The Rise and Decline of Fisker: A Detailed Journey Through an EV Dream

Fisker significantly reduced production targets on multiple occasions, fell short of sales expectations, and proceeded with workforce reductions. Additionally, the Ocean SUV faced a series of software and mechanical challenges, which left some vehicles unusable. Among the problems were faulty brakes, unexpected power losses, and issues with door functionality, which prompted several safety investigations and ultimately a halt in production to secure new funding.

These challenges culminated in Fisker filing for Chapter 11 bankruptcy protection, signalling a troubling chapter for the startup. Below is a chronological summary of the events leading to this situation.

2023

Fisker missed its Q2 production target

July 7 — During the second quarter of 2023, Fisker managed to produce 1,022 Ocean SUVs, falling several hundred units short of its goal of between 1,400 and 1,700 EVs.

Fisker issued convertible notes to sustain operations

July 10 — Fisker revealed intentions to issue $340 million in convertible debt, anticipating net proceeds of around $296.7 million. These funds were earmarked for general corporate expenses and to establish an additional battery pack production line to facilitate growth in 2024 and beyond. The company aimed to allocate part of the funding towards capital investment and future product development.

Revised production targets

December 1 — Fisker lowered its annual production forecast to conserve $300 million in working capital, estimating 10,000 vehicle outputs for 2023. This projection represents only a quarter of the optimistic outlook shared a year prior.

2024

Fisker faced challenges in achieving internal sales objectives

January 1 — Fisker was far from fulfilling its publicly announced target of delivering 300 electric SUVs daily worldwide. Throughout December, the company aimed to attain an internal sales goal of 100 to 200 vehicles daily in North America, which constitutes the bulk of its inventory and sales strategies. However, Fisker frequently fell short of this target, typically selling only one to two dozen Ocean SUVs daily.

Investigation launched into Ocean SUV due to braking complaints

January 15 — U.S. safety regulators initiated an investigation into Fisker’s inaugural electric vehicle over braking issues. Owners filed 19 complaints with the National Highway Traffic Safety Administration (NHTSA) concerning brake failure, gear shift malfunctions, a driver door that failed to open from the inside, and two incidents where the hood unexpectedly lifted while driving.

Customers reported sudden power losses and braking issues for months

February 9 — Since the initial deliveries of the Fisker Ocean SUVs, customers have documented over 100 cases of unexpected power loss. The company asserted to StartupSuperb that these occurrences are infrequent and that most issues have been worked out through software updates. Reports also included abrupt brake power loss, problematic key fobs causing users to be locked inside or outside the SUV, seat sensors failing to register the driver’s presence, and the vehicle’s hood unexpectedly lifting at high speeds.

Second investigation launched into the Ocean SUV following rollaway complaints

February 16 — NHTSA opened a second investigation into the Fisker Ocean after receiving four reports of the vehicle rolling away unexpectedly, resulting in one injury. The company indicated to StartupSuperb that it is “fully cooperating” with safety authorities.

Fisker dismissed 15% of its workforce

February 29 — Fisker announced that it would reduce its workforce by 15% and indicated it might not have sufficient cash reserves to sustain operations for the next year. The company is seeking ways to generate necessary funds while transitioning from a direct sales strategy to a dealership model.

Production halt with only $121 million cash on hand

March 18 — Fisker declared a six-week halt to the production of its Ocean SUV while seeking a cash injection. In a regulatory notice, the company stated it had $121 million in cash and cash equivalents as of March 15, of which $32 million was restricted or inaccessible. Fisker also reported having accounts payable of up to $182 million, expressing “substantial doubt” about its ability to continue operations without securing new financing.

Fisker lost the Nissan collaboration, jeopardizing rescue funding

March 25 — Negotiations between Fisker and a prominent car manufacturer, believed to be Nissan, regarding potential investment and partnership concluded unsuccessfully, endangering a separate imminent funding effort. Fisker disclosed in a regulatory report that the discussions were terminated on March 22, without providing a reason. The continuation of these talks had been a necessary condition for a potential $150 million convertible note.

