Fisker Faces Bankruptcy As EV Sector Struggles

Henrik Fisker, once more, has faced failure with his electric car company filing for bankruptcy this week, amid an industry downturn.

Henrik Fisker and his wife, Dr. Geeta-Gupta Fisker, headed Fisker Inc. as chairman/CEO and CFO/COO respectively. This venture was Fisker’s second attempt at the car industry after the collapse of Fisker Automotive in 2013. That company, known for its hybrid plug-in Karma, attracted high-profile investors like Al Gore and Leonardo DiCaprio but went bankrupt after a key supplier failed. Despite producing around 2,000 cars, it burned through $1.4 billion.

Fisker Inc. was meant to be different. Henrik Fisker assured investors he had learned from past mistakes, securing over $1 billion to launch the Ocean SUV and partnering with CATL, a leading Chinese battery manufacturer. Yet, despite these efforts, the company filed for bankruptcy protection on Monday.

The company is now trying to sell assets and restructure its debt. It lists assets between $500 million and $1 billion and liabilities from $100 million to $500 million, with major creditors including Adobe, Google, and SAP.

“We have faced various market and macroeconomic headwinds,” Fisker Inc. said in a statement, attempting to explain its struggles.

Fisker had hoped to revolutionize the car industry, allowing customers to buy vehicles via an app, service them easily, and lease them on flexible terms. The Ocean SUV, designed with sustainability in mind, featured recycled materials, a vegan interior, and solar panels capable of generating over 2,000 miles of power in ideal conditions. Production was outsourced to Magna Steyr in Austria to reduce costs and speed up development.

However, the Ocean SUV faced criticism for software and hardware problems. Influencer Marques Brownlee called it “the worst car I’ve ever reviewed,” and Consumer Reports deemed it “unfinished business.” Additionally, the US auto safety regulator is investigating Fisker for braking issues and other defects.

Despite producing over 10,000 vehicles last year, less than half were delivered. By January, Fisker shifted from a direct-to-consumer model to dealership-based distribution but still couldn’t clear an inventory of more than 5,000 cars. In February, the company expressed doubts about its viability. In March, it slashed the price of its entry-level model, the Ocean Sport, by 36% to $24,999 to attract buyers and meet debt obligations. Production was paused for six weeks, and Fisker raised $150 million by selling convertible notes after missing an interest payment.

Former employees have criticized Fisker’s management, citing poor processes. “The lack of processes and procedures was kind of mind-blowing,” said Sean O’Grady, a former sales manager. Fisker, however, is also a victim of a broader EV market slump, where supply exceeds demand. Several EV firms, including Proterra and Lordstown, have gone bankrupt recently.

Mark Juron, an automotive consultant, noted that infrastructure for widespread EV adoption is still lacking and could take at least a decade to develop. With high cash burn rates, more EV ventures are likely to fail. “Sooner or later, the deepest pockets have a bottom,” Juron said.