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Unable to pay the debt! A new force or bankruptcy

2024-05-30 Update From: AutoBeta NAV: AutoBeta > News >


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On April 23rd, according to foreign media reports, Fisker, a US electric car maker, announced in a regulatory document that it was facing bankruptcy. If Fisker fails to obtain relief from creditors or raise additional cash, the company is expected to have to file for bankruptcy within the next 30 days, according to the filing. Fisker noted that during the 30-day grace period, the company failed to pay $8.4 million in interest in March, resulting in a default on the loan.

In addition, Fisker's cash balance fell sharply. Fisker said in the document that its cash balance had decreased from $736.5 million in 2022 to $325.5 million in 2023. As of April 19, Fisker had about 1135 employees, down 425 from the end of December. To avoid a worst-case scenario, the company is cutting costs, including plans for further layoffs and streamlining of operations and a reduction in the company's actual footprint.

There was a foreboding long before Fisker faced bankruptcy. On February 29th, Fisker announced plans to cut 15 per cent of its 2023 fourth-quarter and full-year results. Fisker said the reduction in headcount was mainly related to a change in sales strategy, from directly facing consumers to the distributor partner model. It also points out that if Fisker does not have new sources of funding, the company's existing funds may not be enough to support growth in the next 12 months. In addition, Fisker said it was in talks with another "big carmaker" about financing, hoping to finalise the capital agreement "as soon as possible", but Fisker did not disclose the name or other details of the "big carmaker" and the industry speculated about the "big carmaker" or Nissan.

On March 13, people familiar with the matter said Fisker was considering filing for bankruptcy and even hired restructuring consultants to help. Fisker had previously said it had "major questions" about its ability to stay afloat and could run out of cash this year. On March 18th, Fisker announced that it would suspend production of electric vehicles for six weeks, and the biggest benefit of the suspension is that it will ease the cash flow shortage and advance strategic financing plans. At the time, Fisker reiterated that it was in talks with a large carmaker about a potential deal, but did not give a name. On March 25, Fisker said it had received notice from large carmakers that had previously negotiated a potential deal with it, which had decided to end the talks. As a result, the company will not be able to meet the terms and conditions of the financing commitments and terms signed with an investor on March 18 and intends to discuss waiving this condition with the investor. But Fisker said the company would continue to review strategic alternatives such as in-court or out-of-court restructuring and capital market transactions.

On the same day, the New York Stock Exchange issued a statement that Fisker's share price is so low that it is no longer suitable to continue trading on the New York Stock Exchange, trading will be suspended immediately, and the delisting process of Fisker shares will be launched. It is understood that before the suspension, Fisker shares had plummeted 28 per cent to about 9 cents, down 95 per cent this year.

According to the latest earnings data, Fisker's total revenue in 2023 was $272.9 million, gross profit was negative $102.9 million, and full-year net loss was $761.9 million, or $2.22 per share. As of December 31, 2023, Fisker cash and equivalents stood at $325.5 million, well below the average analyst estimate of $502.3 million, and the book value of completed vehicles and raw materials in inventory was about $530 million.

Fisker was once seen as Tesla's main rival, but now it seems that the gap between the two is very different. Fisker currently has only one Ocean model on sale, with prices ranging from $37499 to $68999 (274000-504000 yuan). Data show that Fisker produced a total of 10142 new cars in 2023, but only 4929 new cars were delivered due to logistics restrictions.

As one of the "new car-building forces" in the United States, Fisker also pinned its hopes on the Chinese market. In October 2023, Fisker announced that it would open its first sales experience store in Shanghai, China, and began to promote its business layout in the Chinese market. Henrik Fisker, founder of Fisker, said that China is its very important market and hopes that Fisker will be positioned as "one of the only two pure foreign electric car brands" in the Chinese market. But judging from its current situation, the probability that Fisker wants to achieve this goal is extremely low. Fisker is scheduled to sell all nearly 5000 unsold vehicles produced last year by the end of the first quarter of this year, and between 20, 000 and 22000 electric vehicles will be delivered this year. But without additional financing, the company may be forced to reduce production, reduce the size of its operations and cut further jobs.

Judging from the latest news, Fisker has reached a moment of life and death. If it is unable to get capital injection in the next 30 days to solve the problem of shortage of funds, it may be difficult for Fisker to face bankruptcy.

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