Fisker risks residuals with inventory fire sale

The embattled pure play start-up has slashed prices on 2023 Oceans

Fisker risks residuals with inventory fire sale
2023 Fiskers are now available on the cheap, but who will gamble on buying?

US EV start-up Fisker has announced swingeing cuts to prices of its remaining 2023 Ocean SUVs, in an effort to bolster its dwindling cash reserves. But while the firm describes it as “strategically positioning Ocean to be a more affordable and compelling EV choice”, industry observers see potential long-term damage from the move even if the ailing firm can survive its current liquidity crisis.

The most aggressive reduction is an almost 40pc drop in the manufacturer’s suggested retail price (MSRP) for the premium Ocean Extreme trim, slashing the price from over $60,000 to less than $38,000. But there are also c.35pc cuts on the Ultra and Sport trims (see main image).

All reductions are on 2023 models, although, having faced substantial criticism for software glitches in initial releases, the firm stresses that vehicles will have the latest 2024 Ocean OS software version 2.0 installed. The offer will be available from 29 March until all 2023 model year inventory is sold.

To some extent, what Fisker is doing is hardly unusual — most OEMs in the first half of a year apply discounts to shift the remaining stock of the previous year’s model. It is also understandable that, having sunk costs in its inventory, its current cash flow crunch makes ways to try to stimulate realising value on the vehicles is a prime concern.

But the extent of the price haircut is attracting attention. Analysts warn that it will likely have a material impact on the residual value of 2023 Oceans sold previously.

And this will have a double whammy on early Fisker adopters — hitting them on resale, having already paid more than they would have done if they had waited to buy. Given that the success of Tesla and one of the factors still seen as positive about Rivian has been the evangelising of early brand champions and creating a ‘tribe’ effect, the last people Fisker needs feeling negative about its marque are those that have already bought.

Fisker faces another challenge too. The firm says its “team is working to give Fisker owners the software updates, service, and customer support they require”, while it also “continues to pursue dealer partnerships in North America and Europe”.

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But a buyer must weigh up the attraction of a new BEV SUV with an MSRP of less than $25,000 with the risk that its maker may not be around for much longer to deliver aftersales services. And in the era of over-the-air updates and the software-defined vehicle, the latter is probably a greater disincentive than ever before. Similarly, for dealers, the appetite to partner with a firm that might be about to crease trading is likely to be tempered.

Earlier this week, the NYSE commenced proceedings to delist Fisker's Class A common stock and immediately suspended trading in the shares. It had been issued with a non-compliance notice earlier in the month.

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