Fisker Inc. is the latest electric vehicle startup to fail to cross the "valley of death." Last night, after months of struggles, the automaker announced that it would enter Chapter 11 bankruptcy proceedings in Delaware District Court, starting the process of selling its assets and restructuring its debt.
What that means for the thousands of owners of its sole car, the electric Fisker Ocean SUV, is now extremely unclear. But it does mean that its namesake, CEO and design legend Henrik Fisker, has now overseen two failed automotive startups.
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Fisker's Bankruptcy
After months of corporate cutbacks, rumors about bankruptcy advisors and slashed staffing, Fisker finally declared bankruptcy Tuesday. That leaves owners of its Ocean electric SUV in a bind, forced to choose between holding out hope for maintenance and support that may never come or selling their cars for a massive loss.
It would be easy to look at Fisker's troubles as symptomatic of the broader problems with the electric vehicle market in 2024, a time when sales are rapidly growing but not nearly at the pace that the industry expected. Many EV startups and established automakers are struggling with production issues, software bugs, defects and other challenges—not to mention the enormous financial costs of launching such radically different vehicles.
Fisker even alluded to this in its bankruptcy announcement: "Like other companies in the electric vehicle industry, we have faced various market and macroeconomic headwinds that have impacted our ability to operate efficiently," Fisker officials said.
But the fact is that Fisker likely would've faced this same outcome if the Ocean had a gas-powered engine under its hood and not a lithium-ion battery built into its floor. The automaker had unique problems from the get-go, from launching a product that many said was fundamentally incomplete to lacking a proper infrastructure for sales, parts and repairs.
"I don't think [the EV slowdown and Fisker's bankruptcy] are really related," Corey Cantor, an EV analyst at BloombergNEF, told me in an email. He added that Fisker sold about 2,000 Oceans in the first quarter of 2024—a drop in the bucket compared to the 3.175 million EVs sold globally in the same period.
"In general, it could lead to more negative vibes towards EV startups and anxiety around the future of the market," Cantor said. "But to me, this isn't an EV story, it's a Fisker story."
If an EV slowdown is really underway, that isn't what killed Fisker; Fisker did that on its own.
An Unclear Value Proposition In A Crowded Market
Fisker Inc. was formed in 2016 and started production of the Ocean in 2022. It's often compared to two other EV startups that launched with similar timelines: Rivian and Lucid. But while Rivian found a niche with luxurious, off-road-capable electric SUVs and pickup trucks—it was actually first to market with the latter—and Lucid has delivered the most efficient and highest-range EVs on the market, Fisker's positioning always felt a little murkier.
Gallery: 2023 Fisker Ocean
The Ocean is an electric crossover. Rather than carving out its own unique space, that put it in contention with just about every other automaker out there. Nearly all of them sell electric crossovers. Going after the most popular segment in cars makes sense. But what did the Ocean bring to the table that was truly special or worthy of hype?
Sure, the Ocean is stylish and delivers an impressive 360-mile maximum range figure. But many EV crossovers look cool and deliver good range now. What did the Ocean do that the Ioniq 5 couldn't? Or a BMW iX? Or a Cadillac Lyriq? Or even the Tesla Model Y, which may be everywhere, but is for a reason? Plenty of early adopter types are into what's new and different, but the Ocean always seemed to lack a "gotta have it" factor that made other EVs stand out.
It's not as if Fisker didn't have other ideas. The automaker had several other planned designs, like the $29,000 Pear, the four-door convertible Ronin and, later on, the compact Alaska pickup truck.
The future of any of those models is now in doubt. The Pear, Ronin and Alaska seemingly never made it past the concept stage. Even if Fisker's assets get bought by some new entity, those models are likely too premature to see the light of day.
That leaves us with the Ocean—just another electric crossover, except one that may end up orphaned by the company that made it.
An 'Incomplete' Car
When I interviewed Henrik Fisker for The Verge in late 2022, he boasted of the Ocean's record development time, which was about half that of most other cars. But according to multiple reports—including accounts from current and former employees who spoke to InsideEVs—that plan hinged on software updates and fixes to be deployed later on. And it turns out that was a very tall order.
