Electric vehicle (EV) startup Fisker is taking drastic measures to stay afloat amidst severe financial turbulence. The company has agreed to sell its remaining inventory of Ocean SUVs to a leasing firm, American Lease, as co-founder Henrik Fisker dramatically reduces his salary to a mere $1. This move comes as Fisker navigates Chapter 11 bankruptcy proceedings, highlighting the intense pressures faced by EV manufacturers in a challenging market.
According to a recent filing on July 2nd, Fisker will offload its remaining stock of 3,231 Ocean SUVs to American Lease, a New York-based company specializing in leasing vehicles to ride-share drivers. The deal, while providing a much-needed cash injection, reflects the distressed state of Fisker’s finances. American Lease will acquire the Ocean SUVs at significantly reduced prices, ranging from a mere $2,500 to $16,500 per vehicle, contingent on their condition. Damaged vehicles will fetch the lowest price, while previously titled models will be slightly more expensive at $3,200. The most favorable price of $16,500 is reserved for the 2,711 new vehicles in “Good Working Order” located across fleets in the United States and Canada. While the final details are still being finalized, the total value of the sale is currently capped at $46.25 million.
This fire sale of Fisker Inventory comes with a significant caveat for potential future owners. The agreement explicitly states that “Fisker shall have no obligation of repair or maintenance,” meaning the automaker will not honor warranties on these vehicles. This lack of warranty support could be a concern for buyers acquiring these discounted EVs through American Lease.
Interestingly, amidst this inventory liquidation, Fisker has reportedly been approached by another potential buyer. However, this party remains undisclosed due to a non-disclosure agreement, and the nature of their interest and potential offer remains unclear.
In a parallel move to conserve funds during bankruptcy proceedings, Henrik Fisker and his wife, Geeta Gupta-Fisker, have both reduced their annual salaries to just $1. This decision, effective July 8th, underscores the severity of Fisker’s financial crisis and the personal sacrifices being made by its leadership to navigate the bankruptcy. The salary reduction occurred shortly after company lawyers faced scrutiny in court regarding the funding of bankruptcy proceedings.
Fisker’s Chapter 11 bankruptcy filing on June 17th followed a series of setbacks for the EV startup. Just weeks prior to filing, Fisker recalled nearly 7,000 of its 2023 Ocean SUVs due to a critical issue with the Motor Control Unit (MCU). In a prepared statement released at the time of the bankruptcy filing, Fisker cited “various market and macroeconomic headwinds” impacting their operational efficiency. The company stated that proceeding with the sale of assets under Chapter 11 was the “most viable path forward.”
Adding to its woes, Fisker has issued a second recall, this time affecting all 7,545 Ocean EVs sold in the United States. This recall addresses a communication issue within the vehicle’s Local Interconnect Network 6 (LIN6), potentially causing the High Voltage Battery Management System (BMS) to enter limp mode. This limp mode severely restricts battery output to a mere 8.5 kilowatts, barely sufficient to power the vehicle.
This latest recall follows a previous recall issued on June 20th for door handles that could stick and prevent vehicle occupants from exiting in emergencies. In total, the Fisker Ocean has been subject to four recalls in the US, with only two being resolvable through software updates, highlighting potential quality control challenges and adding to the company’s financial strain.
Fisker’s journey to bankruptcy began in 2016. Earlier this year, the company initiated workforce reductions of 15% and painted a bleak picture of its future. These layoffs were followed by a halt in production and significant price reductions for the Ocean SUV, its sole production model. During this period, Fisker announced a potential $150 million financing commitment from an existing investor and disclosed negotiations with a major automaker for a possible transaction, including joint EV platform development and North American manufacturing. While reports suggested Nissan was in advanced talks for a potential investment, a deal ultimately failed to materialize, leaving Fisker without the financial lifeline it desperately needed. The current fire sale of Fisker inventory and bankruptcy proceedings mark a significant downturn for the EV startup, underscoring the intense competition and financial pressures within the electric vehicle market.
