Electric vehicle startup Fisker Inc. released its preliminary financial results for the fourth quarter and fiscal year ended December 31, 2023.
Fisker expects its capital expenditures and working capital requirements to decrease during 2024 and beyond as it enters the second year of Ocean production. The company’s business plan is highly dependent on the successful transition to its new Dealer Partner model in 2024. Furthermore, to the extent Fisker’s current resources are insufficient to satisfy its requirements over the next 12 months, the company will need to seek additional equity or debt financing, and there can be no assurance that Fisker will be successful in these efforts.
If the financing is not available, or if the terms of financing are less desirable than Fisker expects, the company may be forced to decrease its planned level of investment in product development, scale back its operations including further headcount reductions, and reduce production of the Fisker Ocean, which could have an adverse impact on the company’s business and financial prospects. As a result, the company expects to conclude there is substantial doubt about its ability to continue as a going concern when its annual financial statements for the year ended December 31, 2023, are filed with the SEC.
To address potential liquidity issues, Fisker is already taking action. The company is currently in discussions with an existing noteholder about potentially making an additional investment in the company. The use of proceeds, if a transaction is consummated, is expected to be for general corporate purposes, vehicle production and the ongoing transition to a dealer-focused sales model. In addition, Fisker intends to reduce its workforce by approximately 15%. Headcount reductions are predominantly related to the change in sales strategy from direct-to-consumer to a Dealer Partner model. In addition, the company is streamlining operations, including reducing its physical footprint and overall expenses.
Fisker’s total revenue was $200.1 million, an increase of $128.3 million compared to revenue of $71.8 million in Q3 2023, as vehicle deliveries increased by 2,721 units sequentially to 3,818. Reported revenue for Q4 2023 excludes $44.6 million of deferred revenue the company expects to recognize in the future when additional services related to option packages are provided as well as when certain vehicle features and functions are updated through the delivery of new over-the-air (OTA) updates. Reported gross margin was -35%. Fisker’s loss from operations totaled $103.5 million. SG&A rose sequentially reflecting higher professional fees as well as an increase in headcount. Research and development expenses during the quarter reflect a reversal of some previously accrued expenses due to a settlement with a supplier.
Fisker’s net loss for the quarter was $463.6 million or a loss of $1.23 per share. A substantial portion of the company’s net loss in the quarter reflects a non-cash fair value adjustment associated with its 2025 senior convertible notes of $328.5 million. This adjustment resulted primarily from a conversion feature, which became available to the holder of the notes upon an event of default on November 13, 2023, related to the late filing of the company’s Form 10-Q for the period ended September 30, 2023. The 2025 senior convertible notes have been amended such that the conversion feature will cease to be available to the noteholder when the company files its 2023 Form 10-K with the SEC. As of February 29, 2024, approximately $237 million of the 2025 notes outstanding have been converted to equity, from the initial aggregate principal amount of $510 million, which has reduced the principal amount of 2025 notes outstanding to $273 million. Cash and cash equivalents and restricted cash was $395.9 million as of December 31, 2023.
Fisker is targeting combined sales directly to consumers and dealers of approximately 20,000 – 22,000 vehicles in 2024. Average selling prices (ASPs) for 2024 are expected to be in the range of $56,000 – $62,000 after costs related to import duties and dealer commissions. The carrying value of completed vehicles in Fisker’s inventory and pre-paid raw materials at year-end was approximately $530 million. During the first half of 2024, the company expects to generate cash from the sale of existing 2023 production vehicles that are largely paid for, supporting monetization of its balance sheet. In addition, Fisker expects a higher than usual cash contribution from Oceans produced and subsequently sold in 1H 2024 as the company consumes raw materials that are on its balance sheet.
