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Once-Promising Electric Vehicle Company Crashes and Burns, Files for Bankruptcy
The company was once hyped as the next thing in EVs. One review of its product called its only vehicle "The Worst Car I’ve Ever Reviewed."
C. Douglas Golden By C. Douglas Golden June 19, 2024Commentary
By C. Douglas Golden June 19, 2024 at 6:45am
Electric vehicle industry darling and entrepreneur Henrik Fisker’s company has gone bankrupt. Again.
In what was arguably the least-surprising news ever for those of us who follow the automotive industry, Fisker — the second eponymous heavily hyped electric vehicle startup created by the former BMW and Ford designer — filed for bankruptcy protection late Monday, according to Reuters.
The brand’s parent company, Fisker Group Inc., said in the Delaware Chapter 11 bankruptcy filing that its assets totaled between $500 million and $1 billion. Its liabilities, meanwhile, were between $100 million and $500 million.
The copacetic corporate spin on the bankruptcy filing was that the cash burn from introducing the brand’s only automobile, the Fisker Ocean crossover, had left it without the capital to continue without protection from between 200 and 999 creditors, the court filing stated.
Furthermore, talks with an unnamed automaker for a rescue deal this year — rumors were that it was Nissan, according to Reuters, although this was never confirmed — did not lead to an agreement to rescue the company.
After the termination of talks was announced, one analyst said the bankruptcy was coming sooner or later. “I can’t put it if it is next week or next year, but it is inevitable,” said Thomas Hays, chairman of the hedge fund Great Hill Capital.
In addition, the company’s eponymous founder cited problems in the ultra-competitive EV market, especially for startups.
“Like other companies in the electric vehicle industry, we have faced various market and macroeconomic headwinds that have impacted our ability to operate efficiently,” Fisker said. “After evaluating all options for our business, we determined that proceeding with a sale of our assets under Chapter 11 is the most viable path forward for the company.”
Reuters added that EV startups Proterra, Lordstown and Electric Last Mile Solutions also filed for bankruptcy over the past two years.
Less discussed in talk of the bankruptcy filing, however, was the nature of the Fisker Ocean itself — a vehicle so flawed that one prominent YouTuber who test-drives EVs bluntly titled his review video with the crossover thusly: “This is the Worst Car I’ve Ever Reviewed.”
Consumer Reports was also less than enthusiastic about the Ocean, which was billed as a full-featured EV crossover for under $40,000.
While the organization’s Keith Barry wrote in an April review that “the concept looked good on paper — an all-electric compact SUV with 360 miles of range and a starting price of $38,900,” he said the car was “unfinished,” “buggy” and gave drivers a “nauseating” sensation while driving due to the vibrations from the regenerative braking system.
In addition, promised safety features either didn’t work or only worked intermittently — which, if you think about it, is just as much of an issue as safety features that don’t work at all.
“It’s inexcusable that safety and other features promised on the Ocean’s window sticker come and go, with their absences only occasionally accompanied by warning messages,” Consumer Reports stated:
In addition to the safety issues, reviewers said the interior “feels like a cheap polyester suit”
As previously noted, this was the second attempt at an EV marque by the Danish-born Fisker. The first iteration of Fisker Automotive sought to challenge then-startup Tesla, mostly known for its Roadster sports car, with a sports car of its own, the Fisker Karma.
Probably the best illustration of why that company filed for bankruptcy in 2013 can be summed up by a Business Insider headline from a year prior: “SPOTTED: Here Is a Fisker Karma That Isn’t Broken Down.” A rare sight, indeed.
Fisker produced just over 2,400 Karmas; one notable owner was Hunter Biden, who would go on to trade in the $142,000 sports car for a more sensible Porsche. It was probably the smartest decision the future first son made during that period of his life, from all available evidence.
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As for the Ocean, which was designed to be more of a mass-market vehicle, the company delivered only half of the 10,000 vehicles it produced last year — some with discounts of up to $24,000, according to Autoweek, due to the desperation caused by the company’s cash flow problems.
It’s not like it should have had these problems, either; as Reuters noted, “Fisker went public in late 2020 in a merger with a blank-check firm, valuing it at $2.9 billion and infusing its balance sheet with more than $1 billion in cash.”
For all we know, Fisker resurrects itself and starts fixing the problems with the Ocean with some miraculous infusion of cash. Weirder things have happened; consider that financiers gave Henrik Fisker another chance at running an EV startup after the failure of the Karma.
However, Monday’s filing is more evidence of the problem with EVs in generaland EV startups in particular: Despite no real evidence that these vehicles are catching on beyond a niche clientele who want to virtue-signal about their environmental bona fides, with the possible exception of Tesla, investors and corporate boards continue to throw money at electric vehicle projects that sound too good to be true — because they are.
Simply judging from the stats alone, the Fisker Ocean looked great on paper. Cars, alas, are not driven on paper.
Bankruptcies are filed on them, however — and Fisker won’t be the last EV startup to take this ignominious route.
Heck, it might not even be the last company called Fisker to do it.