Electric vehicle (EV) startup Fisker is navigating severe financial headwinds, evidenced by a recent agreement to liquidate its remaining inventory of Ocean SUVs. In a strategic move to generate capital, Fisker has agreed to sell its stockpile of vehicles to a leasing company, even as its co-founder takes a symbolic salary cut to bolster the company’s dwindling resources. This development unfolds as Fisker grapples with bankruptcy proceedings and seeks a path forward in a challenging market.
According to a filing made public on July 2nd, Fisker is set to finalize a deal with American Lease, a New York-based leasing firm specializing in providing vehicles to ride-share services. This agreement will see American Lease acquire the remaining 3,231 Ocean SUVs currently in Fisker’s possession. The price per vehicle will vary significantly, ranging from a mere $2,500 to $16,500, depending on the condition of each SUV. Vehicles deemed damaged will command the lower end of the price range, while previously titled Ocean SUVs will be valued slightly higher at $3,200. The most favorable price point of $16,500 is reserved for the 2,711 new vehicles across Fisker’s US and Canadian fleets that are classified as being in “Good Working Order.” While the final details and total value of the sale are still being determined, the agreement currently caps the total transaction at $46,250,000.
Adding a layer of complexity to the deal, the filing explicitly states that Fisker will not be responsible for honoring warranties on these vehicles. The document clarifies, “Fisker shall have no obligation of repair or maintenance,” shifting the burden of vehicle upkeep onto American Lease. Interestingly, while the agreement with American Lease is progressing, Fisker has also reportedly been approached by another, as yet undisclosed, potential buyer. This party remains under a non-disclosure agreement (NDA), and the specifics of their interest and potential offer remain unclear.
In a parallel move reflecting the dire financial straits of the company, Fisker Inc.’s co-founders, Henrik Fisker and his wife, Geeta Gupta-Fisker, have dramatically reduced their annual salaries to just $1. This symbolic gesture is intended to free up funds to support the EV startup’s bankruptcy proceedings as legal teams work towards a comprehensive sale of remaining assets. This decision, effective July 8th, followed scrutiny from the courts regarding company finances amidst the bankruptcy. Fisker officially filed for Chapter 11 bankruptcy protection on June 17th, a culmination of mounting pressures and challenges faced by the electric vehicle manufacturer. This filing came shortly after the company initiated a recall of nearly 7,000 of its 2023 Ocean SUVs due to a critical issue with the Motor Control Unit (MCU).
In a statement released at the time of the bankruptcy filing, Fisker acknowledged the difficult market conditions, stating, “Like other companies in the electric vehicle industry, we have faced various market and macroeconomic headwinds that have impacted our ability to operate efficiently.” The company further explained, “After evaluating all options for our business, we determined that proceeding with a sale of our assets under Chapter 11 is the most viable path forward for the company.”
Adding to the company’s woes, Fisker has issued a second recall affecting all Ocean EVs sold in the United States within a month. This most recent recall, encompassing all 7,545 Ocean EVs in the US market, addresses a communication failure within the vehicle’s Local Interconnect Network 6 (LIN6). This issue can cause the High Voltage Battery Management System (BMS) to enter limp mode, severely restricting battery output to a mere 8.5 kilowatts – an output considered by experts to be barely sufficient to move the vehicle. The initial recall, issued on June 20th, concerned door handles that could stick and fail to open, potentially trapping occupants in an emergency. In total, the Fisker Ocean model has been subjected to four recalls in the US, with two of these being resolved through software updates.
Fisker’s journey to bankruptcy began in 2016. Earlier this year, the company had already implemented a 15 percent workforce reduction, signaling a pessimistic outlook for the future. These initial 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. During the production pause, Fisker revealed a secured financing commitment of up to $150 million from an existing investor and disclosed ongoing negotiations with a major automaker. These discussions were centered around a potential transaction involving investment and joint development of EV platforms, including North American manufacturing. While the automaker was not officially named, reports indicated that Nissan was in advanced talks to invest in Fisker, a deal that could have provided a crucial financial lifeline. However, ultimately, this potential partnership did not materialize.
The agreement to sell the Fisker Inventory to American Lease represents a critical step for the struggling EV manufacturer as it navigates bankruptcy. Whether this sale, combined with cost-cutting measures like executive salary reductions, will be enough to secure a long-term future for Fisker remains uncertain. The evolving situation underscores the intense competition and financial pressures within the electric vehicle market, even for companies with innovative products like the Fisker Ocean.
