The saga of Fisker Inc., the ambitious electric vehicle (EV) startup, has taken another turn as a bankruptcy plan has been approved, marking a significant moment for Fisker car owners and the broader EV landscape. On Friday, a U.S. Bankruptcy Court judge in Delaware officially approved a plan that will see Fisker wind down its operations. This decision brings both clarity and lingering questions for those who invested in the Fisker dream, particularly the owners of Fisker cars.
This bankruptcy approval arrives amidst a backdrop of financial turmoil for Fisker, including an ongoing Securities and Exchange Commission (SEC) investigation. The SEC is probing potential securities violations that occurred prior to the company’s Chapter 11 bankruptcy filing in June. Fisker had previously disclosed in August that it was under SEC scrutiny, with the agency recently reinforcing the need to preserve all relevant records during the bankruptcy proceedings.
Jennifer Lee, a former SEC enforcement division assistant director, commented on the agency’s proactive stance, noting, “The SEC has been much more aggressive in pursuing its claims and remedies, even if the focus of its investigation has filed for bankruptcy.” This suggests that the regulatory scrutiny on Fisker and its past dealings is far from over.
Key Outcomes of the Bankruptcy Plan for Fisker Car Owners
For the owners of Fisker cars, primarily the Ocean SUV, the approved bankruptcy plan offers a degree of reassurance. While shareholders are expected to receive nothing from their investments, the plan ensures that Fisker car owners can continue to operate their vehicles for the foreseeable future. Crucially, the plan addresses several pressing concerns:
- Recall Resolution: The National Highway Transportation Safety Board (NHTSA) had raised concerns about funding for necessary recalls, including those for brake malfunctions and defective water pumps in Fisker cars. The approved plan mandates that Fisker’s estate will cover these recall expenses, ensuring owner safety and compliance with regulatory requirements.
- Software Updates Secured: A major point of contention was the continued access to over-the-air software updates, vital for the operation of the technologically advanced Fisker Ocean. American Lease, a vehicle leasing company, stepped in to bid $46.25 million for Fisker’s remaining inventory of over 3,000 vehicles. As part of the agreement, American Lease will pay $2.5 million for five years of access to Fisker’s cloud server, and importantly, will extend this access to existing Fisker car owners, albeit with pricing details still to be determined.
Brandon Jones, president of the Fisker Owners Association, expressed satisfaction with the outcome, stating, “We’re happy with the outcome today, and we’re optimistic about the future. There’s still some discussion and negotiation needed, but we’ll have the services we need to maintain our cars.” This sentiment suggests a positive step forward for the Fisker car owner community.
The Fisker Journey: From Tesla Rival to Bankruptcy
Founded in 2016 by renowned automotive designer Henrik Fisker, Fisker Inc. entered the EV market with ambitious goals, aiming to compete directly with Tesla. The Fisker Ocean SUV was envisioned as a direct rival to the Tesla Model Y. Going public in 2020 through a special purpose acquisition company backed by Apollo Global Management, Fisker raised substantial capital, but ultimately faced significant hurdles in production and delivery.
Despite praise for the Fisker Ocean’s ride quality and build, the vehicle was plagued by software issues. Compounding these challenges, Fisker struggled financially, ultimately leading to the bankruptcy filing. Prior to bankruptcy, Fisker had relocated its headquarters from Manhattan Beach to La Palma in Orange County.
Financial Fallout and Creditor Claims
The financial distress of Fisker is evident in its stock performance. After reaching a peak of $28.50 in March 2021, Fisker’s stock plummeted to pennies on the dollar by the time of bankruptcy. The Ocean SUV, initially priced from $38,999 to over $60,000, saw significant price reductions as the company struggled. American Lease acquired the remaining Fisker car inventory at approximately $13,900 per vehicle, a stark illustration of the company’s financial decline.
Fisker’s bankruptcy filing came after failed attempts to secure strategic investment, notably a deal that reportedly fell through with Nissan. Liabilities were estimated to be up to $500 million, with assets ranging between $500 million and $1 billion at the time of filing. The bankruptcy process is proceeding under Chapter 11, typically used for restructuring, but in Fisker’s case, it is functioning as a liquidation.
By the time the bankruptcy plan was approved, over 4,000 claims had been filed against Fisker. These included substantial claims from U.S. Bank and Magna International, the manufacturer of the Fisker Ocean. The largest secured creditor is CVI Investments, holding a claim of over $180 million.
Lingering Issues and Owner Recourse
While the bankruptcy plan provides a framework for moving forward, some uncertainties remain for Fisker car owners. The long-term availability and pricing of software updates and parts through American Lease are still to be fully defined. Furthermore, Fisker car owners who filed claims as unsecured creditors, like Evan Scott who sought compensation for vehicle devaluation and faulty tires, are unlikely to recover their losses.
However, there are avenues for potential recourse. The law firm Hagens Berman is pursuing arbitration cases against J.P. Morgan Chase Bank, a major lender for Fisker car loans, on behalf of owners. This indicates that while the bankruptcy marks the end of Fisker Inc. in its current form, legal and financial repercussions are still unfolding for various stakeholders, including Fisker car owners.
Conclusion: Navigating the Road Ahead for Fisker Car Owners
The approval of Fisker’s bankruptcy plan provides a degree of resolution for Fisker car owners, ensuring continued operation and addressing immediate concerns like recalls and software updates. However, the Fisker story serves as a cautionary tale in the volatile EV market. For Fisker car owners, the focus now shifts to navigating the future landscape of service, parts, and long-term support for their vehicles under the new arrangements established by the bankruptcy plan. The Fisker Owners Association will likely play a crucial role in advocating for owners and ensuring a smooth transition in this new chapter.
