Two years ago, an employee at Fisker Inc. told me that the most pressing concern at the EV startup wasn’t whether its Ocean SUV would be built. Fisker has outsourced the construction of its first electric electric car to highly respected automotive supplier Magna. The startup’s goal of starting production in November 2022 was aggressive, but not impossible for a company like Magna, which makes vehicles like BMW.
Instead, this person said, employees grew increasingly concerned that Fisker would not be ready to handle all the problems that came. after a company puts a car on the road. They were concerned that the focus was all on making the car and not the company.
The conversation stuck with me because Fisker founder and CEO Henrik Fisker failed a car startup a decade ago, arguably for this reason. That company, Fisker Automotive, got a hybrid sports car into the hands of a few thousand customers. But the company folded soon after as it faced quality complaints, the failure of its battery supplier and a typhoon that literally sank a ship full of vehicles.
The employee’s warning that the new Fisker was headed down a similar path was impressive and ultimately cautionary. Fisker filed for Chapter 11 bankruptcy protection this week after spending just one year shipping its SUV to customers around the world. To a large extent, its abolition is directly linked to its inability to address the concerns raised by the employee in 2022.
This person was not alone. Dozens of others who worked at Fisker have echoed that sentiment to me in conversations since, almost all on condition of anonymity because they feared losing their jobs or retaliation from the company. Those conversations informed stories I reported on — Ocean’s quality and service problems, Fisker’s internal chaos, and decisions by Henrik Fisker and his co-founder, wife, CFO and COO Geeta Gupta-Fisker that dragged the company down.
Most everyone told me about how the lack of preparedness was deep and permeated almost every part of the company, as I’ve reported in the past for TechCrunch and Bloomberg News.
The software that powered the Ocean SUV was inadequate. The contributed to the SUV’s launch delay, and even knocked down the first delivery in May 2023, which Fisker had to turn around and address the issues shortly after it was delivered. Something similar happened when the company made its first US deliveries in June 2023, when one of its board members’ SUVs lost power shortly after delivery.
The company shipped far fewer Ocean SUVs than it had originally anticipated. Even after lowering its 2023 target several times, it still struggled to meet its internal sales targets. Salespeople have told stories of repeatedly calling potential customers in hopes of selling vehicles because so few new customers were coming. Others ended up selling cars even though they worked in completely different departments.
Many customers who took delivery of the Ocean experienced problems such as sudden loss of power, problems with the braking system, problematic key fobs, problematic door handles that could temporarily lock them in or out of the car, and buggy software. (The National Highway Traffic Safety Administration has launched four investigations into Oceano.)
Fisker struggled with the quality of some of its suppliers, and workers said it didn’t build a proper parts buffer. This put additional pressure on those responsible for repairing the cars as they ran into problems, and eventually led to the company removing parts not only from Magna’s production line in Austria, but also from Henrik Fisker’s own car. (Fisker has denied these claims.)
All the while, junior and mid-level employees did what they could to help the slowly growing customer base. One owner told me that an employee received a call on his personal cell phone while at a funeral. Other employees relayed stories of employees doing business while in the hospital. Many worked long days, nights and weekends — to the point where at least one hourly employee has filed a prospective class-action lawsuit over this very issue.
The company itself has admitted multiple times that it doesn’t have enough staff to handle the influx of customer service requests. This was another place where they worked from other departments. Some are still calling customers today, despite having left Fisker weeks or months ago.
Fischer also struggled in the small-but-serious public company business. It lost track of about $16 million in customer payments at one point, thanks to sloppy internal accounting practices. It suffered multiple delays in required reporting to the Securities and Exchange Commission. One of those delays allowed one of the company’s biggest lenders to finally take the reins the last months.
Nevertheless, Fisker is still speaking Its speed to market as an achievement as it begins bankruptcy proceedings. “Fisker has made incredible progress since our founding, bringing the Ocean SUV to market twice as fast as the automotive industry expected,” an unnamed spokesperson said in a press release about the Chapter 11 filing.
This ephemeral company spokesperson goes on to say that Fisker “has experienced various market and macroeconomic headwinds that have impacted our ability to operate effectively.” While that’s certainly true to some extent, there’s otherwise no introspection about the myriad issues that have led the company to this moment.
Perhaps that will come up in Chapter 11 proceedings, where the company is trying to settle its debts (of which it claims it owes between $100 million and $500 million) and offload or otherwise restructure its assets (totaling between $500 and $1 billion).
What happens next will depend on how these proceedings play out. Fisker has always taken a “property-light” approach, likening itself to how Apple used Foxconn to help turn the iPhone into a global phenomenon. The problem with being light is that it naturally means there is less money to borrow or sell when things are bad.
Magna stopped production of the Ocean and expects $400 million loss of revenue this year as a result. It’s unclear how much progress Fisker has made on its future products, the sub-$30,000 Pear EV and Alaska pickup. The engineering firm that co-developed these vehicles with Fisker recently sued the startup, calling the projects into question.
Fisker said in its press release that it will continue “reduced operations,” including “maintaining customer programs and compensating essential suppliers on a predetermined basis.” In other words, it will continue to run a bare-bones business in the event that there is a willing buyer for the assets it is putting up for sale in the Chapter 11 case.
A decade ago, bankrupt Fisker Automotive did find a buyer. It eventually morphed into a startup known as Karma Automotive, which is still in business today. There have been similar results lately. Three other EV startups that recently filed for bankruptcy — Lordstown Motors, Arrival and Electric Last Mile Solutions — were able to sell assets to peers in the space.
But his ultimate fate This The startup, and its assets, won’t change the fundamental problem: Fisker wasn’t ready to deal with bringing a defective car to market.
