Fisker, the American electric vehicle (EV) manufacturer, has filed for bankruptcy protection following the breakdown of negotiations with a major automaker, leading to challenges stemming from significant cash depletion in the endeavor to deliver its ‘Ocean’ SUVs across the United States and Europe.
The filing for Chapter 11 bankruptcy was made by Fisker’s entity, Fisker Group Inc, citing estimated assets valued between US$500 million to $1 billion and liabilities ranging from $100 million to $500 million.
After discontinuation of talks with the undisclosed automaker, Fisker explored various strategic alternatives, contemplating both in-court and out-of-court restructurings, as well as transactions in capital markets, as announced earlier this year.
Although the specific automaker was not disclosed by Fisker, reports from Reuters suggested that Japanese automaker Nissan had been engaged in advanced discussions regarding an investment in the startup.
Established by automotive designer Henrik Fisker, the company had expressed uncertainty about its sustainability in February, pausing investments in future projects until a partnership with an automaker was secured.
The challenges faced by Fisker encompassed constrained access to capital in a high-interest rate environment, alongside expenses linked to marketing and distribution efforts, as well as subdued demand for EVs compared to initial projections, resulting in dwindling cash reserves.
The broader EV sector has witnessed a slowdown in sales in the US and Europe, impacting startups like Fisker, as competitors trim workforce and expansion strategies to preserve financial resources.
Fisker grappled with production challenges and technical setbacks, ultimately revising its production forecasts downward last year. The company joins several other EV startups, including Charge Enterprises specializing in EV charging stations, Lordstown Motors, and Proterra, in seeking bankruptcy protection.
Amidst the backdrop of decelerating sales in key markets, such as the US and Europe, the bankruptcy event reflects the broader challenges for EV manufacturers adapting to evolving consumer demands and market conditions, even as interest in EV technology remains robust globally with a significant portion of sales projected in China for 2024, as noted in a report by BloombergNEF in January.
