Fisker Displays Solid Cost Control in 3Q 2021 Results, A Rarity Among Start-Up Electric Vehicle Manufacturers
On November 3, Fisker Inc. (NYSE: FSR) reported 3Q 2021 results. While the company’s cash burn rate increased in the quarter, we consider the release to be generally constructive for three main reasons.
First, during the quarter, Fisker reached a long-term battery supply accord with China-based Contemporary Amperex Technology Co., Limited (CATL), the world’s largest lithium battery manufacturer. The base battery pack will be a lithium iron phosphate, or LFP, battery. Generally, LFP batteries are cheaper, have better aging and cycle-life characteristics, and are more environmentally friendly (no cobalt) than other batteries. On the other hand, LFP batteries are not as energy dense (e.g., not as powerful) as lithium-nickel-manganese-cobalt-oxide (NMC) designs.
Second, Fisker affirmed that production on its all-electric flagship Ocean SUV will commence in November 2022. The company hopes to reach a monthly production rate of 5,000+ vehicles during 2023. Fisker plans to provide more details and kick off its marketing activities on the Ocean SUV at the Los Angeles Auto Show on November 17, which has a reasonable base price of US$37,499.
As of November 2, reservations for the Ocean have grown to around 18,600 (net of cancellations) from about 2,500 a year ago. Reservations cost US$250 and are refundable, net of a 10% restocking fee.
| Date | SUV Reservations | Comment |
| 2-Nov-21 | 18,600 | Includes 1,400 fleet reservations |
| 2-Aug-21 | ~17,500 | Includes 1,400 fleet reservations |
| 17-May-21 | 16,000 | |
| 25-Feb-21 | 12,467 | |
| October 2020 | ~2,500 |
Third and perhaps most importantly, Fisker represented the first start-up electric vehicle (EV) manufacturer in memory not to increase its estimated full-year 2021 cash burn projection when it reported a quarterly result. The company continues to estimate a US$490 – US$530 million deficit this year, although the company shifted more dollars toward operating expenses and away from capital expenditures.
Fisker’s 3Q 2021 cash flow shortfall increased dramatically from 2Q 2021, reaching US$119 million. Based on the company’s projections, total cash burn should jump again in 4Q 2021 to US$150-US$190 million.
| Quarterly Cash Burn Rate (in thousands of US $) | September 30, 2021 | June 30, 2021 | March 31, 2021 | December 31, 2020 |
| Net Cash Used in Operating Activities | ($103,450) | ($28,117) | ($28,810) | ($30,064) |
| Capital Expenditures | ($15,838) | ($325) | ($65,665) | ($453) |
| Total Cash Burn | ($119,288) | ($28,442) | ($94,475) | ($30,517) |
As of September 30, 2021, Fisker’s cash balance was US$1.4 billion, up dramatically from US$962 million on June 30, 2021. In August, the company raised US$667.5 million from the sale of 2.5% convertible notes (due in 2026). Fisker’s cash position equals about 25% of its stock market capitalization.
| (in thousands of US $, except for shares outstanding) | September 30, 2021 | June 30, 2021 | March 31, 2021 | December 31, 2020 |
| Operating Income | ($109,565) | ($53,140) | ($33,098) | ($31,306) |
| Operating Cash Flow | ($103,450) | ($28,117) | ($28,810) | ($30,064) |
| Cash – Period End | $1,400,411 | $962,366 | $985,422 | $991,158 |
| Debt – Period End | $678,983 | $20,206 | $2,448 | $2,567 |
| Shares Outstanding (Millions) | ~298.0 | ~298.0 | 293.6 | 277.3 |
If Fisker were to encounter difficulties in reaching its fall 2022 target of commencing Ocean SUV production, Fisker’s shares could be negatively affected. In addition, investors currently are quite enthusiastic about electric vehicles (EVs) as an investment theme. If that attitude were to change, Fisker’s stock could likewise suffer.
Fisker is well positioned versus its start-up EV peers. It has controlled its costs better than those companies and it has a very strong balance sheet. In addition, Fisker may gain increasing attention from the media in mid-November when it releases more information about the Ocean SUV at the Los Angeles Auto Show.
Fisker Inc. last traded on the NYSE at US$19.08.
Information for this briefing was found via Edgar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
