Start-up electric vehicle (EV) maker Fisker Inc. (NYSE: FSR) is attempting a new financing tactic — a substantial non-refundable deposit — which even the most established auto makers have refrained from imposing on a production vehicle.
As of July 1, 2022, Fisker is requiring interested customers to not only pay a US$250 nonrefundable deposit to reserve an Ocean One Launch Edition SUV model, but to make an additional non-refundable US$5,000 deposit to secure their vehicle. As an aside, a US$250 refundable deposit is sufficient to reserve the other versions of the Ocean — Extreme, Ultra and Sport.
Fisker plans to manufacture 5,000 Launch Editions, so if 5,000 customers agree to make the US$5,000 irrevocable deposit, the company would raise US$25 million of hard money. Production of the US$69,000 vehicle is scheduled to begin in November 2022. Deliveries reportedly could start in September 2023.
It should be emphasized these dates are the scheduled dates. Start-up EV makers, including Rivian Automotive, Inc. (NASDAQ: RIVN) and Lucid Group, Inc. (NASDAQ: LCID), have announced construction delays and limitations for a variety of reasons, including supply chain issues.
As a result, Fisker is asking a Launch Edition customer to hand over US$5,000 for a vehicle today which will not be delivered for at least 14 months. Moreover, Fisker will not even manufacture the vehicle; it has outsourced that role to Magna International, which will build the cars in Austria. In June 2021, Fisker and Magna finalized a long-term manufacturing agreement.
Reservations for all models of the Ocean SUV reached more than 50,000 in early June, up from 45,000 as of May 2, 2022 and around 18,600 in early November 2021.
|Date||# of SUV Reservations||Comment|
|Early June 2022||50,000|
|2-May-22||> 45,000||Includes 1,600 fleet reservations|
|14-Feb-22||> 30,000||Includes 1,600 fleet reservations|
|2-Nov-21||18,600||Includes 1,400 fleet reservations|
|2-Aug-21||~17,500||Includes 1,400 fleet reservations|
Fisker’s March 31, 2022 cash balance totaled US$1.04 billion, substantially higher than its projected cash burn over the last three quarters of 2022 of US$565-US$640 million. The company’s combined operating cash flow deficit and capital expenditures in 1Q 2022 totaled around US$150 million.
|(in thousands of US $, except for shares outstanding)||March 31, 2022||December 31, 2021||September 30, 2021||June 30, 2021||March 31, 2021|
|Operating Cash Flow||($105,988)||($140,895)||($103,450)||($28,117)||($28,810)|
|Cash – Period End||$1,042,562||$1,202,439||$1,400,411||$962,366||$985,422|
|Debt, primarily Convertible Debt – Period End||$678,185||$678,893||$678,983||$20,206||$2,448|
|Shares Outstanding (Millions)||297.2||296.7||296.2||296.1||293.6|
On May 24, Fisker announced plans to bolster its cash position through a US$350 million at-the-market stock issuance program. At its current share price, this represents the eventual issuance of around 37.5 million shares, a 13% increase from current shares outstanding of approximately 297 million.
Fisker shares, like the stocks of many EV start-ups, are down dramatically from late 2021 levels. The stock is down about 60% from its US$23.75 mid-November 2021 peak. Nevertheless, valuing Fisker is a difficult task. While the company appears to be progressing toward commercial manufacturing, Fisker has recorded only negligible lifetime revenue and the company is in the process of (gradually) selling a quantity of stock equivalent to around 13% of its shares outstanding. Nevertheless, Fisker carries a robust US$2.4 billion stock market valuation.
Fisker Inc. last traded on the NYSE at US$8.96.
Information for this briefing was found via Edgar and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.