Two years ago, a Fisker Inc. employee said the most pressing concern inside the EV startup was not whether or not the Ocean SUV would be built. Eventually, Fisker outsourced the manufacturing of its first EV to Magna, a respected automotive supplier. The startup's goal of starting production in November 2022 was aggressive, but not impossible for a company like Magna, which builds vehicles like BMW.
Instead, employees are increasingly worried that Fisker will not be prepared to handle any problems that arise, the person said. ~ after The company puts its cars on the road. They worried that the focus was on building cars, not companies.
The conversation continued because Fisker founder and CEO Henrik Fisker failed at an automotive startup 10 years ago, probably for this reason. A company called Fisker Automotive has provided hybrid sports cars to thousands of customers. But the company soon became frustrated as it faced quality complaints, failed battery suppliers, and a hurricane that literally sank a ship full of vehicles.
The employee's warning that the new Fisker was headed down a similar path was surprising and ultimately prescient. Fisker filed for Chapter 11 bankruptcy protection this week after taking just a year to deliver SUVs to customers around the world. Most cancellations are directly related to the inability to address concerns raised by employees in 2022.
This man was not alone. Dozens of other people who worked at Fisker echoed these sentiments to me in conversations, almost all of whom spoke on condition of anonymity because they feared losing their jobs or retaliation from the company. These conversations influenced stories reporting on Ocean's quality and service issues, Fisker's internal turmoil, and the decisions of Henrik Fisker and his co-founder and wife, CFO and COO Geeta Gupta-Fisker.
As I've previously reported for TechCrunch and Bloomberg News, most of them spoke about how lack of preparation has penetrated and permeated nearly every department of the company.
The software that powers the Ocean SUV is less baked. This contributed to the delayed launch of the SUV, which missed its first delivery in May 2023 and forced Fisker to turn around and fix the problem shortly after taking over the vehicle. A similar thing happened when the company made its first U.S. delivery in June 2023, when one of the board member's SUVs lost power shortly after taking delivery.
The company has launched far fewer Ocean SUVs than originally expected. Despite lowering its 2023 targets several times, the company still struggled to meet its internal sales goals. Salespeople told us how they repeatedly called potential customers hoping to sell their vehicles because few new leads were coming in. Others got involved in car sales despite working in completely different departments.
Many customers who have taken delivery of the Ocean have encountered issues including sudden power loss, brake system issues, faulty key fobs, problematic door handles that can temporarily lock the car in or out, and buggy software. (The National Highway Traffic Safety Administration has opened four investigations into Marine.)
Fisker said it struggled with quality issues from some suppliers and its employees failed to build an adequate buffer of spare parts. This caused problems, putting additional pressure on those responsible for repairing the cars, and eventually led the company to import parts not only from Magna's production line in Austria, but also from Henrik Fisker's own cars. (Fisker has denied these claims.)
Meanwhile, mid- and lower-level employees worked hard to do what they could to help the slowly growing customer base. One owner said an employee received a call on his personal cell phone while he was attending a funeral. Other employees relayed stories of employees performing company duties while in the hospital. Many people worked days, nights and weekends. At least one employee per hour even filed a class action lawsuit over this very issue.
The company itself has repeatedly acknowledged that it does not have enough staff to handle the growing number of customer service requests. This was another place where employees from different departments participated. We still field customer calls today, even though some left Fisker weeks or months ago.
Fisker also struggled with the mundane yet serious task of being a public company. Messy internal accounting practices once caused it to lose track of about $16 million in customer payments. There were multiple delays in required reporting to the Securities and Exchange Commission. One of those delays allowed one of the company's largest lenders to finally take the reins in its final months.
Despite all this, Fisker is still touting speed to market as an achievement as it begins bankruptcy proceedings. “Fisker has made remarkable progress since its inception, launching the Ocean SUV twice as fast as the auto industry expected,” an unnamed spokesperson said in a press release about the Chapter 11 filing.
The interim company president goes on to say that Fisker “faces a variety of market and macroeconomic headwinds that impact its ability to operate effectively.” While this is certainly true to some extent, there is no reflection whatsoever on the numerous issues that have brought the company to this point.
Perhaps this will surface in Chapter 11 proceedings, where the company will seek to pay off its debt (allegedly between $100 million and $500 million) and sell or restructure its assets (totaling between $500 million and $1 billion).
What happens next will depend on how the process goes. Fisker has always taken an “asset-light” approach, likening it to how Apple leveraged Foxconn to help make the iPhone a global phenomenon. The problem with being asset light is that it means that you naturally have less to borrow or sell when things go south.
Magna has halted production of Ocean and expects to lose $400 million in sales 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 company that was co-developing these vehicles with Fisker recently sued the startup, questioning the project.
Fisker said in a press release that it would continue to “reduce operations,” including “preserving customer programs and compensating suppliers for their future needs.” This means that if you are willing to purchase assets to sell in a Chapter 11 case, you will continue to manage the underlying operations.
Ten years ago, bankrupt Fisker Automotive found a buyer. It eventually morphed into a startup called Karma Automotive, which still exists in name only today. Similar results were found recently. Three other EV startups that recently filed for bankruptcy – Lordstown Motors, Arrival and Electric Last Mile Solutions – were able to sell their assets to peer companies in the sector.
But in the end fate this Startups and their assets won’t change the fundamental problems. Fisker was not prepared for the trouble of bringing a defective car to market.
