Fisker folds! Could this small-time electric car maker be the first of many EV start-ups such as Rivian and Vinfast to fail in the coming years?

Fisker, a US-based electric car start-up founded by long-time car designer Henrik Fisker, has filed for a Chapter 11 bankruptcy following a mass recall of almost every single vehicle it has sold so far.

The California-based company built its single model, the Tesla Model Y sized Ocean SUV, in Austria with the help of contract manufacturer Magna Steyr. It was sold in Europe and the United States. 

Despite plans to expand into China and other global markets, the company was frequently marred by financial difficulties stemming from what it claims were “various market and macroeconomic headwinds that have impacted our ability to operate efficiently.”

It previously announced a manufacturing pause, slashed prices, and underwent mass layoffs in attempts to stay afloat, but a recall of 6864 vehicles due to an issue with the motor control unit resulting in a potential loss of power appeared to be the final nail in the coffin for the embattled start-up.

The bankruptcy will mean the company will undergo re-structuring and a sell-off of its assets, with some employee wages and benefits, as well as customer programs and bills to vendors reportedly continuing to be paid.

The Ocean mid-size SUV was intended to be followed by three more models, the Pear small SUV, the Kayak ute, and the Ronin convertible.

Plans for all three were paused earlier this year as the company’s financial troubles became more evident. Reportedly, the company was in talks with a “large OEM” over a “strategic partnership" earlier this year.

Fisker follows in the footsteps of fellow US-based start-up Lordstown Motors, which crumbled off the back of ambitious sales targets it couldn’t meet, also frustrated by alleged supply chain disruptions, and a finance deal which fell through with Taiwan’s Foxconn. The company has since been accused of misleading investors over both its ability to deliver its Endurance ute, and the demand for it.

Meanwhile, once-promising Chinse EV start-up WM Motor was also forced to file for bankruptcy in 2023, along with several other small-time players as demand in the Chinese market plateaus, either because of high levels of saturation in certain areas, or because of a financial contraction in the economy curtailing growth outside of major cities.

This has caused several Chinese manufacturers to look to export markets like Australia for additional growth. Some brands, like BYD, have reached a critical mass of profitability as Tesla originally managed to do in the West, while others, like SAIC (owner of MG and LDV) have large enough combustion businesses to be able to absorb losses on their EV business.

The same can be said for western manufacturers, some of which are losing money hand-over-fist in an attempt to gain a foothold in the EV market and become a viable competitor to the market-leading Tesla. Many are now facing tough price competition from Chinese automakers.

There are still other promising electric brands on the precipice. US start-up Rivian is burning through cash reserves in an attempt to bring its new mass-manufacturing base in Illinois online, in order to build its more affordable R2 and R3 models to sit underneath its R1S and R1T off-roaders.

Its production-limited deliveries and high cash-burn ($2 billion US dollars in the last 12 months) has seen its stock halve in the last year off the back of prior massive boosts thanks to comparisons to Tesla. Promises of a per-vehicle profitability and the launch of its new more affordable models will be make-or-break for the brand in the next two to four years, according to stock analysts.

Australia specifically is seeing a rapid expansion of the amount of automakers available, as more Chinese players vie for a slice of our small market. Many auto executives CarsGuide has spoken to recently say there will be some automakers which won't be able to survive this once-in-a-generation electrification shift in our market.