Fisker Addresses Bankruptcy Rumors as It Pauses Production: Secures $150 Million Funding

Mar 18, 2024 10:47 PM EDT

VIEWS OF CARS ON EXPRESSWAY — (Photo : PEXELS/ Eugene Shirokov)

Fisker responded to reports of potential bankruptcy with a formal statement. The struggling electric vehicle company has decided to temporarily halt production for a period of six weeks. In more positive news, Fisker revealed securing a substantial $150 million funding boost and is currently engaged in discussions with a major automaker for potential investment or partnership opportunities. This development comes after Fisker's prior warning about its ongoing viability.

Rumors Surfaced: Fisker Bankruptcy, Finds $150 Million Funds

Fisker, the struggling electric vehicle manufacturer, announced a temporary six-week suspension of its production operations and disclosed securing a substantial $150 million financing package from an undisclosed existing investor. It particularly targets to pause production of its electric Ocean SUV in a bid to address its financial challenges.

The decision to pause production, effective immediately, is aimed at optimizing inventory and advancing strategic and financial objectives. Furthermore, Fisker revealed its intention to raise up to $150 million through a financing arrangement with the holder of its 2025-dated convertible notes.

While the EV maker did not reveal the identity of the current investor, it outlined that the funding would be structured into four tranches and subject to specific conditions. According to 21WFMJ, the EV company is actively engaged in negotiations with a large automaker.

The identity of which remains undisclosed, for a potential transaction encompassing various possibilities such as an investment in Fisker, collaborative development of one or more electric vehicle platforms, and the prospect of establishing manufacturing operations in North America.

Fisker reported global deliveries of approximately 1,300 vehicles and the production of nearly 1,000 EVs within the first two and a half months of this year, with around 4,700 vehicles currently in its inventory. As part of its efforts to realign inventory levels and address financial matters, the EV manufacturer has scheduled a six-week production pause.

Recent reports had indicated that Fisker had enlisted advisors to aid in potential bankruptcy proceedings subsequent to experiencing a loss of $463.6 million in the last quarter of 2023.

Nissan's Investment

Autoweek reported that Fisker initiated deliveries of the electric Ocean SUV in late autumn, emphasizing that this achievement does not immediately translate to profitability for the company. As of the present moment, the EV maker is operating at a deficit, with a reported loss of $463.6 million in the fourth quarter of 2023, despite recording revenue of $200.1 million during the same timeframe.

Last week, the Wall Street Journal disclosed Fisker's enlistment of restructuring advisors, an announcement that led to a 50% decline in the company's stock value towards the end of the week. In response to the ensuing market speculation, Fisker issued a statement clarifying its position.

Thus, stating the company's policy of refraining from commenting on market rumors and highlighting its collaboration with external advisors to manage its business and develop effective strategies. Fisker stressed that it was concentrating on obtaining more funding and forging a strategic alliance with a large carmaker in addition to working toward implementing a Dealer Partnership model throughout Europe and North America.

It was also reported that Henrik Fisker, the CEO, has been looking for a larger carmaker to work with for a while. There are signs that an arrangement will be concluded soon. Fisker and Nissan are reportedly contemplating a large $400 million investment for Fisker's pickup truck chassis.

According to Autoblog, the recent disclosures shed light on the challenging situation faced by Fisker, as the company issued a warning last month regarding significant uncertainties about its continued operations.As part of its efforts to address production concerns, software failures, and criticism from short-sellers, Fisker revealed plans to decrease its staff by 15%.

This month, Bloomberg reported that talks were in progress between the corporation and Nissan Motor Co. of Japan, citing persons with knowledge of the issue.