Fisker (FSR) stock falls after failing to make an interest payment, pauses EV production

EV startup Fisker (FSR) is pausing EV production for six weeks as its financial struggles worsen. Fisker looks to get its finances in order after failing to make an interest payment. The EV maker did get a commitment for up to $150 million in financing, but will it be enough?

Fisker is halting production as EV woes worsen

Fisker reiterated there is “substantial doubt” in its ability to continue operations after missing an interest payment.

According to an SEC filing on Monday, Fisker is pausing EV production for six weeks, starting immediately. The move is to “align inventory levels and progress strategic and financing initiatives.”

The EV startup was unable to file its annual report (10-K) due on March 15, putting it in default under its convertible notes due in 2025. Because of this, investors retain the right to convert the payable amount. The investors waived the right on Monday as Fisker works to file the report.

In addition, Fisker failed to make an interest payment of $8.4 million on March 15, 2024. The company has a 30-day grace period to make the payment before it goes into default.

Fisker said it “elected not to make the interest payment,” even though it currently has the liquidity to do so, as it looks to improve its financial situation.

The EV startup cash and equivalents dwindled to just $120.9 million (as of March 15, 2024) after making “significant payments” to suppliers. That’s down from $736.5 million at the end of 2022 and $325.5 million at the end of 2023.

Substantial doubt in its ability to continue

As of December 31, 2023, Fisker’s accounts payable were $182 million. However, Fisker expects more cash will be needed to pay debt and scale EV production.

Fisker will need to raise additional debt (or equity financing), partner with an OEM, or generate cash from vehicle sales to continue operations.

Fisker continues to seek funding through equity raises or partnering with an OEM. Earlier this month, reports suggested Fisker and Nissan were in “advanced talks” that could give the EV maker a financial lifeline (and an electric pickup). However, Nissan has since partnered with rival Honda.

The company said it is “continuing negotiations with a large automaker” that could include an investment, joint EV platform development, and North American manufacturing.

Fisker did get a financing commitment from an existing investor worth up to $150 million, but that won’t be enough to fund operations long-term.

After producing zero vehicles in January, Fisker built about 1,000 from February 1 to March 15. The company sold about 1,300 cars in the first two months of 2024.

Following the news, Fisker’s (FSR) stock is down over 11%. The company is facing a delisting from the NYSE exchange, with its stock price well below the required minimum of $1.00 per share. Fisker shares are currently around 0.115 per share, down 97% over the past year.

Fisker’s current vehicle inventory includes:

• North America: 1,168 at parts, 11 in transit, 180 at sea, 2,140 in storage, and 171 produced but not delivered.
• EU: 131 at port, 5 in transit, 72 at sea, 739 in storage, and 105 produced and undelivered.
• Work-in-progress vehicles include 175 in North America and another 126 in the EU.

Electrek’s Take

Fisker’s journey so far has been anything but easy, but their ability to continue just got even more challenging. After failing to miss an interest payment, Fisker is pausing EV production.

It’s already struggling to make ends meet, and now it’s halting its primary revenue source. Fisker already has a ton of convertible notes ($1.2 billion) issued that will need to be paid back.

Without significant financial backing, likely from an OEM, it will be nearly impossible for Fisker to repay them.

To make matters worse, Fiker is likely to be delisted from the NYSE, making raising equity even harder.

What do you guys think? Can Fisker pull through? Let us know what you think in the comments.