Two years ago, an employee at Fisker Inc. told me that the electric car startup’s most pressing concern wasn’t whether its Ocean SUV would get built. After all, Fisker outsourced production of its first electric car to highly respected auto supplier Magna. While the startup’s November 2022 production start goal was ambitious, it wasn’t impossible for a company like Magna, which builds vehicles for BMW and others.
Instead, this person said, employees were increasingly concerned that Fisker would not be prepared to handle all the problems that came along. after A company puts a car on the road. They feared that the focus would be solely on building the car and not on the company.
The conversation stuck with me because a decade ago, Fisker founder and CEO Henrik Fisker failed an automotive startup for this reason. The company, Fisker Automotive, brought a few thousand customers with a hybrid sports car. But soon after, the company collapsed when it faced complaints about quality, the failure of its battery supplier, and a hurricane that literally sank a ship full of vehicles.
The employee’s warning that the new Fisker would follow a similar path was striking and ultimately prescient. Fisker filed for Chapter 11 bankruptcy this week after just a year of delivering its SUV to customers around the world. Its failure is largely directly attributable to its inability to address the concerns the employee raised in 2022.
That person was not alone. Dozens of others who worked at Fisker have since expressed that sentiment to me in conversations, almost all on the condition of anonymity for fear of losing their jobs or facing retaliation from the company. Those conversations were the basis for the stories I reported about Ocean’s quality and service problems, Fisker’s internal chaos, and decisions made by Henrik Fisker and his co-founder, wife, CFO and COO, Geeta Gupta-Fisker, that dragged the company down.
Almost all of them told me that the lack of preparation was profound and permeated nearly every part of the company, as I have previously reported for TechCrunch and Bloomberg News.
The Ocean SUV’s software was not mature. This contributed to the delay in the SUV’s launch and even slowed the very first delivery in May 2023, which Fisker had to turn around and fix bugs shortly after handover. Something similar happened when the company made its first deliveries in the US in June 2023, when one of an executive’s SUVs lost power shortly after delivery.
The company delivered far fewer Ocean SUVs than originally planned. Even after lowering its 2023 target several times, it still struggled to meet its internal sales goals. Sales reps have told stories of repeatedly calling prospects in hopes of selling vehicles because so few new leads were coming in. Others ended up helping sell cars even though they worked in entirely different departments.
Many customers who took delivery of their Oceans experienced problems such as sudden loss of power, problems with the braking system, faulty key fobs and problematic door handles that could temporarily lock them in or out of the car, and faulty software. (The National Highway Traffic Safety Administration has opened four investigations into the Ocean.)
Fisker struggled with the quality of some of its suppliers, and employees claimed that it had not built up a sufficient buffer of spare parts. This put additional pressure on the people tasked with repairing the cars when problems arose, and ultimately led to the company using parts not only from Magna’s production line in Austria, but even from Henrik Fisker’s own car. (Fisker has denied these claims.)
Throughout it all, lower and mid-level employees went above and beyond to help the slowly growing customer base. One owner told me that an employee took a call on his personal cell phone during a funeral. Other employees told stories of employees handling business at the hospital. Many worked long days, nights and weekends — to such an extent that at least one hourly employee filed a class action lawsuit for exactly that reason.
The company itself has admitted on several occasions that it did not have enough staff to handle the flood of customer service requests. Here, too, employees from other departments helped. Some of them are still taking customer calls today, even though they left Fisker weeks or months ago.
Fisker also struggled with the mundane but serious task of being a publicly traded company. Due to chaotic internal accounting practices, the company temporarily lost track of customer payments worth around $16 million. Mandatory reporting to the US Securities and Exchange Commission (SEC) was delayed several times. One of these delays allowed one of the company’s largest lenders to finally take the reins in recent months.
Despite all this, Fisker is touting its rapid launch as a success as it begins its bankruptcy proceedings. “Fisker has made incredible progress since our founding, bringing the Ocean SUV to market twice as fast as the automotive industry expected,” an unnamed spokesperson said in a press release about the Chapter 11 bankruptcy filing.
This fleeting company representative goes on to say that Fisker has “faced various market and macroeconomic headwinds that have impacted our ability to operate effectively.” While that is certainly true to some extent, there is otherwise no introspection of the myriad problems that have brought the company to this point.
Perhaps this will come to light in the Chapter 11 proceedings, in which the company seeks to pay off its debts (which it claims it owes between $100 million and $500 million) and sell off or otherwise restructure its assets (totaling between $500 million and $1 billion).
What happens next depends on how those proceedings turn out. Fisker has always taken an “asset-light” approach, comparing himself to how Apple used Foxconn to make the iPhone a global phenomenon. The problem with the asset-light approach is that there is obviously less than you can borrow or sell if things go wrong.
Magna has stopped production of the Ocean and expects to lose $400 million in revenue this year. It’s unclear how far Fisker has gotten on its future products, the sub-$30,000 Pear EV and the Alaska pickup. The engineering firm that co-developed those vehicles with Fisker recently sued the startup, calling the projects into question.
Fisker said in its press release that it will continue “reduced operations,” including “maintaining customer programs and compensating necessary suppliers on a going-forward basis.” In other words, the company will continue to operate at a bare minimum level in the event that a willing buyer is found for the assets it is offering for sale in the Chapter 11 proceedings.
A decade ago, bankrupt Fisker Automotive found a buyer. That eventually evolved into a startup called Karma Automotive, which still exists today. There have been similar developments recently. Three other EV startups that recently filed for bankruptcy – Lordstown Motors, Arrival and Electric Last Mile Solutions – were able to sell assets to comparable companies in the space.
But the final fate of The The startup and its assets will not change the fundamental problem: Fisker was not prepared to face the challenge of bringing a flawed car to market.
