Fisker, the U.S. electric vehicle (EV) startup, faced a substantial setback as its stock plunged over 40% in late trading on Wednesday. Reports emerged that the company is contemplating a potential bankruptcy filing, prompting concerns among investors and industry observers alike. Fisker has enlisted restructuring advisors to assist in navigating its financial challenges, with The Wall Street Journal citing inside sources on the matter.
The troubled EV startup had previously issued a “going concern” warning, indicating the possibility of running out of cash within the year. Delays in reporting full 2023 financial results further exacerbated uncertainties surrounding Fisker’s financial health, with the company citing a shortage of accounting resources as a contributing factor.
Fisker’s struggles are emblematic of broader challenges facing EV startups, including sluggish demand for electric vehicles and persistent production obstacles. Despite initiating U.S. deliveries of its first EV, the Ocean SUV, in June, Fisker has encountered difficulties in scaling its operations and meeting market demand.
The news of Fisker’s potential bankruptcy filing comes amidst similar challenges faced by other EV companies. Rivian Automotive, another prominent player in the EV space, has faced scrutiny over its production and delivery projections, leading Tesla CEO Elon Musk to suggest the possibility of Rivian’s bankruptcy within the next six quarters. While Rivian’s production and delivery figures surpass those of Fisker, its 2024 output guidance fell short of expectations, exacerbating concerns among investors.
Similarly, luxury EV manufacturer Lucid Motors recently revised down its 2024 production forecast amid tepid demand and pricing pressures. While Tesla remains a profitable leader in the EV market, its profitability has declined, with anticipated delivery declines in the first quarter compared to the previous quarter despite global price reductions and incentives.
In response to these challenges, Tesla stock experienced a fractional decline overnight, with shares falling to their lowest point since May. Analyst sentiment towards Tesla has soured, with Wells Fargo downgrading the company to sell before Wednesday’s market open, and UBS slashing its price target for Tesla shares. These downgrades reflect analysts’ revised delivery and profit estimates for Tesla, further contributing to negative market sentiment surrounding the EV giant.
Overall, Fisker’s potential bankruptcy filing underscores the volatility and challenges inherent in the EV industry, with broader implications for investors and stakeholders across the sector.