EV startup founder rides cash wave to reboot once-dashed dream

[SAN FRANCISCO] Henrik Fisker knows what you're thinking: His namesake company is just another moonshot venture seeking to cash in on the electric-car investment mania and, to make matters worse, it's run by a guy who flamed out spectacularly once before. But he's got a new battery-powered SUV, a chip on his shoulder and a message for doubters: Just wait.

"I've done luxury cars in my life," Mr Fisker, 56, said in an interview. "I don't think I need to prove to anybody I can do a sexy luxury sports car."

The peripatetic chief executive officer's (CEO) automotive career started in the late 1980s at BMW, where he designed the Z8 roadster sports car. He later joined Aston Martin, winning plaudits for rakish supercars like the V8 Vantage and DB9 before trying his hand at electric vehicles (EVs) and founding Fisker Automotive in 2007.

Its first and only vehicle, a luxury plug-in hybrid sports car called Karma, was first unveiled in 2008 but didn't go into production until 2011. Despite celebrity endorsements from the likes of Justin Bieber, it sold poorly. The company encountered significant financial problems, poor reviews and had to recall a number of the limited batch of vehicles it actually did produce.

Mr Fisker's personal website says only around 2,000 units of the US$109,000 vehicle were delivered globally before the venture failed.

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His latest attempt to bottle EV lightning got a boost this week when Fisker Inc announced plans to list its stock through a reverse merger with a blank-check company, seizing on a recent surge in electric-vehicle shares. The transaction is expected to be completed by the fourth quarter and generate around US$1.10 billion to speed development of a battery-powered SUV.

Mr Fisker also got a US$50 million private investment by hedge fund veteran Louis Bacon to tide over operations until the deal closes.

The sudden infusion of cash at a company that won't start producing its first model until late 2022 gives its founder and CEO a chance at redemption in the competitive field of battery-electrics.

Mr Fisker says his latest incarnation has better access to capital, more standardised parts and a vehicle more in tune with consumer demand: a chunky SUV. The five-seater Ocean sport utility will start at under US$40,000 and offer a flexible lease model.

While Mr Fisker's ambitions are no less humble now, the Danish executive says he's learned lessons that will keep this latest venture solvent. One key difference is that he hasn't taken any government money this time. Mr Fisker Automotive's bankruptcy in 2013 cost US taxpayers US$139 million after it defaulted on a Department of Energy loan to spur production of alternative-energy vehicles.

"I have put a car on the road before, but I also take the lessons learned from the last venture," Mr Fisker said. "We got a government loan, which I would never do again."

NOT LIKE TESLA

The business plan this time around is based on pooling the supply chain with other, larger automakers and outsourcing manufacturing. In a presentation to investors, the company said its in talks with Volkswagen (VW) to use its modular vehicle architecture. VW declined to comment other than to say it's in talks about sharing its MEB platform with various partners.

While admiring what Tesla has done to pioneer electric vehicles, Mr Fisker said his business model is completely different. His company is not vertically integrated like Tesla and is instead taking a more Apple-like approach to production by outsourcing it to others.

Mr Fisker expects to be cash-flow positive within 12 months of starting production and envisions revenue of more than US$3 billion in 2023. It took Tesla four years to reach that level of sales after listing on the Nasdaq. But analysts say the startup may fall into the same trap that befell the former Fisker Automotive as it hurries to get its first vehicle to market.

"If you look at Fisker, the previous iteration, they basically rushed the vehicle out because they had customers waiting, had a huge number of problems with the vehicle, and it put them out of business," said Michael Ramsey, an automotive analyst at consultant Gartner.

COMPETITIVE NICHE

When the Fisker Ocean launches, it will compete in an increasingly crowded sea of electric SUVs. Tesla started delivering its Model Y in March and Amazon.com-backed Rivian Automotive plans to begin production of a battery-powered SUV next year. Ford Motor also plans to introduce the Ford Mustang Mach-E, while General Motors is rolling out the Cadillac Mystiq and reviving Hummer.

The new Fisker will also face off against the former Fisker Automotive, which was acquired by Chinese auto-parts maker Wanxiang Group and renamed Karma Automotive. That company also is looking to cash in on Tesla's coattails as the dominant EV maker.

A bigger issue than the profusion of rival vehicles may be the limited demand for EVs. Tesla may enjoy the highest valuation of any automaker, but electric-car sales remain a tiny part of the overall market.

"The problem may be less about Henrik or Fisker Inc and more a result of what they are trying to build," said Kevin Tynan, an auto analyst for Bloomberg Intelligence. The challenge could be that there are "not enough seats on the bandwagon given the niche".

BLOOMBERG