After years of high expectations driven by Tesla’s success, electric vehicle manufacturers now find themselves struggling to survive.
The latest name to face challenges is Fisker. Amid a market with stagnant demand, the automaker, founded in 2016, is facing difficulties in expanding its sales. According to information obtained from The Wall Street Journal, the company has hired FTI Consulting and the law firm Davis Polk to prepare for a possible bankruptcy.
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The problems faced by Fisker are not new. Last month, the company issued a statement indicating “substantial doubt” about its ability to continue operating and announced negotiations with investors to secure a capital injection.
Preliminary data reveals that Fisker incurred a loss of $762 million in 2023, an increase of 39.2% from the previous year. The automaker’s debt surpassed $1 billion in the same period.
The possibility of resorting to bankruptcy negatively impacted Fisker’s shares in after-market trading on the New York Stock Exchange (NYSE). Around 6:30 p.m., the automaker’s shares recorded a 47.1% decline, reaching $0.17.
Year-to-date, the company’s shares have depreciated by 81.1%, reducing the market value to $190 million. Since its initial public offering in 2020 through a Special Purpose Acquisition Company (SPAC), Fisker has experienced a depreciation of over 97%.
Fisker’s decline reflects the challenging landscape faced by the electric vehicle market, with stagnant demand and intense competition pressuring many companies to lower prices of their vehicles. Additionally, many of these companies have struggled to economically viable mass-produce their automobiles.
According to a survey conducted by the WSJ in December 2023, at least 18 startups in the sector that went public between 2020 and 2022, many through Spacs, are at risk of running out of capital by the end of this year. Of the 43 companies that went public during the period, five have gone bankrupt or been acquired.
If Fisker does indeed file for bankruptcy, it will be the second collapse of a car manufacturer founded by former designer Henrik Fisker, known for iconic models from BMW and Aston Martin. His first company, Fisker Automotive (the same name as the current one), filed for creditor protection in 2013.
