American electric vehicle startup Fisker formally announced Tuesday it had filed for Chapter 11 bankruptcy protection, CNN reports.
The new filing reportedly comes after the company failed to secure an investment from an unnamed major OEM to keep afloat.
Cash crunch forces Fisker to sell assets
In hindsight, Fisker had already warned during its quarterly earnings publication that it might not secure sufficient funds to survive another year. At the time, the SUV maker disclosed that it was encouraging an existing investor to allocate more money to support the company’s operations.
On Tuesday, a Fisker spokesperson clarified the current situation and the company’s final decision.
“Like other companies in the electric vehicle industry, we have faced various market and macroeconomic headwinds that have impacted our ability to operate efficiently. 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.”
Fisker spokesperson said in a statement
The move will allow Fisker to address and solve its financial problems through reorganization. In this sense, the company is now in “advanced discussions with financial stakeholders” about selling its assets.
As per the filing, Fisker indicated an estimated assets of $500 million to $1 billion. Meanwhile, its liabilities are between $100 million and $500 million, with 200 to 999 creditors.
Fisker Ocean SUV flopped
Fisker’s sole offering, the Ocean electric SUV, hit approximately 10,000 production units in 2023. However, the company disclosed in its earnings report in February that it only sold about 50% of the total.
In the same month, prominent American tech reviewer Marques Brownlee reviewed the Fisker Ocean in a YouTube content titled “This is the Worst Car I’ve Ever Reviewed.”
Brownlee goes on to write, “Do not buy this version of the Fisker Ocean” in the video’s description. In effect, Fisker’s stock dropped notably following the review’s release.
As of today, the video has accumulated 5.7 million views.
Fair enough, founder and CEO Henrik Fisker admitted in a past interview that the electric SUV had quality issues due to software from various suppliers that failed to work appropriately when combined.
Competition
Fisker also got in the middle of the intensifying competition among established electric automakers, legacy brands, and innovative startups.
Apart from pioneer Tesla, strong contenders like Hyundai, Kia, Ford, and GM also have electric SUV offerings similar to the Ocean SUV. However, they attract more customers due to their established name and reputation in the industry.
In addition, low-cost electric SUVs from Chinese automakers have also put more pressure on Fisker. BYD even managed to beat Tesla as the top-selling EV maker in Q4 2023.
Fisker’s filing for bankruptcy demonstrates the challenges facing the global push for electrification. The IEA projects the global plug-in vehicle sales to surge 21% in 2024, down from the 35% growth in the prior year.
