EV Sector Turmoil Intensifies: Fisker's Stock Plummets by 55% Amid its Bankruptcy Fears

Fisker’s shares dropped by about 55% on Thursday following reports from The Wall Street Journal hinting at potential bankruptcy filings. The blow comes amidst a string of struggles faced by the electric vehicle (EV) manufacturer, reflecting the broader hurdles many EV newcomers encounter. These difficulties are particularly stark when contrasted with the dominance of the Tesla industry leader.

Fiskers’ asset-light business model, where they design cars but outsource manufacturing, has yet to translate into robust sales, particularly amid sluggish demand for EVs. Despite producing over 10,000 Ocean vehicles in 2023, Fisker only managed to deliver around half of them to customers. This poor performance has led to a decline in their stock value by 92% this year.

The automaker’s financial troubles have forced them to seek help from legal experts as they navigate the possibility of bankruptcy. The company faces financial difficulties, with substantial losses exceeding its sales revenue and a debt surpassing $1 billion.

Negative Reviews Compound Fisker’s Woes

A bad review of its Ocean vehicle by popular YouTube reviewer Marques Brownlee adds to Fisker’s woes. The American YouTuber dubbed Fisker Ocean SUV, released in June 2023, “the worst car I’ve ever reviewed.”  His critical review of the vehicle has garnered over 4.6 million views on YouTube in the past three weeks. In his video, Brownlee highlighted software-related issues such as recurring warning lights, the lack of monitoring for the car’s solar roof output, and problems with the car’s key fob. These criticisms have not affected Fiskers’ stock only. They have also affected the entire electric vehicle (EV) sector. Tesla saw a 4% decrease in its stock value, while Rivian and Lucid experienced declines of 9% and 6%, respectively, in Thursday’s trading.

The downturn in the EV sector mirrors a broader trend of slower growth than anticipated in the US market. This slowdown has been compounded by increased competition from automakers like BYD, flooding markets with budget-friendly electric sedans. Furthermore, the resurgence in hybrid vehicle sales has added pressure on EV companies as consumers grapple with concerns about EV range anxiety.

In this demanding environment, American electric vehicle companies have experienced a shift in their fortunes. A prime example is Rivian, which has dramatically dropped from a peak valuation exceeding $150 billion to $10 billion.