Tesla rival Fisker scrambles for cash as it lays off 15% of staff

Things are going from bad to worse for the once-promising EV startup Fisker, as the carmaker that hoped to challenge Tesla says it may not have enough cash to survive the year.

The California-based EV company is slashing 15% of its workforce and scrambling for investment as it faces growing pains from its shift from direct-to-consumer sales to a dealership model.

“2023 was a challenging year for Fisker, including delays with suppliers and other issues that prevented us from delivering the Ocean SUV as quickly as we had expected,” Fisker’s Danish founder and CEO, Henrik Fisker, said in a statement alongside the carmaker’s preliminary earnings release.

Fisker’s boss, who is hoping to avoid becoming the face of two failed carmakers following the collapse of Fisker Automotive in 2013, lamented a “turbulent and unpredictable period” for the EV market, as shares in the automaker plunged 35% after-hours on news of the results.

“With that understanding and taking the lessons learned from 2023, we have put a plan in place to streamline the company as we prepare for another difficult year,” he said.

But even these comments are generous, as the automaker faces the whiplash of several blunders and miscalculations that have left it on a financial cliff and on the verge of being kicked out of the New York Stock Exchange.

Fisker needs cash

Ultimately, Fisker is in desperate need of cash to continue as a going concern beyond 2024.

Fisker says it is in negotiations with a “large automaker” about a potential investment that would allow it to create “one or more electric vehicle platforms” and increase North American manufacturing.

The company has cash reserves of $395.9 million, though more than $70 million worth of those reserves are restricted.

That wouldn’t be enough to cover Fisker’s losses of $417 million last year if it repeats that red ink in 12 months’ time.

The company made $272 million in sales last year after it delivered 4,929 Fisker Oceans to customers. It hopes to increase deliveries to between 20,000 and 22,000 this year, which would go some way to allaying financial concerns.

Stuttered deliveries

However, Fisker hasn’t had an easy ride getting its cars off the lot.

The carmaker is sitting on $538.9 million worth of inventory and prepaid raw materials, and the group is struggling to turn its bumper production into sales.

Fisker says sales were hit last year as it attempts to shift its sales model to focus on dealer partnerships, and away from its previous direct-to-consumer setup, which it says prompted the culling of 15% of its headcount.

The group says it has received more than 250 expressions of interest since announcing the new model in January.

Back in September, Fisker said it expected to ramp up deliveries of its EVs to the U.S. and Europe to 300 a day by the end of 2023.

However, by December the group was falling well short of its targeted 100 to 200 daily deliveries in the U.S., TechCrunch reported, citing internal documents.

This resulted in the company delivering less than half of the Ocean SUVs that it produced last year.

In November, Fisker cut its production forecasts for 2023 from between 20,000 and 23,000 to between 13,000 and 17,000 cars to avoid sitting on too much inventory.

The group has also been marred by quality concerns both in and out of the car.

The automaker is the subject of a probe by the U.S. National Highway Traffic Safety Administration (NHTSA) after thousands of Fiskers rolled away involuntarily last year.

In a video review of the Fisker Ocean, prominent YouTuber Marques Brownlee, also known as MKBHD, said the SUV was the “worst car” he had ever tested, owing to software issues. He did however compliment the SUV’s interior.

Fisker also ran into trouble last year as it was forced to delay third-quarter results, citing problems with its internal financial reporting that also saw two chief accounting officers resign in quick succession.

The company’s latest full set of results have also been delayed, with its latest release caveated with an asterisk as being preliminary.

Shares in Fisker tumbled last week after the group received a noncompliance letter from the NYSE after its share price closed below $1 on average for 30 trading days. It is exploring options, including a reverse stock split, to stay on the exchange.

Mounting problems

Fisker’s problems, many of them internal, are also the product of an EV sector in disarray as carmakers are hit by a collection of headwinds, including falling demand from buyers in the wake of low gas prices and a harsher economic environment.

In February, Rivian predicted zero production growth this year as it laid off 10% of its staff, citing wider headwinds including higher interest rates.

Speaking to journalists this week following its latest earnings release, Aston Martin executive chairman Lawrence Stroll said the carmaker was delaying the launch of its own EV by a year to focus on hybrids, citing low consumer demand.