With the EV startup close to bankruptcy, it appears increasingly likely that the Ocean is dead in the water
May 7, 2024 at 07:20
- The contract manufacturer will lose about $400 million in sales if production of the Ocean doesn’t resume.
- Fisker told Magna to pause production in mid-March for six weeks but there are no signs of it restarting.
- The small EV manufacturer could be on the verge of bankruptcy.
Things keep going from bad to worse for Fisker. Soon 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 won’t be building any more.
Rather than building the Ocean itself, Fisker has contracted Magna International to assemble each and every example through the Magna Steyr subsidiary in Austria. Production was paused in March and while speaking on the firm’s most recent earnings call, Magna chief executive Swamy Kotagiri revealed it is still idled.
Read: Report Claims Fisker Using Prototype And ‘Graveyard’ Parts To Fix Customer Cars, Company Denies
“It is important that I provide an update on our current status for the Fisker Ocean program,” he said. “Production of the vehicle is currently idled. Our current outlook issued today assumes no further production.”
Although Kotagiri didn’t say definitively if production of the Ocean has ceased for good, Magna International chief financial officer Pat McCann doubled down on the assumption the Ocean is dead while speaking on the call.
“As Swamy mentioned earlier, we are assuming no more production of the Fisker Ocean,” he said.
The company believes it will lose about $400 million in sales if production of the Ocean doesn’t resume. Magna added it has $195 million in deferred revenue associated with the Fisker contract that will be recognized as income if performance obligations are met or if its contract manufacturing agreement with Fisker is terminated, Yahoo! Finance reports.
In mid-March, Fisker paused production of the Ocean for six weeks while it desperately scrambled to strike a deal with a large automaker. Just two weeks later, it was reported that talks with other OEMs had broken down, leaving Fisker without a lifeline and edging closer to bankruptcy.
Fisker filed documents with the SEC in late April that revealed it had missed a required interest payment worth $8.4 million and said it may have to file for bankruptcy in the next 30 days if it doesn’t get debt relief.
