Electric vehicle (EV) maker Fisker Inc. has filed for Chapter 11 bankruptcy protection, a setback in the EV industry as it becomes the second startup to do so in the past year. The company led by designer Henrik Fisker faced financial difficulties and market challenges that led to this decision.
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The company filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court in Delaware. The company’s estimated assets range between $500 million and $1 billion, with liabilities between $100 million and $500 million. Fisker has between 200 and 999 creditors.
The company was founded in 2016 by Henrik Fisker, a former Aston Martin design chief and his wife, Geeta Gupta-Fisker.
This was Henrik’s second attempt to establish a successful EV company following the collapse of the company in 2013.
Fisker adopted an “asset-light” model, relying on contract manufacturers to build its cars rather than investing heavily in its own factories. This approach was to reduce capital expenditure and speed up production timelines.
Fisker’s sole product, the Ocean electric SUV has been the centerpiece of its offering. It aimed to combine sustainability with cutting-edge technology.
Despite manufacturing around 10,000 units in the previous year, only half of these were delivered to customers. Production delays and quality control issues plagued the vehicle’s rollout.
In February, a review by YouTuber Marques Brownlee, who described the Fisker Ocean as “the worst car I’ve ever reviewed,” damaged the company’s reputation.
Earlier this year, Fisker had already warned that it might not have sufficient funds to survive another year. The company was in discussions with an existing investor about additional funding.
On Monday, the company filed for Chapter 11 bankruptcy, which allows companies to restructure their debts while attempting to continue operations. The company is in advanced discussions to sell its assets.
The company faced competition from established automakers like Tesla, Hyundai, Kia, Ford and General Motors, which have strong footholds in the EV market.
Chinese manufacturers such as BYD have been aggressive in capturing market share. The EV market has been impacted by rising interest rates, which have made it more difficult for startups to secure funding.
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According to the International Energy Agency, global sales of plug-in vehicles are expected to grow by 21% this year, down from 35% the previous year.
The company, a 7-year-old company, was founded by Henrik, a designer in the automotive industry.
Henrik is known for designing the BMW Z8 and the Karma luxury plug-in hybrid, has faced previous challenges in the automotive sector. The company’s first attempt to enter the market ended in bankruptcy in 2013.
EV sales grew by only 3.3% to nearly 270,000 units in the first quarter of the year, a sharp decline from the previous year’s 47% growth. The overall market share of EVs fell to 7.15%, down from 7.6%, a slowdown in consumer adoption.
The company’s production targets for its flagship Ocean SUV were repeatedly cut, leading to doubts about the company’s viability.
The company faced financial turmoil, pausing production in March and defaulting on a loan repayment in May.
Attempts to secure investment from other automakers failed earlier this year, contributing to the company’s financial instability.
The company’s stock, once valued at several billion dollars, was delisted from the New York Stock Exchange due to “abnormally low” prices.
Fisker is not alone in facing financial troubles, other EV startups like Lordstown Motors, Arrival and Proterra have also filed for bankruptcy. Companies like Canoo and Nikola are struggling financially.
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