Tags: fisker | electric | vehicle | ev | startup | fail

Another EV Startup Bites the Dust

Another EV Startup Bites the Dust
Henrik Fisker, chairman and CEO of U.S. startup Fisker Inc., speaks on a press day for the 2021 Los Angeles Auto Show. (AP/file)

By    |   Friday, 21 June 2024 02:00 PM EDT

In the ever-expanding graveyard of electric vehicle startups, a familiar name has kicked the bucket: Fisker. This isn't the first time the brainchild of automotive designer Henrik Fisker has flamed out. Like a phoenix attempting to rise from its ashes, only to crash and burn again, Fisker's latest iteration has filed for bankruptcy protection, putting its assets up for sale and restructuring its mounting debt.

Let's be brutally honest here: did we predict Fisker's demise? Absolutely. But we're not gleefully dancing on their grave – well, maybe a little. The reality is, Fisker was an unnatural entity, much like many other EV companies that have failed. They wouldn't have existed without the government's generous subsidies, essentially propping up businesses that the free market had no intention of supporting.

Troubled Waters

Fisker's latest venture, the "Ocean" SUV line, was supposed to be the company's saving grace. But instead, it became a whirlpool of cash hemorrhaging, ultimately leading to the company's bankruptcy filing. Like other would-be Tesla competitors such as Proterra, Lordstown, and Electric Last Mile Solutions, Fisker found itself drowning in the turbulent waters of supply chain issues, production challenges, and fundraising hurdles stemming from the COVID-19 pandemic.

To make matters worse, Fisker vehicles were also under investigation by U.S. regulators, casting a shadow of doubt over the company's already precarious position. In a desperate attempt to stay afloat, Fisker slashed prices for its Ocean electric SUVs in the U.S., but it was too little, too late.

Just days after Fisker's price cuts, the New York Stock Exchange announced that it would delist the company's shares, citing "abnormally low price levels" that made the stock unsuitable for listing. This move was like a domino effect, triggering a chain reaction of events that ultimately led to the termination of negotiations with an unnamed automaker – rumored to be Japanese giant Nissan – that had been in talks to strike a deal with Fisker.

Backed into a corner, Fisker's operating unit, Fisker Group Inc., filed for Chapter 11 bankruptcy in Delaware, listing estimated assets of $500 million to $1 billion and liabilities of $100 million to $500 million. The company had made over 10,000 vehicles in 2023, less than a quarter of its forecast, but delivered only about 4,700. And to add insult to injury, its cars were under regulatory investigation for certain incidents, including a probe started by the National Highway Traffic Safety Administration last month.

Unnatural Selection

Fisker raked in (and subsequently squandered) massive money from investors and subsidies from taxpayers. Why are we relieved when these companies disappear? Because when these unnatural, artificially inflated entities go away, hopefully, the money will start flowing to companies that genuinely earn it and deserve it.

Interestingly, Fisker went bust twice. I recall being in Palo Alto, California, in 2012, near Stanford, where they had a fancy mall displaying Fisker Karma cars. Despite being in a liberal tech hub, they struggled to sell these cars. The company disappeared, then re-emerged with a new approach – introducing a “magical” SUV with different manufacturing methods.

EV companies are always trying new ways to achieve the impossible. They attempted to become more of a software car company, but how did that work out? The software failed, leaving cars inoperable. It's almost as if they were chasing a mirage in the desert, only to find themselves completely lost and dying from dehydration.

The free market is a wonderful and beautiful thing if we allow it to work. Had we let the market decide, we wouldn't have seen so many EV companies going out of business. Established auto companies could have explored what made sense – perhaps hybrids or hydrogen. But government involvement creates a disconnect. Anytime the government subsidizes an industry or forces consumers to buy something, it leads to waste, fraud, and investor losses.

As we stand amidst the tombstones of failed EV companies, it's hard not to be reminded of those humorous epitaphs at Disney World's Haunted Mansion: "Here lies so-and-so…" In the case of Fisker, it's more like "Here lies another government-funded fantasy, buried by the realities of the free market."

But let's not get too carried away with the metaphors – after all, we're not celebrating the downfall of these companies. We're simply acknowledging the natural order of things: when businesses are propped up by artificial means, they're bound to collapse under their own weight.

So, what's the solution? It's simple: let the free market decide. Let established auto companies explore what makes sense – whether it's hybrids, hydrogen, or even good old-fashioned gasoline. Let innovation flourish organically, without the distortion of government subsidies and mandates. Only then can we truly witness the resurrection of reason in the automotive industry.
Chris Markowski is the founder and partner at Markowski Investments and host of the Watchdog on Wall Street radio show and podcast..

© 2024 Newsmax Finance. All rights reserved.

In the ever-expanding graveyard of electric vehicle startups, a familiar name has kicked the bucket: Fisker. This isn't the first time the brainchild of automotive designer Henrik Fisker has flamed out.
fisker, electric, vehicle, ev, startup, fail
Friday, 21 June 2024 02:00 PM
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