Fisker to Pause Production for Six Weeks
Company says it is also continuing to negotiate with a large automaker for a potential transaction
Fisker FSR -12.94%decrease; red down pointing triangle is pausing production for six weeks as it continues deal talks with a large automaker and works to keep the business running.
The embattled electric-vehicle maker disclosed the stoppage Monday amid a series of updates on its efforts to avoid potential bankruptcy, saying the pause will allow it to “align inventory levels” and focus on strategic and financing initiatives.
After warning last month that there was “substantial doubt” about its ability to stay in business, Fisker hired restructuring advisers to assist with a possible bankruptcy filing, according to an exclusive report last week from The Wall Street Journal.
Fisker said Monday it has secured $150 million in financing by selling $166.7 million worth of notes to an existing investor at a 10% discount.
The company is also continuing to negotiate with a large automaker for a potential transaction, which could include an investment in Fisker, joint development for one or more EV platforms, or a North American manufacturing deal.
Fisker shares sank 11% in morning trading Monday. They have fallen about 90% this year.
The Manhattan Beach, Calif.-based startup has struggled with sluggish sales growth that left it with around 5,000 unsold vehicles at the end of last year.
Fisker is the latest EV startup to face the possibility of running out of cash. Electric-truck maker Lordstown Motors and electric-van company Arrival have both filed for bankruptcy protection.
Auto startups that once commanded multibillion-dollar valuations from investors have seen their market values plummet as the young companies struggled to increase their manufacturing and losses piled up.
Now, Fisker and other EV makers face additional challenges amid cooling sales growth for battery-powered models, particularly in the U.S.
The startup’s chief executive, Henrik Fisker, has said the company’s strategy was intended to better weather the financial pressures that other new EV companies face. Instead of owning its own assembly plant and employing factory workers, Fisker pays other manufacturers to build the cars. The decision was supposed to keep Fisker’s operating costs lower and boost profitability.
In a separate filing, Fisker disclosed that it didn’t file its annual report for 2024 with the Securities and Exchange Commission on time and is working to get it filed “as quickly as possible.”
Fisker also disclosed that it didn’t make a required $8.4 million interest payment on certain bonds. The company said it would take advantage of a 30-day grace period for that payment while it works out a plan with stakeholders and enhances its liquidity.