Trading of shares suspended by NYSE

March 25 — The New York Stock Exchange suspended the trading of Fisker shares and began the process to remove the company from its listing, due to it is no longer appropriate for listing due to abnormally low price levels.

Fisker Mismanaged Millions in Customer Payments

March 27 — Fisker experienced significant challenges while scaling up its vehicle deliveries, misplacing millions in customer payments for several months. An internal audit, initiated in December, revealed the company’s struggle to monitor these payments—ranging from down payments to full vehicle costs—due to insufficient internal tracking procedures, according to three insiders familiar with the financial discrepancies. In some instances, vehicles were delivered without securing any payment, they noted.

New Layoffs to Conserve Cash

April 29 — Fisker reduced its workforce again in a move to conserve cash, fulfilling a strategy announced a week earlier, as disclosed in an internal email reviewed by StartupSuperb. The company is considering filing for bankruptcy protection within the next month if it fails to secure necessary funding, according to a U.S. Securities and Exchange Commission regulatory document.

Fisker Ceased Payments to Engineering Firm

May 3 — Fisker halted payments to the engineering firm responsible for developing the Pear, an affordable electric vehicle aimed at the mass market, as well as the Alaska, Fisker’s entry into the growing pickup truck sector. The firm also claims that Fisker is illegally retaining intellectual property related to these models.

Fisker Ocean Undergoes Fourth Federal Safety Investigation

May 10 — The NHTSA launched its fourth inquiry into the Fisker Ocean SUV due to multiple reports of “unintentional Automatic Emergency Braking.” Eight complaints detail experiences where owners reported unexpected activations of the Automatic Emergency Braking system when no obstructions were present in their vehicle’s path.

Mass Layoffs to Sustain EV Startup

May 29 — During the last week of May, Fisker laid off hundreds of employees in a desperate effort to remain operational while seeking funding, a potential buyer, or preparing for bankruptcy. Estimates from both a current and a former employee suggest that approximately 150 individuals now remain with the company.

Inside Fisker’s Downfall

May 31 — Fisker’s path to downfall may have begun and culminated with its faulty Ocean SUV, plagued by numerous mechanical and software issues. However, the journey was also characterised by pride, internal power struggles, and a failure to implement essential operational protocols crucial for any automobile manufacturer.

First Recall Issued for Ocean SUV

June 12 — Fisker announced its first recall for the Ocean SUV due to warning light malfunctions, as stated by the NHTSA. The instrument panel exhibited brake, park, and antilock brake system warning lights in incorrect font sizes and colours, rendering them non-compliant with Federal Motor Vehicle Safety Standards. The agency also noted the failure of multiple warning lights to activate during the ignition process.

Fisker Filed for Bankruptcy Protection

June 18 — After a challenging year, Fisker entered Chapter 11 bankruptcy protection. The California-based firm had sought a partnership with another automaker as a final attempt to salvage its business. According to the filing, the company reported assets of between $500 million and $1 billion, and liabilities ranging from $100 million to $500 million.

Fisker Struggled to Operate as a Car Manufacturer

June 18 — Following its bankruptcy declaration, Fisker stated it would continue with “limited operations,” which include “maintaining customer programmes and compensating essential vendors moving forward.” This means the company will run a minimal operation as they await potential buyers for their assets that are up for sale as part of the Chapter 11 proceedings.

Financial Distress Started as Early as August 2023

June 21 — Recent documents filed during Fisker’s Chapter 11 proceedings indicate that the company faced “potential financial distress” from as early as August 2023. This troubling financial situation prompted Fisker to seek partnerships or investments from other automotive firms, as outlined in the filing.

Disputes Over Fisker’s Assets Intensify

June 21 — The dispute concerning Fisker’s assets has quickly become contentious mere days after its bankruptcy filing, with accusations that the startup has been liquidating assets “without the court’s oversight.” The conflict centres on Fisker’s relationship with its major secured lender, to whom it borrowed over $500 million in 2023 amid growing financial difficulties.

