After months of teetering on the edge of collapse, Fisker has finally filed for bankruptcy. The American electric car start-up led by car designer Henrik Fisker stopped production of its only model, the Ocean, in March when it revealed that extra funding would be required to continue operations.
Fisker’s operating arm, the Fisker Group, officially filed for bankruptcy in the USA on 17 June, after failing to find an investment partner to rescue the ailing operation. Despite hitting key production and launch date targets, Fisker was hit by softening demand for the Ocean and supplier issues. Fisker hoped to build more than 42,000 Ocean models in 2023 but ended up producing just 10,193. Fewer than half were delivered to customers.
Huge losses
According to the company’s own figures, it lost $463.6m in the fourth quarter of 2023 which brought its overall losses for the year to $762m. In an attempt to rescue its ailing finances and clear unsold stock, Fisker heavily discounted its range earlier this year, slashing up to 39% off list prices. At the same time, Fisker laid off 15% of its workforce and announced a suspension of production at its factory in Graz, Austria.
In addition to the brand’s financial woes, the Ocean itself came under heavy criticism for its quality with numerous reports of serious software glitches, missing features and a shortage of spare parts. In America, the The National Highway Traffic Safety Administration opened four investigations into the Ocean relating to the emergency braking system and the power delivery system.
Internal problems and failed rescue
Further revelations about the brand and its chaotic organisation came in March when former employees revealed that Fisker’s finance department had temporarily lost track of millions of dollars in payments. According to a report in techcrunch.com, in some cases, cars were delivered without payments being collected. In other cases, cheques were lost or never cashed. The news coincided with Fisker’s announcement that it was abandoning its direct sales approach in favour of a network of traditional dealers.
The collapse of the brand’s share price also caused Fisker to be delisted from the New York Stock Exchange. Trading was halted when the firm’s share price fell below $1 for more than 30 days, violating the NYSE’s rules. At the same time, Fisker confirmed that it was in negotiations with another car manufacturer, understood to be Nissan, regarding a future joint venture and investment. However, talks ended without any formal agreement.
Second time unlucky for founder
The collapse of Fisker Inc represents a second automotive brand failure for founder Henrik Fisker. The former BMW and Aston Martin designer saw his first venture, Fisker Automotive go bankrupt in 2013, taking with it a $528m loan guarantee from the United States Government. The brands sole product, the Fisker Karma plug-in hybrid was plagued by problems and supplier issues. Just 2,450 examples were made before production was shuttered after a year. As with the Ocean, which was produced by contract manufacturer Magna (until the money ran out), production of the Karma was carried out by Valmet Automotive in Finland.
Who will be the next car maker to go?
Fisker is unlikely to be the last electric car start-up to run into financial troubles. Two other US-based brands, Lucid and Rivian, are both walking financial tightropes in an increasingly tough premium electric car market. Lucid, which makes the Air and Gravity models, recorded a $2.8 billion loss in 2023, the fourth year in a row that has made a loss. Rivian, which makes the R1T and R1S pick-up and SUV recorded losses of $5.5 billion in 2023, and has recorded losses of $16.8 billion over the course of the last three years. The California-based brand is pinning future hopes on a new compact R2 model it revealed earlier this year.
Fisker Ocean owner or considering one to buy? Your questions answered
Should I buy a Fisker?
There’s no doubt that the brand’s financial woes have had a huge impact on the price and value of Oceans. Or to put it another way, they’re very cheap right now. A car that would have cost you almost £70,000 six months ago can now be snapped up with a few miles on the clock for under £25,000. Even unregistered, as-new, examples are more than £20,000 cheaper than they were.
Can I insure a Fisker Ocean?
Having a carmaker go bankrupt doesn’t mean that you can’t insure your car. As long as it’s roadworthy there will always be someone willing to cover you. However, because there is a big question mark over the availability of spares in the future, some insurers will consider that to be a bigger risk. You also need to consider that the value of an Ocean will be significantly lower than it was. In the event of the car being written off, you’ll only get the current value of the car.
I have an Ocean on finance, do I need to worry?
No, because it’s the finance company that has taken on the risk and not you. You will still need to make your contracted payments, but the guaranteed future value of the car will not be the same as when you took out the agreement. This means that your only real option will be to hand the car back at the end of the term.
Will I be able to get it serviced?
This is hard to answer at this stage, because Fisker is likely to make agreements regarding the sale of its existing parts inventory. The company is also expected to release all its technical information as part of the bankruptcy process.
If previous examples are anything to go by (MG Rover, TVR, Saab etc), spares are likely to have good availability. However, given that relatively few cars were made – only around 200 cars made it to the UK, there may be issues with supply in the long term.
Will the warranty still be valid on my Fisker Ocean?
This isn’t clear at the moment and also depends on when the car was purchased. Buyers who bought their cars after April 2024 were required to sign a disclaimer that stated: “Buyers must expect a permanent loss of the enforceability of claims for material defects and warranty claims….and nevertheless wishes to purchase a Fisker Ocean in view of the risk described.” That said, a number of third-party warranty companies, such as WarrantyWise, have already stated that they would cover the Ocean in future.
We loved the Ocean, but the production cars never matched the promise or quality of the prototypes
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