Hendrik Fisker is a well known luxury car designer, with a portfolio of cars such as the BMW z8, Aston Martin v8 Vantage, Mustang Rocket, Mercedes SL 55 AMG and then his own historical designs of Fisker vehicles. In fact, he was initially hired to design the Tesla Model S, but we all know how that turned out.
Fisker also maintained an underground, “first to market” perception as an electronic vehicle manufacturer in a generation of internal combustion engines and so it was seen as an elitist vehicle.
In popular culture, Childish Gambino says the following line in his 2016 song “Sweatpants” : “Fiskers don’t make noise when they start up, just so you know” – and the portrayal of the brand in such a song highlighted the brands perception within the American market, let alone amongst the Europe car manufacturers. Top Gear’s presenters marvelled at the design aspects of the V8 Vantage on their show and in their reviews.
Henrik Fisker has had a historically poor case of business management. He has failed numerous times in the past, on many levels; however each case has its specific reasons which can be backtracked and studied. Most of these instances include a very competitive EV market, as well as campaigns or lawsuits designed to crush the fledgling company.
An example would be the lawsuit with Elon Musk and Tesla, which ended up bankrupting the previous iteration of Fisker. Issues with Ford, or Henriks previous employers, where they accuse him of stealing designs or infringing on their designs, so on and so forth, mitigations to stop Hendrik from bringing his own designs to market.
Then comes the SPAC conversion in the bubble of 2021 and Fisker enters the market for the first time as they have access to the public market through convertible special acquisition, and thus could gain access to public capital.
Pre-orders were well converted, so much so that they had to increase the next pool batches of production. Their production is handled by Magna Steyr, out of Austria who also makes things like Jaguars, BMW, Mercedes and even the Toyota Supra. They’ve been around for decades and have a high craftsmanship quality manufacturing ICE vehicles.
Fisker moved quickly to secure battery technology, which was then sued by Tesla in 2022 to slow down or stop them. This lawsuit failed and production was delayed, but the Fisker Ocean was a go ahead. They secured production with Magna Styer within a contract with certain stipulations that included a net positive cash balance minimum of $800,000. With Fisker’s pre-order sales in 2022 and a solid cash balance, they were looking good heading into 2023.
The decline in EV demand at the end of 2022, into Q1 of 2023, saw a massive decline in PGM (platinum group metals) miners, processors and the entire supply chain off the back of lower EV demand in the USA and China. Rising global inflation and a constrained consumer opted for ICE second hand rather than new EV, and thus all manufacturers started to struggle off lower demand.
Ford’s electric version of it’s popular F150, had to reduce it’s two production lines to one and then subsequently stop production until demand improved. This was a key highlight in the poor demand for EV’s in the consumer market.
In 2023, we also can see some things start to affect Fisker specifically. Cash becomes constrained as delays in production start to occur. Delivery dates are pushed back and pre-orders start to reduce. Marketing and business costs start to go up. Then there is news of possible bankruptcy and an initial warning from NYSE, which stirs the market. The price drops to 0.14 from its MA of 0.20.
The price then continues to maintain this level, even though delivery of vehicles starts to occur. Then the very first reviews start coming out and they are fantastic. Great build quality, Tesla owners compared the two – specifically build quality, and manufacturing. The car felt like a car. The stock recovers slightly and things seem teetering.
Then the issues started to mount. The main issue was on delayed software updates, which were promised to be worked on and updated. Overall, the consensus at delivery of the first batch was that Fisker Ocean was indeed a good buy at an amazing price, especially the pre-order price.
Then a few months later, we have a popular Youtube tech reviewer, Marques Brownlee, who reviews the vehicle. In his review he comments more on the software features and the downfall rather than the car itself – and that makes sense, he’s not a car guy. However this review and it’s popularity tanks the share price further and a lot of vitriol was thrown around on Twitter regarding Fisker, Marques Brownlee and how “influencers can kill companies”.
