Fisker, an electric car startup, announced that it will have to halt the production of its EV cars while it attempts to raise a whopping $150 million in emergency funds. The funds are needed because it is grappling with a cash crunch sparked by low demand for EVs, low demand that comes despite federal incentives and regulations meant to push people toward EVs.
As background, Fisker is an electric vehicle design and production company based in California. Its goal is, according to its mission statement, to “create the world’s most emotional and sustainable electric vehicles.” Despite that expansive goal, the company has managed to produce only about a thousand vehicles for the year.
Announcing the current state of things in a statement, Fisker said, “The company has approximately 4,700 vehicles in its current inventory, carried over from 2023 and including 2024 production.” It continued, “While it has not completed an NRV analysis for 2024, Fisker believes the completed vehicle value for its inventory as of March 15, 2024, is in excess of $200 million.”
Continuing, the company noted that it would be pausing production for about a month and a half as it tries to find financing to keep going and tries to “along inventory levels,” which likely means selling off some of those thousands of unbought cars. It said, “Fisker will pause production for six weeks starting the week of March 18, 2024, to align inventory levels and progress strategic and financing initiatives,”
According to Reuters, the Fisker announcement came after it missed an interest payment on its debt. Apparently, the missed payment, totaling $8.4 million, came because Fisker wanted to use the 30-day grace period for the missed payment to discuss changing Fisker’s capital structure with investors. The company says it had the necessary liquidity to pay the interest.
Its capital structure solution is to offer $150 million in convertible notes. Reporting on the details of those notes, Reuters noted, “The senior secured convertible notes will have a 10% original issue discount for gross proceeds of up to $150 million” and “The notes are being sold to CVI Investments, which is working through Heights Capital Management, and the Warsaw-based investment fund can convert the debt into equity in Fisker.”
Fisker’s trouble is coming during a nadir in consumer interest in EVs, with some of their battery problems rising to the fore thanks to bitterly cold weather over the winter, such as in Chicago, and people generally seeing more issues with EVs, particularly surrounding range and charge times, than with traditional, combustion-powered vehicles.
That distrust of EVs comes despite Biden Administration regulations prioritizing EV production. Sen. Ted Cruz, commenting on that regulation and the threat to American living standards it poses, said, “Biden’s latest ban on gas-powered vehicles and replacement with electric vehicles is another direct assault on consumer choice and the American way of life.”
Continuing, Sen. Cruz added, “It ignores the needs of American families in order to appease the radical environmental lobby at the expense of millions of jobs supported by the automotive industry. It’s time to put an end to this regulatory overreach.”
Featured image credit: By Alexander-93 – Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=137749938
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