Photo: Fisker
On June 17, Fisker finally admitted its difficult situation and filed for Chapter 11 bankruptcy protection. While this could offer it some breathing room while ensuring the creditors can recover some of their money, there's no real protection for people who bought its vehicles. Fisker Ocean owners are left holding the bag, and some are already facing the new reality.
Henrik Fisker will remain in history as the man who started two automotive startups and ran both into the ground. While some companies are bound to fail due to difficult market conditions, underwhelming products, or bad management, Fisker had them all and then some. After the company filed for Chapter 11 bankruptcy protection, new information surfaced that could put Henrik Fisker next to Nikola's Trevor Milton, who was convicted of securities fraud.
According to a TechCrunch report, Fisker filed a new document in its Chapter 11 bankruptcy proceeding that shows the company was in financial distress as early as last August. However, during a Product Vision Day in August 2023, Henrik Fisker reassured the public and investors that the company has "big plans" to launch new vehicle models "into several different segments."
It was actually the financial distress that forced Fisker to seek a partnership with another carmaker, which Reuters reported to be Nissan. Fisker blamed its difficulties on this failed partnership when, in fact, the financial troubles were looming much earlier. The fact that the company's CFO was Henrik Fisker's wife, Geeta, and the marketing director was his daughter, Natasha, didn't seem to help either.
Fisker was forced to stop production of the Ocean SUV earlier this year, fired most of its workforce, and is now beginning the bankruptcy process. The Chapter 11 protection is meant to offer the company the chance to stabilize operations while it tries to reorganize or at least sell its assets in an orderly and efficient fashion. However, with so much debt outstanding, it's doubtful the company will still be able to operate once those assets are gone.
A WSJ report indicates that Fisker is looking to sell about 4,300 Ocean SUVs in its inventory to American Lease, a supplier of leased cars to Uber and Lyft drivers in New York City. It would be interesting to see how that would work out, considering that Fisker could not offer after-sales support, warranty, parts, service, or road assistance for these vehicles. This is something that Ocean owners are already facing with dire consequences. However, at this scale, any company would incur a significant loss operating such a ghost fleet of non-functional vehicles.
The part shortage is already biting existing owners, who have complained about this since Fisker started selling its vehicles in the US. The startup made no replacement part stockpile, and components were slow to arrive when needed. In some cases, insurance companies were forced to write off Ocean EVs for minor issues because there were no parts to complete the repairs. This means that insuring a Fisker Ocean would be nearly impossible in the future.
We're only days into the bankruptcy proceedings, and Fisker offices already look like a ghost town. Owners report that no one is picking up phone calls, which leaves distressed owners in a delicate situation. Some are left with non-functional cars that no one can service or repair, and the warranty is no more valuable than the piece of paper it is written on. Make no mistake, a company under Chapter 11 protection should still offer parts, service, and honor the vehicle warranty, although it's unlikely that Fisker can still.
Even if no repairs are needed, and you're among the few lucky ones who got a perfectly functional Ocean SUV, problems are still looming. Many software functions, including the Fisker app, rely on a server connection that might not exist in the future. The same goes for the 4G internet connection inside the car if Fisker doesn't pay T-Mobile bills in time.
The Chapter 11 bankruptcy protection is, most of the time, a preliminary step before Chapter 7 (liquidation) is triggered. In the highly likely case that Fisker fails to reorganize its operations, it will be broken up, and its assets will be auctioned off. Given its debt and lack of assets and intellectual property, it's difficult to imagine that a company will be interested in buying Fisker as a whole and continuing operations. More likely is that the company will disappear, and existing owners will be left holding the bag.
Their only chance is to leverage the community and convince third-party suppliers and independent repair shops to help them maintain their vehicles. The first step has already been accomplished, with hundreds of Fisker owners founding the Fisker Owners Association. The goal is to help each other maintain their vehicles by securing a supply of replacement parts and maintaining the software.
