In a setback for the struggling electric vehicle (EV) startup Fisker, negotiations with a major automaker, rumored to be Nissan, have been abruptly terminated. This unexpected development jeopardizes a near-term rescue funding effort and adds to the mounting challenges faced by the imperiled EV manufacturer. Let’s cut into the details of this pivotal moment for Fisker and its implications for the company’s future.
Nissan Deal Termination
Fisker disclosed in a Monday morning regulatory filing that the negotiations with the automaker were terminated on March 22. While the reasons behind the termination remain undisclosed, Fisker was obligated to continue these negotiations as part of the closing conditions for a potential $150 million convertible note announced just last week. In the wake of this development, Fisker intends to request the unnamed investor to waive this closing condition, as the failed negotiations put the rescue funding effort in jeopardy.
Stock Plunge
Following the announcement, Fisker’s stock plummeted by 28% after the stock market opened, leading to a halt in trading. This sharp decline is the latest in a series of ominous signs for the beleaguered EV startup. Fisker has struggled to meet its sales targets for the Ocean SUV, prompting a shift away from a direct sales model. Additionally, the company has grappled with quality issues affecting some delivered vehicles, as revealed by internal documents.
Financial Struggles
Earlier this year, Fisker laid off 15% of its workforce, approximately 200 employees, and as of last week, reported a cash balance of just $121 million. With production paused and a warning to investors about the company’s inability to survive another year without fresh funding, Fisker’s financial woes continue to escalate. While Fisker has engaged in talks with other automakers, including Mazda, Nissan was the only remaining automaker at the negotiation table.
Strategic Alternatives
In response to the terminated deal, Fisker announced that it is evaluating other “strategic alternatives” beyond the potential tie-up with Nissan. These alternatives include in or out of court restructurings, capital markets transactions subject to market conditions, debt repurchases, equity issuances, asset sales, and other strategic measures.
The termination of the Nissan deal casts a shadow over Fisker’s already precarious financial situation and raises questions about the company’s ability to secure the necessary funding for its survival. As Fisker explores alternative strategies to navigate these challenges, the future remains uncertain for this struggling EV startup.
- Automaker: Nissan (rumored)
- Deal Termination Date: March 22
- Closing Condition: $150 million convertible note negotiations
- Stock Plunge: 28%
- Recent Layoffs: 15% of workforce (approximately 200 people)
- Cash Balance: $121 million
- Strategic Alternatives: In or out of court restructurings, capital markets transactions, debt repurchases, equity issuances, asset sales
