Not too long ago, electric vehicle (EV) sales were gaining momentum and seemed poised to enter mainstream acceptance. However, the landscape has swiftly transformed. Fisker (NYSE: FSR), an EV startup, is currently grappling with survival challenges amidst factors such as elevated interest rates, obstacles in charging infrastructure, escalating competition, and a diminishing cash reserve. The question arises: is Fisker stock destined for a complete downturn, or does it retain potential for long-term investors?
The ugly numbers
In late February, Fisker reported a challenging fourth-quarter net loss of $463 million and announced a workforce reduction of 15%. Despite generating $200 million in revenue, Fisker’s cash and cash equivalents dwindled to $396 million.
These unfavorable figures were indicative of a year plagued by various challenges, including supplier delays and difficulties in delivering vehicles to customers. In 2023, Fisker only managed to produce 10,000 vehicles, a mere fraction of its initial guidance, and delivered less than half of that quantity.
Compounding the company’s troubles, in mid-February, Fisker received a non-compliance notice from the New York Stock Exchange (NYSE) due to its stock consistently closing below $1 per share over 30 consecutive trading days, potentially leading to a delisting from the exchange.
Adding to the adversity, the U.S. National Highway Traffic Safety Administration (NHTSA) initiated a preliminary evaluation in response to four claims of unintended vehicle movement in 2023 Fisker Ocean vehicles. Allegations included difficulties shifting into park and/or the vehicle failing to engage the intended gear, with one complaint involving an alleged injury.
In its February 29 report, Fisker acknowledged these challenges and expressed the expectation that there will be “substantial doubt about its ability to continue as a going concern” when filing its annual financial statements for the year ended December 31, 2023, with the SEC.
While the overall outlook appears grim for the EV startup, a glimmer of hope exists for investors in the form of a potential partnership.
Enter Nissan
2024 is sure to bring some unexpected developments in the EV industry, but Nissan (OTC: NSANY) potentially coming to Fisker’s rescue is unexpected, to put it mildly. That could be the case, however, as Nissan and Fisker are in advanced talks for a deal that would provide the Japanese automaker with a platform for an electric pickup truck and throw a lifeline to the struggling EV company.
The potential financial lifeline would send more than $400 million in investment to Fisker, enabling Nissan to build its own electric pickup on Fisker’s truck platform while also producing Fisker’s planned Alaska pickup in 2026 at one of Nissan’s U.S. assembly plants.
Is it enough?
While a potential lifeline from Nissan would be a positive development for investors, the harsh reality is that Fisker may require much more assistance, with the looming threat of bankruptcy a genuine concern. Fisker has acknowledged ongoing discussions with a debt holder regarding potential investments, emphasizing the urgency of financial support.
Even if the deal with Nissan materializes, Fisker’s Alaska truck, expected to debut at around $45,000, might not be the transformative solution the company needs. Positioned in a highly competitive segment featuring Ford’s F-150 Lightning, General Motors’ Chevrolet Silverado EV, Rivian’s R1T and upcoming R2 platform, and Tesla’s Cybertruck, Fisker faces significant challenges.
Without substantial assistance, Fisker’s path forward appears precarious, and the possibility of the company’s story concluding within the next 12 months cannot be dismissed.