According to a TechCrunch report, Fisker filed a new document in its Chapter 11 bankruptcy proceeding that shows the company was in financial distress as early as last August. However, during a Product Vision Day in August 2023, Henrik Fisker reassured the public and investors that the company has "big plans" to launch new vehicle models "into several different segments."
It was actually the financial distress that forced Fisker to seek a partnership with another carmaker, which Reuters reported to be Nissan. Fisker blamed its difficulties on this failed partnership when, in fact, the financial troubles were looming much earlier. The fact that the company's CFO was Henrik Fisker's wife, Geeta, and the marketing director was his daughter, Natasha, didn't seem to help either.
Fisker was forced to stop production of the Ocean SUV earlier this year, fired most of its workforce, and is now beginning the bankruptcy process. The Chapter 11 protection is meant to offer the company the chance to stabilize operations while it tries to reorganize or at least sell its assets in an orderly and efficient fashion. However, with so much debt outstanding, it's doubtful the company will still be able to operate once those assets are gone.
Fisker bankruptcy spells trouble for Ocean owners
While creditors and even the company's founders might see (at least) some of their money back, the ones bearing the brunt of Fisker's failure are Ocean owners. Many bought their vehicles at sticker price, which sometimes meant over $60K, and have grappled with countless issues since day one. Make no mistake, the Fisker Ocean would've failed regardless of the market conditions because of its many problems that put buyers off. This made it impossible for Fisker to find buyers for more than half of the SUVs it produced in 2023.A WSJ report indicates that Fisker is looking to sell about 4,300 Ocean SUVs in its inventory to American Lease, a supplier of leased cars to Uber and Lyft drivers in New York City. It would be interesting to see how that would work out, considering that Fisker could not offer after-sales support, warranty, parts, service, or road assistance for these vehicles. This is something that Ocean owners are already facing with dire consequences. However, at this scale, any company would incur a significant loss operating such a ghost fleet of non-functional vehicles.
The part shortage is already biting existing owners, who have complained about this since Fisker started selling its vehicles in the US. The startup made no replacement part stockpile, and components were slow to arrive when needed. In some cases, insurance companies were forced to write off Ocean EVs for minor issues because there were no parts to complete the repairs. This means that insuring a Fisker Ocean would be nearly impossible in the future.
We're only days into the bankruptcy proceedings, and Fisker offices already look like a ghost town. Owners report that no one is picking up phone calls, which leaves distressed owners in a delicate situation. Some are left with non-functional cars that no one can service or repair, and the warranty is no more valuable than the piece of paper it is written on. Make no mistake, a company under Chapter 11 protection should still offer parts, service, and honor the vehicle warranty, although it's unlikely that Fisker can still.
Fisker Ocean might become an expensive garage decoration
Fisker has laid off a large portion of its staff and closed offices, so getting the company to process a warranty claim and get the dealer to do the work would be highly unlikely. Finding the parts for the repair was difficult even months ago, but now it would be nearly impossible. Also, forget about recalls, as the company will not have the money to investigate the problems and make the necessary repairs.Even if no repairs are needed, and you're among the few lucky ones who got a perfectly functional Ocean SUV, problems are still looming. Many software functions, including the Fisker app, rely on a server connection that might not exist in the future. The same goes for the 4G internet connection inside the car if Fisker doesn't pay T-Mobile bills in time.
The Chapter 11 bankruptcy protection is, most of the time, a preliminary step before Chapter 7 (liquidation) is triggered. In the highly likely case that Fisker fails to reorganize its operations, it will be broken up, and its assets will be auctioned off. Given its debt and lack of assets and intellectual property, it's difficult to imagine that a company will be interested in buying Fisker as a whole and continuing operations. More likely is that the company will disappear, and existing owners will be left holding the bag.
Their only chance is to leverage the community and convince third-party suppliers and independent repair shops to help them maintain their vehicles. The first step has already been accomplished, with hundreds of Fisker owners founding the Fisker Owners Association. The goal is to help each other maintain their vehicles by securing a supply of replacement parts and maintaining the software.
Google News