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Can Nissan Save Fisker from Going Belly Up?

Jeff Siegel

Written By Jeff Siegel

Posted March 2, 2024

It was so long ago, I can’t even remember the exact date.

This was back when the EV industry was just getting started.

In fact, if I remember correctly, Tesla (NASDAQ: TSLA), either wasn’t public yet, or just went public.

Either way, there was a lot of capital available for EV start-ups at the time, and I was being invited to dozens of fundraising events. 

One that I’ll never forget was for Fisker Automotive, which was held in a swanky Manhattan office.  There was a lot of money in that room.  And not just from the U.S.  I met a couple of high rollers from Dubai, a Swiss tech mogul who was an early investor in Apple (NASDAQ: AAPL), and a young Chinese entrepreneur who was sandwiched between two bodyguards. 

The meeting was quite official, and I had to go through three security protocols just to get into the room.  To be honest, I was expecting something quite spectacular.  But I was underwhelmed, to say the least.

About 30 minutes into the presentation, it was quite clear to me that this company would have a very hard time delivering on its promises.  From questionable debt obligations to a slow roll-out of the actual product, I just didn’t see how this company would have much of a chance competing against Tesla or any of the legacy carmakers that were also gearing up to get into the EV game. 

Needless to say, I never invested, nor did I share the opportunity with my readers.  And I’m glad, as the company went belly up in 2013 after raising more than $1 billion from private investors and getting approved for a $529 million loan from the US government. 

Then,three years later, Henrik Fisker, the co-founder of the original company, launched a new version of the company, and in 2020 went public through a merger with a SPAC.

Here’s how the stock has performed since then …

fiskerart1

I was asked to invest in the company right after it went public, but given its previous failure, I wasn’t interested in doing much more than sitting on the sidelines.  Despite the company’s ability to make a pretty nice car, I still saw no evidence that it could successfully compete in what is now a much more competitive marketplace compared to the first time Fisker gave it a go.

Then last week,Fisker released Q4 earnings, which included the following statement …

Fisker expects its capital expenditures and working capital requirements to decrease during 2024 and beyond as it enters the second year of Ocean production. The company’s business plan is highly dependent on the successful transition to its new Dealer Partner model in 2024. Furthermore, to the extent Fisker’s current resources are insufficient to satisfy its requirements over the next 12 months, the company will need to seek additional equity or debt financing, and there can be no assurance that Fisker will be successful in these efforts. If the financing is not available, or if the terms of financing are less desirable than Fisker expects, the company may be forced to decrease its planned level of investment in product development, scale back its operations including further headcount reductions, and reduce production of the Fisker Ocean, which could have an adverse impact on the company’s business and financial prospects. As a result, the company expects to conclude there is substantial doubt about its ability to continue as a going concern when its annual financial statements for the year ended December 31, 2023, are filed with the SEC. 

Truth is, I don’t see how Fisker survives beyond this year.  

Even if it were to get a necessary infusion of cash, it still won’t be able to compete with Tesla or Hyundai (OTCBB: HYMTF) in the U.S., and outside of the U.S. it definitely won’t be able to compete with the millions of EVs that are being pumped out in China. 

Understand, I don’t write these words to attack Fisker.  This is merely little more than an observation of truth. 

That being said, we did get word on Friday that Nissan (OTCBB: NSANY) is now in talks to invest more than $400 million in Fisker’s truck platform and build the company’s new pickup that it has already planned to build in 2026. 

If that happens, Fisker could get a nice boost.  Certainly with Nissan sniffing around, this could present a very nice trading opportunity. But if you choose to take that route, I would just get in and get out.  Because long-term, even with a potential infusion of $400 million, I’m still not convinced Fisker has the chops to successfully compete in this very competitive market. So proceed with caution. 

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