Fisker Facing Financial Fire Again, Talks To Nissan

Fisker Inc. seems to be circling the drain…again.

The battery-electric-vehicle company has become a penny stock, and the company is burning cash and reaching out for new capital, including an investment from and possible joint-venture with Nissan.

The company says it is preparing to cut 15% of the workforce.

Fisker’s shares plunged 39% to $0.44 Friday morning. The stock fell 76% last year. 

The company had a disastrous fourth quarter, losing $400 million, with roughly $400 million in cash on hand while sales are stagnating.

Talks with Nissan were ongoing last week with a potential deal to invest capital into Fisker, and partner on an EV pickup. Why Nissan, with longer established EV tech credentials than Fisker and plenty of experience making pickups would need or want a tie-up with Fisker is a mystery. Fisker does have an EV pickup platform, but Nissan engineers will have to determine whether it is up to Nissan standards, and how much revision will have to be done on it.

The company is Henrik Fisker’s second try at launching and sustaining an eponymous car company in the tradition of DeLorean and Bricklin, though the designer had visions of joining the ranks of Ferrari and Dodge in terms of longevity of having his name on automobile grilles.

Fisker Inc. was launched in 2016 by the founder and his wife, Geeta Gupta-Fisker. The company did an initial public offering (IPO) in 2020 through a merger with Spartan Energy Acquisition Corp., backed by Apollo Global Management. Then, a reverse merger was completed with Fisker being the listed entity on the New York Stock Exchange.

The venture was viewed as viable in the wake of Tesla Motors’ success and the regulatory mandates set by the European Union and U.S. to phase out internal combustion engines in favor of BEVs. The thinking was that there would be plenty of room for high-end, luxury BEVs.

But the BEV revolution is not happening on a straight line of upward sales. Despite a roaring stock market and strong economy after the COVID-19 pandemic, consumer demand for BEVs is slowing and companies bigger and better-resourced than Fisker, plus the growth of Chinese BEV companies in the EU countries and China, are making it difficult for upstarts. Lucid, for example, is also having difficulty gaining sales traction.

It didn’t help Fisker’s campaign for credibility when NHTSA’s Office of Defects Investigation recently initiated a “preliminary evaluation” after receiving nine complaints about braking for Fisker’s Ocean SUV. The complaints allege the Ocean is prone to losing partial braking performance without alerting the driver, with one complaint even alleging a crash.

Henrik Fisker revealed Feb. 29 that he is in talks with a “large automaker” for a capital infusion, though it is difficult to imagine what an established automaker outside of China would see in the Fisker brand. According to financial reports, the Fiskers hold 20% of the company’s shares.

Fisker is funded by several institutional investors, including C4 Ventures and BlackRock, as well as retail investors still hanging in.

Macroaxis recently reported, based on analysis, that Fisker had a 54% probability of bankruptcy. Macroaxis analysis is based on financial distress measured by how much difficulty a company has meeting its current financial obligations toward creditors and delivering on expectations of investors.

This is not Fisker’s first drive into the fire. Fisker Automotive was founded in 2007, producing a plug-in hybrid-electric vehicle called the Fisker Karma. That company received significant private and public investment, including a $529 million loan from the federal government. The company had raised over $1 billion from private investors including Kleiner Perkins. Fisker Automotive filed for Chapter 11 Bankruptcy in 2013 after a recall of batteries from its supplier A123 Systems, and a loss of 338 vehicles due to a hurricane that hit the New York port where the cars were sitting.