Electric vehicle (EV) startup Fisker is making headlines again as it navigates turbulent financial waters. In a strategic move to address its mounting challenges, Fisker has reached an agreement to sell its remaining inventory of Ocean SUVs to a leasing firm. This decision comes as co-founder Henrik Fisker dramatically reduces his salary to a mere $1, signaling the severity of the company’s current situation and its desperate measures to stay afloat amidst bankruptcy proceedings.
According to a recent filing on July 2nd, Fisker is set to finalize a deal with American Lease, a New York-based leasing company specializing in ride-share vehicles. This agreement will see American Lease acquire Fisker’s entire remaining stock of 3,231 Ocean SUVs. The price per vehicle will vary significantly based on condition, ranging from a mere $2,500 for damaged units up to $16,500 for vehicles in good working order. Previously titled Ocean SUVs are slated to be sold for $3,200 each.
American Lease Secures Fisker’s Ocean SUV Inventory
The filing reveals that within Fisker’s inventory across the United States and Canada, there are 2,711 new Ocean SUVs classified as being in “Good Working Order.” These vehicles are earmarked for the top-tier price of $16,500. While the final details and total value of the sale are still being determined, the agreement currently caps the total transaction at a potential $46,250,000.
Alt text: Front view of a Fisker Ocean SUV showcasing its sleek design.
A noteworthy aspect of this inventory sale is the exclusion of warranties. The official documents explicitly state, “Fisker shall have no obligation of repair or maintenance” for the vehicles sold to American Lease. This unusual condition underscores Fisker’s pressing financial constraints and its focus on immediate liquidity.
Interestingly, while the American Lease deal is in motion, Fisker has also been approached by another unidentified potential buyer. This party remains undisclosed due to a non-disclosure agreement (NDA), and the specifics of their interest and potential offer remain unclear. This adds another layer of complexity to Fisker’s ongoing efforts to restructure and secure its future.
Executive Pay Cuts Amidst Bankruptcy Scrutiny
In a parallel move reflecting the company’s dire straits, Fisker Inc. co-founders Henrik Fisker and his wife, Geeta Gupta-Fisker, have taken drastic measures by reducing their annual salaries to just $1 each. This decision, effective July 8th, is a direct response to the financial pressures of the company’s Chapter 11 bankruptcy proceedings. The reduced salaries are intended to free up funds to cover legal expenses associated with the bankruptcy process and facilitate the sale of remaining assets, including the significant Fisker Inventory. This pay cut came shortly after company lawyers faced intense questioning in court regarding executive compensation amidst the financial turmoil.
Fisker’s Chapter 11 bankruptcy filing on June 17th came shortly after a challenging period for the EV manufacturer. Just weeks prior to filing, the company initiated a recall of nearly 7,000 of its 2023 Ocean SUVs. This recall addressed a critical issue with the Motor Control Unit (MCU).
Alt text: Side view of a Fisker Ocean SUV highlighting its aerodynamic profile and unique wheel design.
“Like many companies in the electric vehicle sector, we have encountered a series of market and macroeconomic obstacles that have negatively impacted our operational efficiency,” Fisker stated in a prepared statement accompanying the bankruptcy announcement. “After thorough evaluation of all available options for our business, we concluded that proceeding with a sale of our assets under Chapter 11 is the most viable path forward for the company.”
Further Recalls Compound Challenges for Fisker
Adding to Fisker’s woes, a second recall was issued, impacting all Ocean EVs sold in the United States within a month of the initial recall. This subsequent recall, encompassing all 7,545 Ocean EVs in the US market, addresses a communication issue within the vehicle’s Local Interconnect Network 6 (LIN6). This problem can lead to the High Voltage Battery Management System (BMS) entering limp mode, severely restricting battery output to a mere 8.5 kilowatts. Experts indicate this power level is barely sufficient to propel the vehicle under its own power, raising significant safety and usability concerns for Fisker Ocean owners.
The initial recall, announced on June 20th, targeted a separate issue: door handles that could stick and fail to operate. This malfunction could prevent occupants from exiting the vehicle, particularly critical in emergency situations. In total, the Fisker Ocean has now been subject to four recalls in the US market, with two of these issues addressed through software updates, highlighting the rapid pace of challenges and fixes the company is grappling with.
The Road to Bankruptcy and Inventory Liquidation
Fisker’s journey to bankruptcy began in 2016. Earlier this year, the company had already initiated workforce reductions, cutting 15 percent of its staff, while forecasting a grim outlook for the future. These layoffs were followed by a halt in production and significant price reductions for the Ocean SUV, which remains Fisker’s sole production and sales model.
Around the time of the production pause, Fisker announced it had secured a financing commitment of up to $150 million from an existing investor. The company also disclosed ongoing negotiations with a major automaker for a potential transaction. This potential deal was rumored to involve an investment for the joint development of EV platforms and North American manufacturing.
While the automaker was not officially named, reports suggested Nissan was in advanced discussions to invest in Fisker, potentially offering a crucial financial lifeline for the struggling EV startup. Ultimately, this anticipated deal did not materialize, leaving Fisker to pursue other drastic measures like the current inventory sale to American Lease as its path forward becomes increasingly uncertain.