Most reviews of the Ocean are rife with words like "incomplete" and "unfinished." Consumer Reports was especially scathing earlier this year, citing issues with the accelerator, ride quality, Bluetooth connectivity, the total lack of adaptive cruise control at the outset and more.
Veteran car reviewer Keith Barry said he had minimal confidence in the product after "our experiences with buggy software, features that disappear and reappear, and promises that future updates will activate options we already paid for."
Moreover, an utterly scathing test of the Ocean by YouTube reviewer Marques Brownlee may have been due to the car's outdated software, but it's hard to believe an update would've fixed all of its problems. Even the owners who told InsideEVs they loved the cars also said they were getting sick of all the bugs.
"Other EV startups and legacy automakers would be wise to avoid Fisker's mistakes: ensure that key products are included in the vehicle from day one and not rely on the potential for software updates to rush products to market," Cantor said. "Too often it felt as if Fisker let its desire to meet internal deadlines rush ahead of those responsibilities to its potential consumers."
While just about every automaker is undertaking a big push for over-the-air software updates, including so they can offer new features worth paying for, Fisker's experience is proof that band-aids after the fact are no replacement for rigorous development.
Internal Strife And Struggles With Carmaking 101
Reports of the turmoil inside Fisker itself have spread like wildfire. Current and former employees have relayed stories of Henrik Fisker and his wife, COO and CFO Geeta Gupta-Fisker, allegedly mismanaging the company while being obsessed with protecting their reputations. Those Fisker employees say the company's leaders aggressively micromanaged relationships with suppliers and cut costs at every turn, sometimes putting it odds with Magna International, the contract firm hired to build the Ocean.
What's worse, the company never quite figured out the basics of carmaking, including a functioning sales channel, an infrastructure to supply parts to owners and a means to repair vehicles. The sales process was often in utter disarray, Business Insider reported today. InsideEVs' own reporting indicates that Fisker employees sometimes had poach components from its factory and disassemble entire cars to get needed parts to customers.
While the company attempted to pivot from a direct sales model like Tesla uses to a dealership-centric one, that never materialized in time to save it.
"Establishing a new automaker takes a considerable amount of marketing, not to mention the proper distribution and retail networks that need to be built," said Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions. "Even if the company does not have a set dealership network, an organized method of delivery, maintenance and repair for these vehicles must be created because even modern vehicles need more than just over-the-air updates for the software."
Had Fisker come to market with a stronger emphasis on the basics of carmaking, from testing to sales and customer service and beyond, it may have had more of a shot at the same long-term viability that other startups are aiming for.
Fisker's Struggles Are Not The EV Market's Struggles
In the end, it's important to remember that Fisker declared bankruptcy around the same period that General Motors, the Hyundai Motor Group, Ford and others saw huge sales gains, and competitors like Lucid and Rivian have new or updated products out or coming soon.
Plus, they're all worried about the rise of China's auto industry, which is singularly focused on electric vehicles. In hindsight, if Fisker was unable to even get parts in the hands of customers who needed them, it's hard to imagine it could've been a viable competitor to the likes of BYD and Geely.
"Making cars is really hard," Cantor said. "And making electric vehicles is hard too. Fisker's bankruptcy isn't a part of the story linked closely to the overall trials and tribulations of the EV market, but closer to the classic difficulty with startup companies succeeding."
Still, Fiorani said he wouldn't rule out new startup players coming in, even as so-called "legacy" automakers go big on EVs and software features too. But they can no longer afford to make the mistakes that Fisker made.
"With the current state of the EV transition, creating an EV startup would be a very big risk," he said. "Too many players at the high end make it difficult to enter the market and generate higher profits needed to invest in lower-priced models to sell at higher volumes. Add in the higher interest rates today and venture capital is less likely to find its way into a no-name, high-risk startup."
Contact the author: patrick.george@insideevs.com