Nonetheless, Fisker continued to deliver on vehicles, personally serviced already delivered vehicles with software updates, after they disabled over the air updating and continued to try and sell EV vehicles in a saturated, and dead-demand market. We also notice a flurry of ‘reviews’ of the Ocean, piling on and disparaging it off the cuff, without a real car analysis, mainly opinion following on the back of Marques Brownlee.
We see more of the 5000 active delivery (daily users) of the car start to post their own reviews of the car, after driving it daily. The reviews are mixed, as certain people want certain things but the main interconnected theme was lacklustre software in the car, which was buggy and had many problems that would affect the driving experience.
Other concerns include serviceability, warranties, updates and other packages that tend to complicate simple electronic vehicles. Knowing that Fisker is two years old, and has a car in the real world, these things can and have been ad hoc. Over time, Fisker can get this right.
Again, remember, the manufacturer is Magna Styer, so quality here is a very silly thing to question, albeit everything has its caveats. We see Tesla, Rivian, Lucid and Ford F150 electric all being promoted – yet all of these manufacture their own cars and most are new manufacturers, which means they have little to no experience in building cars.
The only exception to this list is Ford. We also see other ICE brands like Hyundai, Toyota and even European manufactures dabbling in electric spec vehicles, but as new entrants, who’ve spent millions or billions building their own supply chains, factories and assembly plants, I find it very hard to believe that they have what it takes in two years, then likes of Ford or Magna Styer do not.
So, how can a well known, respected for decades, with a high quality standard out of Austria, on cars that are historical, well known and respected, be worse than new market entrants building their own manufacturing lines. Something here does not add up.
When you look at the stock in the days after the video release and the subsequent decline, this video in itself was the final nail in the coffin, relegating Fisker to pink sheets.
We can say much about fledgling SPACs and the economics of demand and supply, already as many as 23 SPACs have exited completely such as Bed, Bath and Beyond, however Fisker was skirting the pink sheet relegation for a few months well before the review.
Consequently, when a tech blogger reviews a car, and then adds a disparaging title to his 18.7 million Youtube subscribers – as a company in this EV economic environment, you’re done for.
Fisker’s turn around now relies on the EV market resurgence in demand – however there is no doubt that they have the superior quality EV car in the US market, but if the demand does not exist, then they will struggle. They are not the only ones either, the entire EV American market is not doing well in the face of lower consumer demand, and so are subsequent secondary markets like PGM miners.
Software is also a big component in EV’s but at the end of the day you want to be able to comfortably drive in an environment friendly car (Fisker’s are made from recycled materials) then that is actually what you get out of the box.
It’s an electronic vehicle, not “a computer on wheels” and thus should be valued as such.
Pink sheets is probably where that company that is Fisker should be, for some time – possibly reentering the NYSE soon enough, but then also not needing to cover NYSE registration and annual fees. Since the 26th March, we have seen a spike from 0.02 to 0.09, and then normalising at 0.05. A lot of value has already been lost, and the company is worth what it is because it’s asset base (manufacturing, supplies) are not held by them, however they do have vehicles both in storage and in the production line.
The company has back orders, some cash in the bank, new designs for sports GT cars, deliveries to make and customers to still serve. Unlike other SPACs that have exited the market completely, and due to the relationship with Magna Styer, the separation of manufacturing from “company” will allow Fisker to still have a chance at being in the market and producing high quality, premium vehicles.
Pink sheets may give them enough cover to still operate for a push towards Software as a Service(SaaS) as then they will be able to allow their updates to be managed by a third party and possibly sell the IP and SaaS product. In order to do this without media attention or concern from competitors like Elon Musk, who has a penchant for going after Hendrik Fisker, it’s possible that pink sheets is where Fisker should have first started, not SPAC into main markets. Right now there is a lot of media attention on them, which is not good for future orders.
Fisker has always been a risk-on company, given the history of failures, but it operates as a lone wolf in a EV market congested with Chinese and American manufacturers taking on their own production lines and supply chains. Software can be updated easily, hardware manufacturing requires major changes and delays to runs. In other words, better built cars, in the long term, will be favoured over tech-first EVs.