The Fall of Fisker: Electric Car Start-Up Nears Bankruptcy Amid Industry Downturn

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The end of the fairy tale of the American electric car start-up Fisker comes at a terrible time. After the golden two-year period post Covid, which recorded demand and profitability with a decidedly favorable wind, the world of electric four-wheelers has just entered what a brilliant analyst has defined as the Death Valley of the sector, which could last between two and three years. Price delta too high compared to cars with internal combustion engines, rates still too high for those requesting financing, but also a choice that still does not convince a large part of consumers, above all due to the rapidity with which these cars depreciate thanks to as many rapid advances in technology. The challenge of the transition is titanic even for large groups. Imagine for the little ones.

Fisker, short of revenues (only 273 million dollars in 2023 against net losses of 762 million) and liquidity, turned to FTI Consulting and the Davis Polk law firm to be assisted in a possible bankruptcy procedure, as The Wall Street Journal revealed on Wednesday. Already in June you had to throw in the towel Lordstown Motors, abandoned by its Taiwanese partner Foxconn. A few weeks ago the Californian company founded in 2016 by the Danish designer Henrik Fisker, designer of the BMW Z8 and the Aston Martin V8 Vantage, had reported risks of bankruptcy, job cuts and a pause in investments in future projects if a partnership was secured. Nissan was in advanced talks to invest in Fisker and work on an electric pickup project.

The parable was short-lived (moreover, it is the second failure for Henrik Fisker, the first dating back to the end of 2013). Fisker Ocean was supposed to be the “most sustainable” electric car, but sales did not meet expectations. In 2023, 10,193 examples of this electric SUV with 700 km of autonomy were produced and just 4,929 were sold. Fisker stock reached a top of $28.50 in February 2021, today it is worth 15 cents compared to 33 on Wednesday.

Tesla is also bad. Also on Wednesday, Wells Fargo cut its price target from $200 to $125, about 27% below current levels. The US bank downgraded the stock to sell from hold. In the session on Thursday 14 March, the Austin, Texas-based manufacturer lost over 4% – around 25 billion dollars in capitalisation, but is over -33% in 2024, plummeting from around 800 to 510 billion in capitalisation. «Out of 45 analysts who follow Tesla and monitored by S&P Global Market Intelligence, nine consider it a “strong buy”, six a “strong buy”, 22 a “hold”, while eight classify it as a “sell” or “strong sell” . The consensus recommendation is “Hold””. he wrote in Econopoly-Il Sole 24 Ore Gabriel Debach, Italian market analyst at eToro. Among other things, according to Wells Fargo, continued price cuts may have a negative impact on demand. A big problem, given that Chinese competition on the home market is aiming for increasingly aggressive cuts.

This negative astral conjunction has dragged the sector downwards, in particular the most unbalanced and fragile stocks such as the American Rivian (-9.3%), which lost over 5 billion in 2023 (and 17 in the last three years ) despite sales having doubled to 57 thousand units but which will not grow in 2024, precisely due to the ongoing demand crisis.

2024-03-14 20:55:23
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