New Delhi: Two years ago, a Fisker Inc. employee shared concerns that went beyond whether their Ocean SUV would be built. Fisker had contracted Magna, a respected car maker, to handle production, making the ambitious November 2022 start date seem possible. However, the employee was more worried about Fisker’s ability to manage the problems that come after the car hits the road. The focus seemed to be on building the car, not on building the company.
This concern echoed a previous failure by Fisker founder Henrik Fisker. His earlier company, Fisker Automotive, managed to release a hybrid sports car but soon failed due to quality issues, a collapsed battery supplier, and a hurricane that destroyed a shipment of cars. The employee’s warning in 2022 turned out to be accurate. Fisker Inc. filed for Chapter 11 bankruptcy this week, just a year after starting to deliver its SUV. This collapse is largely due to the very issues the employee highlighted.
Many former Fisker employees, speaking anonymously, shared similar concerns. They talked about internal chaos, quality problems with the Ocean SUV, and questionable decisions by Henrik Fisker and his co-founder and wife, Geeta Gupta Fisker.
The software for the Ocean SUV was not fully ready, causing delays and issues with initial deliveries in May and June 2023. Early customers experienced problems like power loss, faulty brakes, glitchy key fobs, defective door handles, and buggy software. The National Highway Traffic Safety Administration has opened four investigations into these issues.
Fisker also had trouble with supplier quality and didn’t have enough spare parts, adding pressure on repair teams. Sometimes, parts were taken from Magna’s production line and Henrik Fisker’s own car to meet needs, though Fisker denied these claims.
Employees worked hard to support customers, often working long hours and weekends. One even took a call during a funeral, and another while in the hospital. An hourly employee has since filed a class action lawsuit over these working conditions. Despite these efforts, the company admitted it didn’t have enough staff to handle customer service requests, resulting in employees from various departments stepping in.
Fisker also struggled as a public company, losing track of $16 million in customer payments due to poor internal accounting. The company faced multiple delays in required SEC reporting, which allowed a major lender to take control in its final months.
Despite these problems, Fisker praised its rapid market entry in its Chapter 11 announcement, blaming external market and economic challenges. However, there was little acknowledgment of the internal issues that led to its bankruptcy.
As Fisker enters Chapter 11 proceedings, it aims to settle debts (estimated between $100 million and $500 million) and restructure assets (valued between $500 million and $1 billion). Its “asset-light” approach, similar to how Apple uses Foxconn, now poses a challenge, with fewer assets available to sell or borrow against.
Magna has stopped production of the Ocean, expecting a $400 million revenue loss. The future of Fisker’s upcoming models, the sub-$30,000 Pear EV and the Alaska pickup, is uncertain following a lawsuit from its engineering partner.
Fisker plans to maintain minimal operations during the bankruptcy process, hoping to attract a buyer for its assets. A decade ago, Fisker Automotive found a buyer and rebranded as Karma Automotive. Recently, other EV startups like Lordstown Motors, Arrival, and Electric Last Mile Solutions have also sold off assets after bankruptcy.
Ultimately, Fisker’s main issue was its unpreparedness to handle the challenges of bringing a flawed car to market.
