Overview of Fisker's Financial Woes

The electric vehicle startup Fisker is facing severe financial challenges, leading it to pause production of its flagship electric Ocean SUV for six weeks as it scrambles to secure additional funding.

• Fisker had only $121 million in cash and cash equivalents as of March 15th, with $32 million of that amount being restricted or not immediately accessible.
• The company's accounts payable balance has soared to $182 million, raising substantial doubts about its ability to continue operations without raising new capital.
• Fisker went public in 2020 through a merger with a special purpose acquisition company (SPAC).

Challenges with the Fisker Ocean Electric SUV

The rollout of the Fisker Ocean electric SUV has been plagued by various issues, contributing to the company's financial difficulties.

• Problematic software and lackluster customer service have marred the Ocean's launch.
• The National Highway Traffic Safety Administration (NHTSA) is investigating the Ocean for rollaway problems and issues with the braking system.
• Despite production targets of 10,000 vehicles by Magna Steyr, Fisker's contract manufacturing partner, the company shipped only around 5,000 Oceans in 2023.

Restructuring Efforts and Cash Infusion Attempts

Fisker is exploring various options to address its financial challenges and secure additional funding.

• The company is pivoting away from a direct sales model and forming partnerships with dealerships, although at least one early partner has already walked away.
• Fisker has hired restructuring advisers to evaluate a potential bankruptcy filing, according to reports.
• The company is in negotiations with an automaker, believed to be Nissan, for a potential investment and partnership.
• Fisker is attempting to raise $150 million through the sale of convertible notes to an undisclosed investor, with funds released in $35 million tranches subject to conditions.

Layoffs and Production Delays

To cut costs and conserve cash, Fisker has implemented layoffs and production delays.

• In February, the company announced layoffs of around 200 employees, representing 15% of its workforce.
• Fisker's contract manufacturer, Magna Steyr, produced zero cars in January and only 1,000 since February 1st, leading to a cash drain of around $200 million across the last 11 weeks.

Regulatory Compliance Issues

Fisker is also facing regulatory compliance challenges, further compounding its financial troubles.

• The company is late in filing its annual results for 2023, missing the 15-day extension period from the SEC that expired on March 15th.
• This has triggered a default in one of Fisker's other convertible notes, potentially allowing the investor to convert the remaining amount (over $300 million as of late January) into shares.

Uncertain Future for Fisker and EV Startups

Fisker's situation highlights the challenges faced by electric vehicle startups in the highly capital-intensive automotive industry.

• Automotive manufacturing is incredibly expensive, even for companies like Fisker that outsource much of the work to suppliers.
• The financial troubles and potential bankruptcy filing of Fisker serve as a cautionary tale for other EV startups and their investors.
• The company's ability to secure the necessary funding and partnerships will be crucial in determining its future and the fate of the Fisker Ocean electric SUV.