Fisker targets delivery infrastructure overhaul
Management says order book is healthy but customers are facing long waits
Henrik Fisker, CEO of the California EV start-up that shares his name, is confident in strong demand for his firm’s EVs. “We have a great manufacturing facility. We have great demand,” he says.
But he concedes that his company is lagging in one important area. “The last part of the puzzle is getting these deliveries right,” he says.
“We have not been able to follow through with deliveries fast enough. People have paid and are waiting for the cars and some of them are really getting annoyed, and that is something that we need to do something about,” the eponymous CEO laments.
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“Neither our production nor demand are limiting our deliveries, but rather it is the delivery and the service infrastructure,” agrees COO and CFO Geeta Gupta-Fisker, who also reveals that the company’s inventory hit 9,000 vehicles during the quarter.
The company is accordingly updating its production guidance to between 13,000 and 17,000 vehicles by year-end, but production has not proved the challenge for Fisker. Nor has securing orders been a stumbling block.
Fisker delivered 1,097 vehicles in Q3 out of 4,725 produced, but CEO Fisker notes that the firm “exceeded that pace in just the month of October”, with 1,200 deliveries in the month, and that “November is tracking even higher”.
“We are in the process of dramatically overhauling our service and delivery infrastructure to keep up with the demand until the delivery process has reached our goal, which we expect later this year,” Gupta-Fisker tells analysts.
And the plan involves injecting money into several capital-intensive areas. As the CEO summarises, the firm’s problem revolves around the issue of “how do we get more real estate, how do we get more people”?
Fisker is targeting opening new service and delivery facilities, as well as showrooms, this month, taking the company’s list of such facilities to “almost around 15”, according to Gupta-Fisker. The firm also says it is hiring 20-30 people each week.
And Henrik Fisker says that this is motivated by a shift in buyer preferences not anticipated by the company. “We are now seeing that it just is not going fast enough for the home deliveries. We also saw people are happy to come and pick up the car if they can get it a week earlier at one of our facilities,” the CEO says.
But this change of tack comes with additional administrative expenses, prompting confusion from Cowen analyst Nicholas Amicucci about how the company was reporting “only a $20mn increase in sales, general, and administrative (SG&A) costs, and operating expenses staying flat”.
“I think on SG&A, it will absolutely continue to increase because we are going to continue to hire people, hire technicians, tools. We are going to continue to lease facilities. We are not buying real estate, so we do not own real estate on the books,” Gupta-Fisker says.
“We could have potentially invested in real estate and started hiring maybe a couple of quarters earlier, but we did not foresee that the delivery infrastructure or service infrastructure or permitting would be so difficult. So I would expect SG&A to continue growing,” she predicts.