Electric vehicle startup Fisker is facing significant challenges as it prepares to lay off 15% of its workforce and expresses concerns about its financial stability over the next year. The company’s founder and CEO, Henrik Fisker, acknowledged the need to streamline operations in light of the anticipated difficulties ahead.
Key Takeaway
Fisker is confronting financial and operational hurdles, including workforce reductions and cash flow concerns, as it navigates a challenging period marked by strategic transitions and industry headwinds.
Facing Financial Hardships
Fisker reported a workforce of over 1,300 employees as of September 2023, indicating that the impending layoffs could impact nearly 200 individuals. The company’s share price experienced a sharp decline of 35% in after-hours trading, reflecting the severity of the situation.
The company disclosed that it closed 2023 with $396 million in cash, with $70 million being restricted. Fisker is actively engaging with its lenders to secure additional investments, and it is also exploring potential partnerships with major automakers to bolster its position.
Transition Challenges
Fisker is undergoing a strategic shift from direct sales to a dealership model, a transition that has adversely affected its sales performance. The company is currently grappling with excess inventory of vehicles valued at over $500 million, despite receiving interest from approximately 250 dealerships. However, only 13 dealerships have been onboarded thus far.
The company’s financial woes coincide with its efforts to adopt a wholesale model centered on dealership partnerships. Fisker’s struggles have been further compounded by issues with its Ocean SUV, the sole model in its lineup. The vehicle has been the subject of scrutiny due to reported software and safety concerns, including brake failures and rollaway incidents.
Challenges in the EV Industry
Fisker’s predicament is emblematic of broader challenges within the electric vehicle sector. Established automakers are revising their ambitious EV targets, while newer players such as Rivian and Lucid Motors are also encountering obstacles, including workforce reductions and production adjustments.
Path Forward
Despite the setbacks, Fisker remains focused on its goal of sustainable growth. The company aims to leverage its partnership with Magna Steyr for manufacturing and delivery of vehicles, with plans to expedite shipments to its new dealer partners to generate immediate revenue.
