California EV startup files for bankruptcy again, shares fall 2 cents [VIDEO]

Electric vehicle startup Fisker, led by car designer Henrik Fisker, has once again collapsed under financial strain and filed for bankruptcy for the second time. The California-based company aimed to make a splash in the auto industry with the launch of its first EV model, the Ocean SUV, but couldn't overcome the challenges of being a public company.

In recent weeks, the struggling seven-year-old company quietly shut down operations. Although it managed to start deliveries of the Ocean SUV last year, Fisker faced a tepid electric vehicle market and weaker-than-expected consumer demand. The setback underscores the difficulties facing new automakers hoping to emulate Tesla's success, as many of them used up their cash reserves while developing new models and infrastructure.

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Fisker's bankruptcy follows in the footsteps of other prominent electric vehicle startups such as Lordstown Motors and Arrival, which have also sought bankruptcy protection. Meanwhile, other industry players are cutting costs and delaying investments in a desperate bid to save what's left of their funds.

This isn't Henrik Fisker's first automotive failure either. His previous company, Fisker Automotive, went bankrupt in 2013 after releasing the expensive Fisker Karma plug-in hybrid. Despite raising more than $1 billion for this new endeavor and partnering with suppliers such as Magna Steyr and Contemporary Amperex Technology, the company encountered internal financial and operational errors that led to its downfall.

MarketWatch reported on Fisker stock prices:

Fisker's stock plummeted after the cash-strapped electric vehicle startup filed for Chapter 11 bankruptcy.

Shares plunged 52% in OTC markets to about 2 cents in Tuesday morning trading, sending shares down nearly 99% year to date.

Fisker in February issued a “going concern” warning to its investors that it was burning through money too quickly. The following month, it said it was temporarily halting production of its Ocean EV. It appointed a restructuring expert in early April and said it was examining its strategic options, but the company was unable to find a financial savior before bankruptcy, The Wall Street Journal reported.

Once a rival to Tesla, Fisker has not found its place amid the growing competition in the electric vehicle market. Less than a week before the bankruptcy filing, Fisker issued a voluntary recall due to a software problem in its Ocean SUVs.

Fisker faced a multitude of obstacles, including defaulting on a debt agreement, unsuccessful attempts to increase sales by moving from direct-to-consumer sales to dealerships, and software issues plaguing its debut vehicle. The National Highway Traffic Safety Administration even investigated the Ocean SUV due to reports of rolling or loss of braking performance. Fisker claimed the issues were resolved with a software update.

In addition, the company struggled with a shortage of qualified accounting professionals, which led to multiple delays in meeting regulatory financial reporting deadlines. Within a month, Fisker suffered the departure of crucial executives, including two accounting directors.

Despite producing more than 10,000 Ocean SUVs by the end of 2023, Fisker managed to deliver only about 4,900 to customers. To speed up deliveries, the company moved to a traditional distributor model. However, even these efforts could not prevent a “going concern” notice being issued in February, indicating a potential depletion of funds for the year. Attempts to secure additional investment fell through, leaving bankruptcy as the only viable option.

In early April, Fisker brought a restructuring expert to its board and explored several strategic options, including asset sales. With cash reserves down to just $50 million, the company began laying off employees and closing facilities, sending a clear message to remaining staff that their jobs could be lost by the end of june

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