Electric vehicle start-up Fisker delivered a flurry of disappointing news on Tuesday, sending the stock lower. Tesla and the challenge of navigating regulatory approvals in Europe are partly to blame.
For the first quarter, Fisker (ticker: FSR) reported a loss of 38 cents a share on sales of less than $1 million. Wall Street was expecting a loss of 31 cents a share on revenue of about $5 million, according to FactSet.
More importantly, the company expects to produce 1,400 to 1,700 vehicles in the second quarter and 32,000 to 36,000 for all of 2023. The full-year figure fell from the 42,000 to 43,000 units the company was expecting in February.
“We [were] too late to get homologation,” CEO Henrik Fisker told Barron’s, referring to the process of registering a car for sale with local regulators. That meant the company started European production later than planned, resulting in an annual production deficit, but the CEO says Fisker is still on track to make 6,000 SUVs a month by the end of the year.
Delivery of the vehicles to consumers began on May 5th. Fisker (Ticker: FSR) completed its final approvals from European regulators in April, allowing the company to begin production and sales of its Ocean SUV. US sales are scheduled for June.
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Investors are reacting with some nervousness to the cut in the production forecast for the full year. Shares lost more than 13% in early trading Tuesday, while the S&P 500 and Nasdaq Composite fell 0.5% and 0.6%, respectively.
Going from less than 2,000 vehicles in a quarter to nearly 20,000 by the end of the year is ambitious, but Fisker is confident it can do it because of its manufacturing partnership.
Do not forget that the company does not have its own production capacity. Magna International (MGA), which has been assembling cars for decades, builds the car at its plant in Austria. Fisker pays for much of the tooling used to make parts.
Investors might also be concerned that Fisker electric vehicle reservations are around 70,000, flat from three months ago. “The entire market has taken a bit of a hit due to Tesla’s aggressive price cuts,” the CEO added. “We’ve probably seen a lot of people persevering…get a Tesla
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simply because they couldn’t resist a good bargain.”
Fisker hasn’t changed the pricing of its Ocean SUV. This was possible, among other things, because it did not produce any cars. Battery costs, which have prompted some price hikes from other electric vehicle manufacturers, have fallen from peaks set in late 2022.
Another area of focus for investors is the company’s second vehicle, the PEAR, which Fisker is building with Hon Hai Precision Industry (2317, Taiwan), better known as Foxconn.
The sale of the PEAR is planned for early 2025. That’s a few months later than planned and partly a function of the new US EV tax credits, which Fisker needs to source and build batteries and battery packs in the US to gain access to the tax credit.
Using partners to build vehicles has meant the cash Fisker needs to fund operations is below that of competitors like Lucid (LCID), which built and owns its manufacturing facility in Arizona. Wall Street expects Fisker to stake about $325 million in 2023.
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Lucid is expected to use approximately $3.1 billion in 2023.
This cash usage number could be higher. Fisker still expects to spend between $535 million and $610 million running its business in 2023, but less production also means less sales to offset that amount.
Fisker ended the quarter with approximately $650 million in cash on its books. An additional $70 million is due to receivables subject to VAT and equity issued using Fisker’s $350 million at-the-market equity program.
At the start of trading Tuesday, Fisker stock was down about 34% over the last 12 months. Lucid’s shares are down about 58% over the same period.
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General Motors (GM) shares are down about 15%, while the S&P 500 has traded about flat.
Rising interest rates, high car prices, a slowing economy, and more EV competition have hit the stocks of most automakers and EV startups.
Write to Al Root at [email protected]