Fisker Inc. (FSR) on Q1 2021 Results - Earnings Call Transcript
Operator: Good day and thank you for standing by. Welcome to the Fisker Incorporated First Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to Mr. Dan Galves, Vice President, Investor Relations. Sir, please go ahead. Dan Galves: Thanks, Li. Welcome everyone to Fisker’s first quarter earnings call. Joining me on the call are Henrik Fisker, Chief Executive Officer; Dr. Burkhard Huhnke, Chief Technology Officer; and Dr. Geeta Gupta-Fisker, Chief Financial Officer and Chief Operating Officer. Henrik Fisker: Thanks Dan. Thanks everyone for joining. I'm extremely pleased with the progress we made in EMotion so far. As I've said many times, we have not used COVID as an excuse to delay anything we're on track for production and deliveries to start in the next year. We completed a major engineering milestone in March this year, which enabled us to kick off tooling and start both test and validation for some key components. The next big milestone is an office and then we will have chassis moved builds complete and that will allow us to do some more testing and fine-tuning. We also will do more – build some prototypes and use over the course of the year, where we started adding more and more production level components. And of course, virtual prototypes for safety validations are also in process and that means that we will have one of the safest vehicles on the road. In fact, we are already working on fulfilling 2023 safety rating for Five Star. So that means if you would buy a vehicle today any vehicle, our vehicle will be safe from the vehicle you would buy today because we really reach for the long-term highest standards. And also engineering powertrain modeling supports our expected range and acceleration, we'll have up to 350 mile range and top vehicle will do zero to 60 in less than four seconds. So we have definitely not only going to be on the target competitors, but that's really a supercar territory for a family SUV, which is pretty amazing for the price we are offering. In terms of certification and homologation, we got a clear and crisp plan in place. I know it's not very exciting, but it's critical for a concurrent launch in both U.S. and Europe. Burkhard Huhnke: Yes. Thanks, Henrik. Yes. Software development is a key priority for Fisker, controlling a major customer facing aspects of the weaker software stack is important for several reasons. Let me explain, number one, it allows us to design and execute a seamless easy to navigate user experience that is fully integrated with our mobile app. And then number two, we can add features, improve performance and fix customer annoyances and other issues rapidly for all the – days. I've been in the industry for a long time and car is perfect from day one of production. You must be able to deploy the improvements to vehicles already on the road. Number three, when the identified something that should be changed, we don't want to rely on suppliers to rewrite software, which can take months. We need to own the relevant software stack, the customer can see and experience every day like the user interface and the overall customer experience. And number four, we want to pursue opportunities to monetize product upgrades and other digital data services. So that's the goal. And in order to accomplish that goal, we need to, number one, own the PIPE that delivers the data back and forth from the vehicle. We are building our Fisker software excellence centers with programmers and data scientists in San Francisco, Silicon Valley and n India. This includes the pipeline from the car to the cloud and vice versa over the outdates and edge computing capabilities. So you need to own the cloud where the data is stored. We're building our own Fisker cloud and data scientists, analyzing data sets to continually optimize the net features and functions. So as explained you need to own software and the key domains that impact the customer and partly as to isolate what is important. And we don’t design it to write software to control window motors, this is a commodity that supply chain is under control. On the other hand component software infotainment system that speak directly to the customer, you need to own that. Performance update of the polymer train is owned by us, edge computing that controls data flowing in and out of the cloud is owned by us. Geeta Gupta-Fisker: Thanks, Burkhard and welcome everyone. I'm really excited to be here today on our second earnings call and report back that our Q1 results were in line with the comments we made on our Q4 call back in February. We display our financial discipline as our various departments executed well as for our spending plan. We’re on track to the full year guidance we previously communicated, which did not include any spending on PEAR program. Now with a binding agreement in place with Foxconn, we're adding $30 million to the midpoint about 7% increase to overall spending. Our balance sheet remains extremely strong with $985 million cash and no debt, basically flat versus December 31, 