Fisker seeks deal with another carmaker to remain afloat, ‘going concern’ warning on the horizon

United States

Fisker Inc. shares fell more than 30% in extended trading Thursday after the EV maker said it was brokering a deal with an unnamed “large” carmaker as it seeks to remain in business, adding that there would be “substantial doubt” about its ability to do just so without a capital injection.

The deal could include an investment in Fisker FSR, -0.65%, a joint development of one or more electric-vehicle platforms and North American manufacturing, Fisker said.

Fisker has been dubbed the “Apple of autos,” having inked deals with manufacturers to produce its EVs and choosing to focus on the design side of the business.

The company also said that its current resources are insufficient to meet its needs over the next 12 months, and that it will need to seek additional equity or debt financing.

If there’s no financing or if financing terms are “less desirable” than expected, the company “may be forced to decrease its planned level of investment in product development, scale back its operations including further headcount reductions, and reduce production of the Fisker Ocean, which could have an adverse impact on the company’s business and financial prospects,” the EV maker said.

“As a result, the company expects to conclude there is substantial doubt about its ability to continue as a going concern when its annual financial statements for the year ended December 31, 2023, are filed with the SEC,” it warned.

Fisker said it would cut about 15% of its workforce, and that the reductions are mostly related to the change in its sales strategy from a direct-to-consumer model to a dealer-partner model. It was not immediately clear how many employees Fisker currently has, and the company did not return a request for information.

The company became a public through a merger with a blank-check company in July 2020.

It had an earlier life as privately held Fisker Automotive, which went bankrupt in 2013 after six years in business. The company’s assets were acquired by a Chinese auto-parts maker that also owned the company supplying batteries to Fisker, A123 Systems.

A123 Systems went bankrupt as well, hastening the demise of the old Fisker. The founder of Fisker Automotive, Danish designer Henrik Fisker, had resigned from the company’s amid board infighting just before the bankruptcy, but he retained some brand rights and went on to found Fisker Inc.

Last year was “challenging” for Fisker, including delays with suppliers and other issues that prevented the EV maker from delivering its Ocean SUVs “as quickly as we had expected,” Henrik Fisker said in the company’s statement.

“We also encountered unexpected headwinds in our efforts to establish a direct-to-consumer sales model in both North America and Europe at the same time,” plus “unanticipated challenges” such as rising interest rates and a tight labor market, he said.

Besides the layoffs, Fisker is also streamlining operations, including reducing its physical footprint and overall expenses.

Fisker reported fourth-quarter sales of $ 200 million, well bellow FactSet consensus for sales of $ 327.7 million for the quarter.

The EV maker lost $ 463.6 million, or $ 1.23 a share, in the quarter, compared with a loss of 34 cents a share in the fourth quarter of 2023. The analysts surveyed by FactSet expected a GAAP loss of 23 cents a share.

Fisker shares have lost 90% in the past 12 months, contrasting with gains of around 28% for the S&P 500 index SPX.