Fisker Collapses Into Chapter 11 Bankruptcy Amid Market and Production Woes

Fisker, the electric vehicle (EV) startup founded by Henrik Fisker, has filed for Chapter 11 bankruptcy protection, becoming the latest casualty in the EV market after its flagship Ocean SUV was plagued by quality issues and software problems.

Fisker filed for bankruptcy in Delaware on Friday, estimating its assets between $500 million and $1 billion and liabilities between $100 million and $500 million. The filing arrives merely months after Fisker stopped production of its Ocean model at Magna’s plant in Austria due to ballooning inventory amid sluggish sales.

In a statement, Fisker cited “various market and macroeconomic headwinds” that hampered its operations and ability to operate efficiently. The company also said the Chapter 11 restructuring process would allow it to continue limited operations while pursuing a potential sale of its assets.

“After evaluating all options for our business, we determined that proceeding with a sale of our assets under Chapter 11 is the most viable path forward for the company,” a Fisker spokesperson said.

Fisker’s Encounters With Troubles

As such, Fisker’s EV lineup had mixed reviews that potentially led to its descent into bankruptcy from an array of glitches ranging from faulty cruise control to troubling build quality issues. Notable reviews including popular YouTuber Marques Brownlee labeled the Ocean “the worst car I’ve ever reviewed” after experiencing multiple malfunctions during a test drive.

Moreover, trouble had been brewing at Fisker for months as it repeatedly slashed production forecasts. The company delivered just 4,929 Ocean model units in 2023 despite producing over 10,000 units as it struggled with both quality control and the software required to enable promised features.

In addition, Fisker had recently recalled its over 18,000 Ocean model units across North America and Europe due to faulty software and noncompliance with safety standards according to according to the National Highway Traffic Safety Administration (NHTSA)

In a shift of strategies, Fisker had attempted a dramatic pivot in January by partnering with franchised dealers after initially planning to sell directly to buyers. But by February, the company had warned about “substantial doubt” over its ability to continue operating as a going concern.

Further into March, Fisker resorted to slashing the Ocean’s sticker price by $24,000 to $37,499 for the top Extreme trim level in a desperate action to increase sales. Despite those affordable sale prices and the Ocean’s vaunted eco-friendly design utilizing recycled materials, the EV market did not respond as its competitive landscape filled with other exceptional EV models made it more difficult.

Notably, this marks the second time in a decade that a Fisker-founded startup has collapsed into bankruptcy. His previous venture, Fisker Automotive, filed for Chapter 11 in 2013 after its battery supplier faltered and triggered recalls of its $103,000 Karma plug-in hybrid sports vehicle.

Hardships For EV Startups

As a result, Fisker’s downfall highlights the challenges facing EV startups as they struggle to ramp up production and execute on targets in the face of fierce competition from established automakers. Other EV firms including Lordstown Motors and Electric Last Mile Solutions have similarly ended up in bankruptcy in recent years.

While Fisker attempts to sell off its remaining assets and intellectual property through the Chapter 11 process, its existing customers could face uncertainty over repairs and parts availability for the few Ocean SUVs delivered to date.

“We’re committed to doing everything possible to protect and support our customers and their Fisker Oceans,” the company spokesperson stated. However, as its cautionary tale has shown, producing and supporting a viable EV is not just about having an innovative design as credible execution is paramount.

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