‘Substantial doubt’ it can continue

Fisker has shared preliminary details of its Q4 and full fiscal year 2023 results, and they’re… not great. Revenue is up for the quarter, but cash on hand is dwindling, causing the American EV automaker to express “substantial doubt” about its ability to move forward. That said, Fisker Inc. has some negotiations in the works to gain more runway, including a potential deal with a large OEM.

2023 was, in many ways, a big year for Fisker Inc. ($FSR) as it was challenging. It’s one of the pains of any young EV startup and nothing the Fisker name isn’t used to. Deliveries of the company’s flagship Ocean SUV continued to grow last year as Fisker unveiled three additional models in its pipeline.

However, Fisker faced several software issues in customer Oceans, and sales were lower than anticipated. Several times throughout 2023, the automaker lowered its production targets, leading to a December business update that detailed leadership moves, accelerated deliveries, and even lower production targets to maintain liquidity.

Q4 was also the first time we heard Fisker mention exploring potential partnerships with other OEMS. Since then, things haven’t gotten much brighter.

Fisker Q4 numbers tell a grim tale. Can it bounce back?

In addition to today’s Q4 and full 2023 preliminary report, chairman and CEO Henrik Fisker offered an essay about how the EV company got here. It’s too long to share here, but we recommend reading it in full.

Let’s dig into the numbers. Fisker’s preliminary Q4 2023 revenue was $200.1 million, up $128.3 million compared to a quarter prior. However, Q4 and the total 2023 revenue exclude $44.6 million of deferred revenue that will be “recognized in future periods.”

Gross margins for Q4 2023 sunk to -35%, translating to earnings per share at a loss of $1.23. For the full year, Fisker’s earnings per share was a loss of $2.22. As of December 31, 2023, Fisker’s cash on hand, restricted cash, and equivalents totaled $395.9 million. Add the carrying value of its existing Ocean inventory and raw materials, and that number jumps to about $530 million.

As a result of these Q4 and full 2023 numbers, Fisker has expressed doubt it can continue its work with how it is currently structured and is relying heavily on its recently implemented dealership model to help boost EV sales in 2024. Fisker previously relayed that over 250 dealer partners in North America have expressed interest, but only 13 have actually signed agreements.

In addition to assistance from dealers, Fisker said in its Q4 report that it is currently in negotiations with a “large automaker” regarding a potential transaction that includes an investment in the company and joint development of “one or more EV platforms.” It is unclear at this time who that potential suitor may be.

Fisker also stated the potential deal could include North American manufacturing, teeing up the potential for Federal tax credits for consumers. The Ocean is currently being built in Austria by contract manufacturer Magna Steyr. Here are some more details per Fisker’s Q4 and full 2023 preliminary report:

To address potential liquidity issues, Fisker is already taking action. The company is currently in discussions with an existing noteholder about potentially making an additional investment in the company. The use of proceeds, if a transaction is consummated, is expected to be for general corporate purposes, vehicle production and the ongoing transition to a dealer-focused sales model. In addition, Fisker intends to reduce its workforce by approximately 15%. Headcount reductions are predominantly related to the change in sales strategy from direct-to-consumer to a Dealer Partner model. In addition, the company is streamlining operations, including reducing its physical footprint and overall expenses

Despite limited cash, Fisker is targeting building 20,000-24,000 EVs in 2024 at an average selling price between $56,000-$60,000 after import duties and dealer commissions. The American automaker hopes sales of its 2023 Oceans, already built and paid for, will provide funding through the first half of 2024 while it continues its negotiations with the unnamed OEM.