was founded by automotive designer Henrik Fisker, who had previously expressed concerns about its sustainability in February. A failed investment deal with a major automaker reported as Nissan deprived Fisker of $350 million in conditional funding, further complicating its financial situation.
In its bankruptcy filing in Delaware, Fisker Group Inc. reported assets between $500 million and $1 billion and liabilities ranging from $100 million to $500 million. Major creditors include Adobe, Google, and SAP.
Historical Perspective:
Fisker went public in late 2020 through a merger with a blank-check firm, valuing it at $2.9 billion and providing over $1 billion in cash. This was Henrik Fisker’s second attempt to establish a successful automotive business after his first venture, Fisker Automotive, went bankrupt in 2013.
Fisker’s “asset-light model,” aimed at reducing development costs and time, struggled with the Ocean SUV, which faced numerous software and hardware issues. Consumer Reports labeled the vehicle “unfinished business,” under investigation for various regulatory compliance issues.
Business Model Shifts:
Despite switching to a dealership-based distribution model in January, Fisker could not sell off more than 5,000 vehicles from its inventory. This shift came after delivering fewer than half the 10,000 vehicles it produced the previous year.
Garrett Nelson, vice-president and equity analyst at CFRA Research, noted that Fisker’s bankruptcy was expected, given the company’s prolonged financial difficulties. He suggested that Fisker is unlikely to be the last EV startup to face such a fate.
