Good morning! It’s Tuesday, June 18, 2024, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.
1st Gear: Fisker Files For Chapter 11 Bankruptcy. RIP
Fisker officially filed for bankruptcy protection on the evening of June 17 in a move by the U.S. electric vehicle maker to salvage its operations by selling assets and restricting its debt. The move comes after burning through billions in cash in an attempt to get production of its Ocean electric crossover ramped up.
Anyone from the outside could have seen this coming from a long way away. Ultimately, Fisker got further than some EV startups like Proterra and Lordstown, but it just didn’t have enough juice to overcome weakening demand, fundraising issues and global supply chain constraints. Goodnight, sweet prince. From Reuters:
The company, founded by automotive designer Henrik Fisker, flagged doubts about its ability to remain in business in February and later failed to secure an investment from a big automaker, forcing it to rein in operations.
The collapse of its talks with the automaker – which Reuters had reported to be Nissan – meant that it was denied $350 million in funding from an unnamed investor that was contingent on the automaker’s investment and forced Fisker to explore options.
“Like other companies in the electric vehicle industry, we have faced various market and macroeconomic headwinds that have impacted our ability to operate efficiently,” Fisker said.
In the Chapter 11 bankruptcy filing in Delaware, Fisker estimated its assets to be between $500 million and $1 billion, and it had liabilities between $100 million and $500 million. Its 20 largest creditors included blue-chip companies like Google, Adobe and SAP.
Here’s a little more on how Fisker found itself in this position:
Fisker went public in late 2020 in a merger with a blank-check firm, valuing it at $2.9 billion and infusing its balance sheet with more than $1 billion in cash.
[…]
Henrik Fisker – a former design consultant for Tesla – had said at the time of the listing that Fisker wanted to be the Apple of the auto industry by outsourcing manufacturing of its cars.
The “asset light model” was meant to reduce development times for vehicles and lower costs to take a vehicle to the market.
Its Ocean SUV, however, was wrought with software and hardware issues, with Consumer Reports, an influential non-profit, calling the vehicle “unfinished business.”
The car is also under regulatory investigation for braking issues, problems with shifting into park and other modes and failure of doors to open at times.
After delivering less than half of the more than 10,000 vehicles it produced last year, Fisker turned to a dealership-based distribution model in January, abandoning the direct-to-consumer approach pioneered by Tesla.
It had signed agreements for 15 dealer locations in the U.S. and 12 partners in Europe, but still failed to clear its inventory of more than 5,000 cars.
“Fisker has been on life support for months now, so today’s announcement doesn’t come as a surprise. It wasn’t the first EV upstart to declare bankruptcy and we don’t think it’ll be the last,” said Garrett Nelson, vice-president and equity analyst at CFRA Research.
Fisker was supposed to be the grand comeback for Henrick Fisker. This was his second go of it after his first venture with the Fisker Karma hybrid sedan went bust in 2013. Perhaps the third time is the charm, Henrik?
OK, in actuality, please do not try this again. Henrik, buddy, I promise you do not need to keep doing this to yourself. You designed some beautiful cars. There’s no need to make an entire company.
2nd Gear: Musk’s Payday Legal Battle Starts Now
A few days ago, Tesla shareholders voted to give CEO Elon Musk his massive payday, but the fight for that money is far from over. The automaker must now begin its legal fight for recognition of the shareholders’ vote. It told a Delaware judge that the will of the shareholders “significantly impacts” her ruling that initially voided the payday. From Reuters:
Tesla wrote to Chancellor Kathaleen McCormick that the parties in the pay package case should now lay out their legal interpretations of Thursday’s ratification of Musk’s pay, rather than moving ahead with the case on the prior schedule.
“The approval of ratification by Tesla’s stockholders significantly impacts the claims and issues in this action, including the court’s final judgment,” Tesla attorneys told McCormick in the letter, which was filed with the Court of Chancery on Friday.
Greg Varallo, a shareholder attorney in the case against the pay package, said the ratification had “no legal effect” on the case and that he would explain his argument in a brief due Friday.