2020 as $89 million of inflows came in from warrant exercises, this incremental cash offsets our Q1 spending. Our current cash reserves are sufficient to fully fund the Ocean program to start a production. And to be very clear, we have no need to raise additional capital in 2021. The predictability of our future business has taken a major leap forward, as we progressively turn what will once estimate for the Ocean Bill materials, engineering, test and validation spend into actual contracted costs. This includes sourcing activities as well as a well defined timeline and a highly diligent cost schedule for vehicle integration and vehicle assembly. What we have done as institute a very robust sourcing courses at Fisker that I lead in collaboration with our engineering and purchasing teams, both the Fisker and Magna and now at Foxconn, our new partner. Prior to sending our RFQs, we have a clear concept and specification for each part and our cost analytics team has worked with engineering to target what the particular component should cost. This benchmarking activity starts long before sourcing and continues throughout the entire project life cycles. Using these financial models, we are well prepared to have in-depth discussions with our suppliers about the input and production costs for each component in our work to convert these supplier quotes into serial contracts, as wanting engineering, purchasing, purchasing quality and finance engages with our supply base to ensure timing, cost, ESG and quality targets are met simultaneously. As of our last engineering milestone in March that Henrik talked about, we have suppliers identified for 100% of parts, including all the ocean derivatives. We have established a plan for each part to support testing and validation activities, which are boring, but very necessary. We are now well underway in the process of awarding zero production contracts with over 60% of the part count, representing more than 1,000 parts and well more than that by dollar value, I look for the source or in the negotiation phase. We will share more information on key suppliers during the course of the year. Overall on the bond side, we now have high visibility in achieving the previously communicated BOM estimate with opportunities identified by our teams to drive that even lower. We are particularly excited about our cost position on batteries. Once an agreement is reached on localized PEAR production, we will share more details around our favorable position on batteries and our supplier partner. Assembly and logistics have also gained visibility. And there are levels that are consistent with estimates we discussed back in July, 2020, when we announced our business combination. Overall, we are in a great place as a high majority of Ocean costs are now based on competitive vendor hard quotes, purchase orders or contracts. Switching gears. I want to highlight the cashless warrant exercise we executed in March and April. The choice to only allow cashless exercises mitigated dilution to our shareholders by 2.5 points and also signaled confidence in a balance sheet, future spending plans and access to capital. Finally, we are very excited to have reached a binding agreement that Foxconn to develop a second platform, FP28 with the initial vehicle launching in third quarter 2023. Both companies have tremendous resources to contribute to the program in terms of human capital, intellectual property and existing supply chains. Beyond the PEAR product itself, this relationship has a very positive impact on Ocean and FM29 platform in several ways. Let me highlight these to you. Number one, we at Fisker have already built an organization that is focused on vehicle affordability and corresponding supply chain that's supports an affordable cars BOM. This means there are many relevant synergies between Ocean and PEAR platforms. Number two, the Ocean and PEAR program have a great opportunity to share several components and subsystems, such as domain controllers, control units, batteries, displays that we talked about today, connectivity and various other hardware. And this is only possible because the Ocean was already designed with affordability in mind, once several other startups that are looking at very expensive products and have an organization, that does not think about vehicle affordability. Companies that design $100,000 cars have very limited opportunities to share own parts of bill of materials with an affordable C segment vehicle, the culture that we are infilling at Fisker. Number three, a deep supply chain and relationships on the Foxconn side are already been improved for our Ocean program. Our nomination of Sharp that we announced this morning for an extremely unique display was a major win that would have not happened without the Foxconn relationship, and it's a great example of component sharing between two different platforms and vehicles. We have also gotten assistance from Foxconn on chipset sourcing, which is obviously a very critical component in our current environment. Number four, we now have an opportunity to