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EV Automaker Fisker Declares Bankruptcy. What Happened?

Photo Courtesy Fisker

Fisker was on to something. The company’s Ocean SUV rolled off production lines last year, and a few orders had been fulfilled. Yet, the public was unaware of the internal issues at the California auto startup, and once the product was out, there was very little hype around it. And then the sad news dropped on June 17: Fisker filed for Chapter 11 bankruptcy after failing to profit off the Ocean.  

“We are proud of our achievements, and we have put thousands of Fisker Ocean SUVs in customers’ hands in both North America and Europe,” a spokesperson for the automaker said in its official announcement. “But like other companies in the electric vehicle industry, we have faced various market and macroeconomic headwinds that have impacted our ability to operate efficiently.” 

It’s a blanket statement about a shortfall the company had faced for several years. The writing was on the wall for Fisker — and some believe it had been for some time. 

In March, Fisker reportedly hired bankruptcy specialists. The firm had a rough start to 2024, with the stock price being delisted from the New York Stock Exchange due to falling shares, even amidst a 300% increase in deliveries in the fourth quarter of 2023. 

Fisker had said it didn’t expect to profit from Ocean sales. Its contract manufacturer, Magna Steyr, also took a portion of the profits. Fisker also recruited several partner dealers to sell the cars. Fisker had a $530 million inventory that was barely getting sold. 

The company had sought investment from a larger auto brand. There was speculation Nissan was interested after Fisker’s Alaska concept electric pickup was revealed.

It looked similar to the Nissan Frontier truck, but no deal materialized between the two firms. It didn’t help that Fisker filed for bankruptcy in Austria, where Magna’s factory is based. Production on the Ocean halted entirely in March.  

Amidst a whirlwind of financial and glaring internal problems, Fisker remained steadfast in its mission to move 10,000 Ocean units. However, a year after it was publicly launched and almost five years after the concept was introduced, Fisker had only delivered under 5,000 SUVs. Yet, they were still charging ahead with the Alaska, its low-cost Pear EV, and the Ronin offroad truck, all unveiled at the Ocean’s 2023 launch.

There was hope a lower MSRP would drive interest in the remaining 2023 Ocean models. The car was lowered to $24,999 for the standard edition and $34,999 for the Ultra trim.

These also were guaranteed to have Fisker’s Ocean OS 2.0, designed to solve some of the bugs in the original software. 

However, Fisker was up against a saturated electric vehicle (EV) market. Tesla and Rivian, its two closest rivals from a business model standpoint, continued to attract customers while Fisker did not. Legacy automakers like Hyundai and Volkswagen also captured a large share of the North American market. 

It’s safe to say that Fisker wasn’t equipped to handle a market where it was competing against literally everyone in the automotive industry. However, nothing prepared them for the customer reviews, which some online commenters believe is what killed Fisker. 

Photo Courtesy Auto Focus/Marques Brownlee

Unfortunately, the Ocean got notoriety for the wrong reason. Tech reviewer Marques Brownlee posted his review of the SUV on YouTube. The video was titled “This is the Worst Car I’ve Ever Reviewed.” Brownlee pointed out several issues with the Ocean, including braking, getting doors open, connecting his phone to the Bluetooth and infotainment system, no glovebox, the charging port door acting silly, failing to enter California Mode, and others. 

The review garnered a lot of attention. Fisker executives heard a famous YouTuber talk ill about their vehicle, prompting them to call the dealer who lent an Ocean to Brownlee. Fisker claimed he was being unfair and was reviewing a prototype, eventually asking if Brownlee would give their SUV another chance. 

Brownlee obliged after a social media maelstrom, reviewing the Ocean 2.0 but running into the same issues. The main takeaway was that the updated Ocean didn’t fix all the SUV’s user experience problems.

Issues with the key remained, which is a massive problem. The brake hold was still not optimal. Regen braking often cut out after hitting a bump in the road, as if the car wasn’t braking. 

Video Courtesy Auto Focus

The internet tried to put the onus on Brownlee after Fisker’s finances took a major blow in the aftermath, but many said that it wasn’t the YouTuber’s job to ensure a company succeeds. Brownlee tweeted about the bankruptcy news in light of his reviews. 

Other publications pointed out similar problems Brownlee addressed in his videos. Car and Driver gave the Ocean a 7/10 rating, and they even said, “If you’re daring enough to roll the dice on a startup automaker teetering on the brink of bankruptcy, you’ll find that the Fisker Ocean is a stylish compact EV SUV with some legitimately good ideas.” The publication also noted the Ocean lacked storage space, consumers had to pay for long-range versions, and bankruptcy was on the horizon. 

Perhaps the most rational take was a comment on Electrek’s story about the failure to secure legacy auto investors. A comment by user Gertrud, liked by 18 people, claimed the problem was not the Marques Brownlee review. Rather, the mistakes piled up after taking three extra years to roll out the first Ocean. The original announcement came in 2019, and the concept model was unveiled in 2020. Then, they missed the 2021 deadline set for themselves while Tesla continued gaining global traction. 

“It took Fisker two more years to actually start production of the Ocean. Two more years of just costs, costs, and costs, and with zero revenue, eating up the cash reserves. And by the time the Ocean hit the market, interest rates were high. Tesla had delivery times of 0–4 weeks. And there was a lot more competition. On top: even in 2023 — after four years — the software wasn’t ready, and that’s why Fisker got a lot of bad reviews for the cars,” the comment concluded

Online reviews certainly influence a product’s reputation, but when the federal government gets involved, there’s little hope for success.

The National Highway Traffic Safety Association (NHTSA) has been investigating problems with the Ocean related to automatic emergency braking, doors failing to open, unintended vehicle movement, and loss of braking performance.

All these investigations are ongoing and were reported this year. 

Even if Brownlee was responsible for Fisker’s demise (he’s not), the government could’ve hit Henrik Fisker with several lawsuits regarding passenger safety and failures to update them.

Photo Courtesy Fisker

Fisker was very behind their rivals. Despite being an America-based entity, using the Austrian factory disqualified it from receiving EV tax credits from the Inflation Reduction Act. People had to pay full price for the vehicle. That certainly plays a role in consumer behavior.

Another misstep was a failure to deliver all the inventory. The company also spent more time mitigating bad press in poor reviews, playing off software issues as bugs that would get fixed with time. This issue is similar to the situation in the gaming industry these days. You rarely find a gamer who doesn’t complain about $70 video games not working at launch.     

Car companies have software issues, especially when EVs are treated like science experiments. However, Tesla, Hyundai, and Volkswagen wouldn’t launch their cars without ironing out some of these issues. There are over-the-air updates, which Fisker also did, but those are supposed to be minor fixes, not something that requires technicians to fix. 

According to the Associated Press, Fisker will have to raise between $100–$500 million in liquidated damages.

There’s no update as to the company’s next plan. This was Fisker’s second attempt to start his auto line, the first attempt from 2007 to 2012 before returning in 2016. 

It is becoming increasingly difficult to break through in the EV landscape. Even legacy automakers find it hard to profit from electric sales when newcomers dominate the market. Fisker may try a third iteration of the company with a more concrete profiting plan, but we can only wait and see.

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