With the EV startup teetering on the brink of bankruptcy, it’s becoming increasingly likely that the ocean is dead in the water
May 7, 2024 at 7:20 am
- The contract manufacturer will lose about $400 million in sales if production of the Ocean does not resume.
- Fisker asked Magna to pause production for six weeks in mid-March, but there is no sign of it resuming.
- The small electric vehicle maker could be on the verge of bankruptcy.
Things are getting worse for Fisker. Shortly after the company announced impending layoffs and after it was sued by an engineering firm, the contract manufacturer that builds the Ocean SUV “assumes it will no longer build it.”
Instead of building the Ocean itself, Fisker hired Magna International to assemble each individual example through the Magna Steyr subsidiary in Austria. Production was halted in March, and when speaking at the company’s most recent earnings release, Magna CEO Swamy Kotagiri revealed that production is still at a standstill.
Read: Report claims Fisker uses prototypes and ‘graveyard’ parts to repair customer cars, company denies
“It is important that I be informed of the current status of the Fisker Ocean program,” he said. “Production of the vehicle is currently suspended. Our current outlook published today assumes there will be no further production.”
Although Kotagiri did not say definitively whether the Ocean’s production had permanently stopped, Magna International Chief Financial Officer Pat McCann, speaking on the conference call, reiterated his belief that the Ocean was dead.
“As Swamy mentioned, we assume that the Fisker Ocean will no longer be supported,” he said.
The company expects to lose about $400 million in sales if production of the Ocean does not resume. Magna added that there is $195 million in deferred revenue related to the Fisker contract, which will be recognized as income when performance obligations are satisfied or if the contract manufacturing agreement with Fisker is terminated. Yahoo! Financial reports.
In mid-March, Fisker paused production of the Ocean for six weeks while it desperately sought a deal with a major automaker. Just two weeks later, it was reported that talks with other OEMs had broken down, leaving Fisker without a lifeline and on the verge of bankruptcy.
Fisker filed documents with the SEC in late April showing that the company had missed a required $8.4 million interest payment and said it may have to file for bankruptcy in the next 30 days if it does do not receive any debt relief.
