Fisker Slashes Production, Investors Feel the Pain

Electric-vehicle start-up Fisker is currently facing a rocky stretch, with investors taking the brunt of the impact. In a recent business update, Fisker announced a significant reduction in its production guidance.

The company now expects to produce approximately 10,000 all-electric Ocean SUVs in 2023. This is a substantial downgrade from the previous guidance given just a few weeks ago in November, which projected 13,000 to 17,000 units. The initial guidance provided in May was even more optimistic, aiming for 32,000 to 36,000 units in 2023.

Despite these setbacks, CEO Henrik Fisker remains positive. He acknowledges that they may not have met their original forecast but believes they are still performing well in light of current market conditions and pessimism surrounding EV sales.

Surprisingly, Fisker's shares rose by 7% in premarket trading, contrasting with slight downturns in the S&P 500 and Nasdaq Composite futures.

These stock gains may come as a surprise considering that Fisker shares have fallen by over 70% in the last three months. Reduced guidance and management turmoil have contributed to this decline, with two chief accounting officers leaving the company and Fisker disclosing material accounting weaknesses in its most recent quarterly report filed with the Securities and Exchange Commission.

In conjunction with the business update, Fisker also announced some management changes. Dan Quirk has taken on the role of executive vice president for finance and accounting, bringing his expertise from Ernst & Young. Additionally, Axel Buhr is now vice president for finance and controller operations.

Amidst these updates, Fisker revealed that it is currently negotiating the sale of zero-emission vehicle credits to major auto manufacturers. This strategy is common among EV makers, as they earn credits for selling cars that do not emit carbon dioxide. These credits can then be traded for cash with car companies that fail to meet their quotas of zero-emission vehicles.

The decision by Fisker to pursue this avenue is not surprising, considering that Tesla generated $489 million in regulatory credit revenue in the third quarter.

While the sale of credits is a positive development, it is more likely that the recent stock price rise is attributed to relief after the turbulent period rather than credit sales.