Fisker’s Proposal to Sell EVs for Approximately £14,000 Each

July 3 — If approved by a judge in the Delaware Bankruptcy Court, Fisker’s request to sell its remaining inventory to a New York-based vehicle leasing firm would allow the automaker to offload 3,231 completed EVs for a total of £46.25 million, equivalent to around £14,000 per vehicle.

Henrik Fisker and Geeta Gupta-Fisker Reduce Salaries to £1

July 9 — Henrik Fisker and co-founder Geeta Gupta-Fisker announced that they are drastically reducing their salaries to £1 to ensure the funding of their troubled startup’s bankruptcy procedures. In addition to this salary cut, Fisker’s restructuring officer, John DiDonato, indicated that the company will delay “certain severance payments, selected employee healthcare benefits, and unpaid vehicle sale incentive bonuses.”

Major Opposition to Fisker’s Ocean SUV Firesale

July 15 — The U.S. Trustee’s office, part of the Department of Justice that supervises bankruptcy administration, has lodged an objection to a deal that is intended to maintain Fisker’s bankruptcy process and facilitate repayment to creditors.

Fisker Approved to Sell North American EVs for £46.25 Million

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July 16 — A bankruptcy judge has authorised Fisker to sell over 3,000 Ocean SUVs to a vehicle leasing firm, potentially generating up to £46.25 million for the struggling electric vehicle startup. This sale’s approval paves the way for Fisker’s ongoing bankruptcy proceedings as it continues to liquidate the remnants of its failed operations.

Key Issue in Fisker’s Bankruptcy

July 29 — The pressing question is whether Heights Capital Management, Fisker’s secured lender, should be first in line to receive the liquidation proceeds. The involved parties are set to negotiate a settlement in the coming weeks regarding asset liquidation. A successful outcome could allow the case to remain under Chapter 11, but failure would lead to conversion to Chapter 7, effectively ending Fisker’s operations permanently.

Fisker’s Stance on Recall Costs

September 18 — As Fisker navigated the bankruptcy landscape, many owners were concerned about how recalls would be managed. In mid-September, the company unexpectedly announced it would cover the cost of parts, while owners would bear the labour expenses. Shortly thereafter, Fisker reversed this position, declaring that it would also cover the labour costs.

SEC Investigation Launched

October 4 — The U.S. Securities and Exchange Commission disclosed its investigation into Fisker, which may result in allegations of violations of federal securities laws. The regulator informed the bankruptcy court that it has issued several subpoenas, expressing concerns that Fisker lacked a strategy to protect its records. (Fisker eventually addressed the SEC’s concerns, but the current status of the investigation remains unclear.)

Fisker’s Headquarters Found in Disarray

October 5 — The landlord of Fisker’s final headquarters, located in La Palma, California, reported that the premises were left in “complete disarray,” with hazardous materials and full-size clay models of vehicles abandoned. The landlord’s documentation indicates that a chaotic few days ensued, during which Fisker employees and auction house representatives vacated the facility.

DOJ Deems Fisker’s Recall Plan Illegal

October 7 — The U.S. Department of Justice, on behalf of the National Highway Traffic Safety Administration, informed the bankruptcy court that Fisker’s plan to shift recall labour costs onto vehicle owners is illegal. This objection ultimately prompted Fisker to reconsider its position once again.

Challenges with Fleet Sale Completion

October 8 — Fisker presented an unexpected complication to the bankruptcy court, stating that it may be unable to transfer essential data to a new server not operated by Fisker. American Lease highlighted this issue in a court filing, indicating that it might not be able to finalize the sale, putting Fisker’s settlement agreement with its creditors at risk.

Confirmation of Fisker’s Bankruptcy Plan

October 16 — Fisker successfully navigated the last-minute issues mentioned earlier and secured confirmation for its liquidation plan from the bankruptcy court. The company agreed to assume responsibility for the labour costs associated with recalls. It also resolved the concerns with American Lease regarding data transfer. A trustee was appointed to manage the sale of Fisker’s non-vehicle assets, which include approximately £1 billion worth of equipment located in Austria, where the Ocean SUVs were manufactured.