Electric vehicle startup Fisker, led by car designer Henrik Fisker, has once again crumbled under financial strain, filing for bankruptcy for the second time. The California-based company aimed to make a splash in the auto industry with the release of its first EV model, the Ocean SUV, but couldn’t overcome the challenges of being a publicly held company.

In recent weeks, the struggling seven-year-old company quietly shut down its operations. Despite managing to begin deliveries of the Ocean SUV last year, Fisker faced a lukewarm market for electric vehicles and weaker consumer demand than expected. This setback underlines the difficulties faced by new carmakers hoping to emulate Tesla’s success, as many of them burned through their cash reserves while developing new models and infrastructure.

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Fisker’s bankruptcy follows in the footsteps of other prominent EV startups like Lordstown Motors and Arrival, which have also sought bankruptcy protection. Meanwhile, other players in the sector are cutting costs and delaying investments in a desperate bid to save what remains of their funds.

This isn’t Henrik Fisker’s first automotive failure, either. His previous venture, Fisker Automotive, ended in bankruptcy in 2013 after launching the costly plug-in hybrid Fisker Karma. Despite raising over $1 billion for this new endeavor and partnering with suppliers like Magna Steyr and Contemporary Amperex Technology, the company encountered internal financial and operational missteps that led to its downfall.

MarketWatch reported on Fisker’s stock prices:

Shares of Fisker nosedived after the cash-strapped electric-vehicle startup filed for Chapter 11 bankruptcy.

The stock plummeted 52% on the OTC Markets to about 2 cents in Tuesday morning trading, putting shares at a nearly 99% decline year to date.

Fisker in February issued a “going concern” warning to its investors that it was burning through cash too quickly. The next month, it said it was temporarily halting production of its Ocean EV. It appointed a restructuring expert in early April and said it was examining its strategic options, but the company wasn’t able to find a financial savior before going bust, The Wall Street Journal reported.

Once a would-be Tesla rival, Fisker failed to find its footing amid growing competition in the EV market. Less than a week ahead of its bankruptcy filing, Fisker issued a voluntary recall due to a software issue in its Ocean SUVs.

Fisker faced a multitude of obstacles, including defaulting on a debt agreement, unsuccessful attempts to boost sales by transitioning from direct-to-consumer sales to dealerships, and software issues plaguing their debut vehicle. The National Highway Traffic Safety Administration even investigated the Ocean SUV due to reports of rolling away or loss of braking performance. Fisker claimed the issues were resolved with a software update.

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In addition, the company wrestled with a shortage of qualified accounting professionals, causing multiple delays in meeting regulatory financial reporting deadlines. Within a month, Fisker suffered the departure of crucial executives, including two chief accounting officers.

Despite producing over 10,000 Ocean SUVs by the end of 2023, Fisker managed to deliver only around 4,900 to customers. To expedite deliveries, the company made a shift to a traditional dealer model. However, even these efforts could not prevent the issuance of a “going concern” warning in February, signaling a potential depletion of funds within the year. Attempts to secure additional investment fell flat, leaving bankruptcy as the sole feasible option.

In early April, Fisker brought in a restructuring expert to its board and explored various strategic options, including selling off assets. With cash reserves shriviling to a mere $50 million, the company began laying off employees and closing facilities, sending a clear message to remaining staff that their jobs could be lost by the end of June.

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