With the feds now taking a look at both Lordstown Motors and Nikola Motor Company, electric vehicle startups are under scrutiny like never before. Especially, when financing is done through a SPAC offering. All you need to know is that on July 29, 2021, Nikola founder Trevor Martin was indicted on numerous fraud charges from both the SEC and US Attorney’s Office of New York. That has placed Fisker in an even brighter spotlight.
Fisker’s agreement with Magna
SPAC transactions involve going public with an initial public offering. Then, the IPO company merges with a private company that takes on the public listing. So, it is used as a way to bring investment capital when the startup is not manufacturing anything, has no production facilities, and is years away from the possibility of doing so.
Fisker has changed when it plans on manufacturing the Ocean several times. Announced back on October 15, 2020, Fisker made an agreement with Magna. The goal of this cooperative effort: manufacturing the Fisker Ocean SUV. Fisker says it is on pace to reach its manufacturing milestone in Q4 2022. With that said, here are some facts about the former and current company that puts that into question.
The previous Fisker car venture ended badly
Henrik Fisker, the man behind Fisker Automotive, has manufacturing experience. His former Fisker Karma was manufactured for a short time in 2011. But quality issues and well-publicized cars catching on fire doomed the effort.
The company was storing built Karmas in a New Jersey port not authorized for EV storage. When hurricane Sandy hit the port was flooded, destroying many Karmas. Fisker tried to file insurance claims to recover what the ruined cars represented.
Fisker was one of the fortunate companies to take advantage of the government’s ATVM loan program. The Advanced Technology Vehicles Manufacturing Program was first authorized by the Energy Independence and Security Act of 2007. It planned to loan the startup over half a billion dollars.
Fisker paid back only a small portion of its ATVM loan
The US Government ended up giving Fisker almost $200 million as of June 2011. It paid back only a quarter of that loan before filing for bankruptcy. “The jobs that were promised never materialized and, once again, taxpayers are on the hook,” House Energy and Commerce Committee Chairman Fred Upton, R-MI, and Oversight and Investigations Subcommittee Chairman Tim Murphy, R-PA, said.
Forums were ripe with complaints about its warranty plan. Some have said they were charged for things that should have been covered by the warranty. And some service groups said they were never paid for warranty work by the company.
That covers just some of the events that occurred with Fisker’s first effort. Here’s what we know about plans for the current Ocean model. Back in 2016 Fisker touted a breakthrough in graphene production.
Graphene batteries are considered the future of chargeable systems. But as of now, it is expensive to manufacture and uses lots of natural resources in doing so. So it’s expensive to make, and only a few companies are currently licensed to manufacture it. Fisker claimed it would be making graphene batteries by 2017.
No graphene or solid-state batteries as promised
There were also claims about using solid-state batteries. But that talking point vanished once the company went public.
Things happen, and Tesla is a perfect example. Tesla CEO Elon Musk is famous for predicting when its next new model will debut, only to push it back and back.
We also hear complaints about Henrik Fisker not being an engineer. His background is in transportation design. But neither Musk nor GM CEO Mary Barra has an engineering background. Mostly, these top positions need financial and organizational skills. So that complaint is weak at best.
The engineering and manufacturing challenges are monumental. If it were easy… But as time moves on and companies like GM and Ford begin producing EVs, the economies of scale make the Ocean seem impossible to sell competitively. We wish Fisker the best and hope it becomes a success like Tesla, as far off as that seems.