Tesla has said the ratification process was “novel” and it was unclear if McCormick and the Delaware Supreme Court would accept the result.
Tesla has argued that the ratification has now cured the problems raised in McCormick’s ruling in January.
The judge ruled the way she did because she found Musk had controlled the 2018 process that led to the pay package. Additionally, Tesla withheld key information from shareholders about how easy the targets the company had to meet were to get Musk paid.
A special committee of its board reviewed the pay package and determine it was in the best interest of shareholders, which Tesla said fixed the problem of Musk’s dominance in the process.
The vote was corrected by providing shareholders hundreds of pages of added disclosures, including McCormick’s 200-page opinion.
On top of all of this, McCormick has to determine a fee for the shareholder legal team before Tesla can appeal her ruling to the Delaware Supreme Court. They’re apparently seeking about $5 billion in the form of Tesla stock as a legal fee. Shockingly, Tesla argues they should be paid around $13.6 million.
Listen, I know Tesla and Elon have made a lot of people a lot of money, but no one on Earth has ever done a good enough job to be paid upwards of $45 billion. However, I will take $20 if he’s offering.
3rd Gear: 1.2 Million Stellantis Vehicles Recalled
Stellantis is recalling 1,159,963 vehicles in the U.S. and Canada because a radio software problem could interfere with the car’s rearview camera display. It is such a funny company. 1,033,433 vehicles will be recalled in the U.S., and a further 126,530 will need to be fixed in Canada From Automotive News:
The recall covers the 2021-23 Chrysler Pacifica, 2021-22 Dodge Durango, 2022-23 Jeep Compass, 2021-23 Grand Cherokee, 2022-23 Wagoneer, 2022-23 Grand Wagoneer, 2022-23 Ram Promaster and the 2022 Ram 1500, 2500 and 3500 vehicles.
Affected vehicles’ rearview cameras might not function when backing up, increasing the risk of a crash, NHTSA said in its recall report. The top U.S. auto safety regulator requires rearview images to be clearly visible while a vehicle is backing up.
Stellantis was its own parts supplier, according to NHTSA.
“The recall was prompted by a routine review of customer feedback,” a Stellantis spokesperson said in an e-mail. “The resulting company investigation discovered some vehicles were equipped with radio software that could inadvertently disable the rearview camera.”
The automaker will reportedly attempt an over-the-air update to fix the camera issue, and owners will be notified by mail starting on August 2.
It’s been a rough year for Stellantis in terms of recalls. This year alone, the automaker has issued 30 recalls that have impacted about 2.2 million vehicles. Ouch.
4th Gear: Tesla Gets OK To Test Advanced Driver Assist Program In Shanghai
Tesla has been given approval to test its Full Self-Driving advanced driver-assistance system on some streets in Shanghai. It’s another step in the right direction for the automaker that wants to start offering the feature to drivers in China. From Bloomberg:
The city of Hangzhou in eastern China’s Zhejiang province may also issue approval for carmaker to test the system, according to the person, who declined to be identified because the information isn’t public. The initial tests will be conducted by Tesla staff, the person said.
[…]
The approvals come about six weeks after Tesla Chief Executive Officer Elon Musk got a tentative green light to deploy the company’s advanced driver-assistance system during a lightning visit to Beijing, sending Tesla’s shares surging.
Advanced driver-assistance systems are becoming increasingly common in China, with many local players including Xpeng Inc. and Xiaomi Corp. using them as a selling point for vehicles.
Tesla charges $8,000 for the system it markets as Full Self-Driving in the US, or $99 a month for a subscription. The suite of features don’t make the company’s cars autonomous and require constant supervision.
In China, Tesla has taken orders for FSD via one-off payments of 64,000 yuan ($8,800), up from 56,000 yuan in 2020. However, since drivers can’t actually activate FSD in China, only a small number of owners have been paying for the option.
Time will tell if FSD is approved for use in China. I mean, it’s sort of half-baked here in the U.S., so I cannot imagine it’s going to fare very well.