Fisker failed because he wasn’t ready to be a car company

Two years ago, an worker of Fisker Inc. told me that the electrical vehicle startup’s most pressing concern wasn’t whether its Ocean SUV would be built. Fisker eventually outsourced production of its first electric vehicle to highly respected automotive supplier Magna. The startup’s November 2022 production start goal was ambitious, but not unattainable for a company like Magna, which makes vehicles like BMW.

Instead, this person said, employees became increasingly fearful that Fisker would not be ready to take care of all the issues that arise when the company puts a car on the road. They were concerned that the main target was solely on constructing the car and never the company.

The conversation stuck with me because a decade ago, Fisker founder and CEO Henrik Fisker caused an automotive startup to fail, probably because of this. This company, Fisker Automotive, provided several thousand customers with a hybrid sports car. However, the company imploded shortly thereafter because it faced quality complaints, a battery supplier failure, and a hurricane that literally sank a ship stuffed with vehicles.

The worker’s warning that the brand new Fisker would follow a similar path was striking and ultimately prophetic. Fisker filed for Chapter 11 bankruptcy protection this week after spending just a 12 months delivering its SUV to customers world wide. Much of its demise is directly linked to its inability to address the concerns raised by the worker in 2022.

This person was not alone. Since then, dozens of other individuals who worked at Fisker have repeated this sentiment to me in conversations, just about all of them on the condition of anonymity for fear of losing their jobs or retaliating from the company. From these conversations emerged the stories I told – Ocean’s quality and repair problems, the interior chaos at Fisker, and the selections by Henrik Fisker and his co-founder, wife, CFO and COO, Geeta Gupta-Fisker, that brought the company down.

Most of them told me how the shortage of preparation was profound and permeated almost every department of the company, as I even have previously reported for TechCrunch and Bloomberg News.

The software powering the Ocean SUV was underdeveloped. This contributed to the delay within the launch of the SUVand even thwarted the primary delivery in May 2023, which Fisker had to repair and resolve issues shortly after handover. The same thing happened when the company made its first deliveries within the US in June 2023, when one in all its executives’ SUV lost power shortly after delivery.

The company delivered significantly fewer Ocean SUVs than originally anticipated. Even after lowering its 2023 goal multiple times, it still struggled to meet its internal sales targets. Sales staff told stories of repeatedly calling potential customers in hopes of selling vehicles because so few recent leads were coming in. Others eventually applied to sell cars, even in the event that they worked in completely different departments.

Many customers who took delivery of their Ocean experienced problems akin to a sudden lack of power, brake system problems, faulty key fobs, problematic door handles that would temporarily lock them in or out of the car, and buggy software. (The National Highway Traffic Safety Administration has opened 4 investigations into Ocean.)

Fisker had quality problems with a few of its suppliers, and employees alleged it failed to provide an adequate buffer of spare parts. This put additional pressure on the people liable for repairing the cars after they encountered problems, and ultimately led to the company taking parts not only from the Magna production line in Austria, but additionally from Henrik Fisker’s own car. (Fisker denied these claims.)

Throughout this time, junior and mid-level employees have strived to do every little thing they will to help the slowly growing customer base. One owner told me that in a funeral, an worker received a call from his personal mobile phone. Other employees shared stories of employees performing job duties while within the hospital. Many people worked long days, nights and weekends – a lot in order that a minimum of one hourly worker filed a potential class motion lawsuit over this very issue.

The company itself has repeatedly admitted that it doesn’t have enough employees to handle the influx of customer support calls. This was one other place where employees from other departments got involved. Some are even receiving calls from customers today, though they left Fisker weeks or months ago.

Fisker also struggled with the mundane but serious work of being a public company. At one point, it lost track of roughly $16 million in customer payments due to a mess of internal accounting practices. It suffered multiple delays in required reporting to the Securities and Exchange Commission. One of those delays was allowed by one in all the company’s largest lenders to finally take over in recent months.

Despite all this, Fisker is there still praises speed to market is an achievement originally of the bankruptcy process. “Fisker has made incredible progress since our founding, bringing the Ocean SUV to market twice as quickly as expected in the automotive industry,” an unnamed spokesperson said in a press release in regards to the Chapter 11 filing.

The ephemeral corporate representative goes on to say that Fisker “has faced various market and macroeconomic headwinds that have impacted our ability to operate efficiently.” While that is actually true to some extent, there may be otherwise no introspection on the myriad problems which have brought the company to its current point.

This may come to light during Chapter 11 proceedings, through which the company seeks to settle its debts (of which it claims to have between $100 million and $500 million) and to divest or otherwise restructure its assets (totaling between 500 million to 1 billion dollars).

What happens next will rely upon the course of those proceedings. Fisker has at all times taken an “asset-less” approach, comparing itself to how Apple used Foxconn to help make the iPhone a global phenomenon. The problem with saving on assets is that it naturally means you’ve gotten fewer opportunities to borrow or sell when things go south.

Magna has halted production of Ocean and is looking for $400 million lack of revenue as a result this 12 months. It’s unclear what progress Fisker has made on its future products, the sub-$30,000 Pear EV and the Alaska pickup truck. The engineering firm that co-created these vehicles with Fisker recently sued the startup, casting doubt on these designs.

Fisker said in its press release that it will proceed “limited operations,” including “maintaining customer programs and compensating needed vendors in the future.” In other words, it is going to proceed to operate its core business within the event that there may be a willing buyer for the assets it’s putting up on the market in a Chapter 11 case.

Ten years ago, the bankrupt Fisker Automotive found a buyer. It eventually evolved into a start-up generally known as Karma Automotive, which nominally still exists today. There have been similar results recently. Three other electric vehicle startups that recently filed for bankruptcy – Lordstown Motors, Arrival and Electric Last Mile Solutions – were able to sell assets to comparable corporations within the industry.

But the final word fate of the startup and its assets won’t change the essential problem: Fisker wasn’t ready to take care of bringing a defective car to market.