Fisker Files For Chapter 11 Bankruptcy Protection

Electric vehicle (EV) manufacturer Fisker Inc. filed for Chapter 11 bankruptcy protection on Monday, citing significant cash burn, operational issues, and lackluster consumer demand. 

TakeAway Points:

  • Fisker Inc. listed $500 million to $1 billion in assets and $100 million to $500 million in liabilities when filing for Chapter 11 bankruptcy.
  • Just 4,929 of the 10,193 Ocean SUVs manufactured last year were delivered because of operational problems, such as software faults and production hold-ups.
  • Fisker’s bankruptcy is indicative of larger issues facing the electric vehicle (EV) industry, including slow consumer uptake and growing prices that are impacting companies like Lordstown Motors and Proterra.

Fisker Declares Insolvency

The company listed between $500 million and $1 billion in assets and between $100 million and $500 million in liabilities in its Delaware petition. This filing protects Fisker from creditors while it formulates a repayment plan.

Fisker, founded by renowned automotive designer Henrik Fisker, is the second EV company under his leadership to file for bankruptcy. His first venture, Fisker Automotive, filed for Chapter 11 protection in 2013. The current bankruptcy follows the company’s failure to secure a crucial investment from a major automaker, which was necessary to keep operations afloat.

The company had gone public in 2020 through a special purpose acquisition company (SPAC) sponsored by Apollo Global Management Inc., which provided Fisker with roughly $1 billion in cash. Despite this, Fisker struggled to meet its sales targets and faced numerous operational challenges, including software bugs that delayed production and led to multiple recalls of its Ocean SUV.

Financial and Operational Challenges

Fisker’s operational issues were evident even before its public market debut. In an investor presentation, the company revealed it had only $1.9 million left on its balance sheet. The partnership with Magna International Inc. was intended to be an “asset-light” strategy, allowing Fisker to save cash and focus on software development. However, this approach did not yield the expected results.

The company produced 10,193 Ocean SUVs last year but delivered only 4,929 vehicles to customers. Fisker attempted to pivot by seeking partnerships with franchised dealers in North America, moving away from direct-to-consumer sales. Despite these efforts, the company warned in February about its ability to continue operating and later secured $150 million from an existing lender, contingent on further investment from an unidentified automaker. When these talks failed, Fisker’s financial situation became untenable.

Fisker’s bankruptcy filing lists several major creditors, including Google, Adobe, and Salesforce. The company also owes millions to software and engineering firms such as Adobe, SAP America, and Manpower Group. At the end of last year, Fisker had $530 million in inventory, having sold only 4,700 of the more than 10,000 Ocean EVs produced in 2023.

Industry and Market 

Fisker’s bankruptcy is part of a broader trend affecting EV startups. Other companies, like Proterra, Lordstown Motors, and Electric Last Mile Solutions, have also filed for bankruptcy protection. The EV market has faced challenges such as slower-than-expected consumer adoption, rising costs, and waning investor interest in EVs other than Tesla.

“Tesla and other big manufacturers have either big head starts or huge advantages in a technically complex product,” noted Lex, highlighting the competitive pressures faced by newer entrants like Fisker. The economic backdrop, including surging interest rates and increased production by other EV makers, has further complicated Fisker’s situation.

Researcher BloombergNEF recently revised its battery-electric vehicle sales projections through 2026, citing expectations for a slower shift away from combustion engines in major markets like the US, Germany, and the UK. This market environment has made it difficult for startups to gain a foothold.

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