drive additional cost reductions for the Ocean program throughout volume sourcing due to the added volume of PEAR, the close timing with these two launches at the end of 2022 and the other one at the end of 2023, and simply the long-term volume opportunity to suppliers of being awarded on those two separate programs. This is going to be one of the most innovative automotive programs and we are inviting suppliers to participate now; today. Before quickly running through results and guidance, I just wanted to remind everybody of the KPIs that everybody at Fisker is focused on and are measured by. Our overall priority KPIs are number one, a stellar product; number two, our bill of materials that underpins market-leading gross margins; number three, started production on time and number four overall program costs and in that order of priority. These are what my performance metrics are based on as well, as well as every single team member at Fisker. And we remind all our suppliers and partners of these key KPIs that drive Fisker. Now turning to our results and outlook. Our Q1 results were in line with internal expectations and the commentary we provided on the last earnings call. Operationally the increase in R&D versus Q4 2020 was primarily the result of increased headcount and initial kickoff with many suppliers that drove initial engineering design and development spending. The reduction in SG&A expense versus Q4 2020 was the result of non-recurrence of onetime costs incurred in the prior quarter due to closing of our business combination. We also reported a non-cash expense associated with the public and private boards. I just want to remind everybody that our net loss totaled $176.8 million and $0.63 loss per share, however, excluding $145.2 million non-cash non-operational loss, reflecting changes in fair value or convertible equity securities and embedded derivatives our net loss actually totaled $31.6 million, a $0.11 loss per share. As of April 2019, these public and private bonds were fully retired and being listed. So we should not see any of this activity in that line item going forward. Our capital expenditures rose meaningfully in Q1 2021 to $66 million versus $0.5 million in Q4 2020, again in line with expectations as you began meaningful capitalized spending on the Ocean platform. Finally, we also reported some revenue from exciting merchandise sales, but I want to remind while the analyst is not material and we do not recommend any analyst spend time podcasting it, as we see this as a critical marketing tool and a critical tool for our fans, but we do not see it as an important aspect of any revenue. It is an important aspect for brand building and engagement with our customer base. Turning to our outlook. As noted in the press release, we are adjusting the midpoint of our guidance for overall cash spending by $30 million to the high end of the prior guidance. The guidance now includes estimated spending on project PEAR, which the prior guidance explicitly did not include. We expect the balance of this year's aggregate spending to be roughly steady across the remaining three quarters of 2021. SG&A should moderately increase sequentially due to higher headcount. R&D spend will be a bit heavy in Q2 and Q3 than Q4, due to timing of incremental supply ED&T and a prototype testing and validation program. We would expect CapEx to be somewhat lower in Q2 than in Q1. Now, specifically on the PEAR program, we are using existing resources to design and develop the program. To be very specific, this is our current human capital that Henrik highlighted in his remarks, and intellectual property that Burkhard highlighted, we’ve developed alone or in collaboration with suppliers. The timeline compare is similar to where the Ocean was last year in the second half of 2020, last year leveraging existing assets and resources that we developed over the last year, so spending in 2021 is modest. Overall, I'm extremely proud of the entire Fisker team for all the accomplishments we have in 2021 and the plans we've established to execute a fantastic profitable product on time and on budget. We’ll now have to take your questions. Dan Galves: Could you queue up the analysts? Operator: Certainly. Your first question comes from the line of Adam Jonas from Morgan Stanley. Your line is open Adam Jonas: Thanks and good afternoon, everybody. So Geeta, I caught a comment, I might've misheard you, when you said that you were moving into contracts for 60% of the parts on the Ocean, and I think you said that represents over 1,000 parts. How many parts are in this car? Geeta Gupta-Fisker: Over 1,600 parts, Adam, that includes obviously all the systems and they may have additional substance, but it's about 1,600, including subsistence. Adam Jonas: I'm curious how that compares to other vehicles, you think that it would be going up against in terms of complexity, it seems like a very low number, although I know there is some definitional noise. Burkhard Huhnke: It is comparable, it’s on a similar level. So we’ve reduced couple of components in the electronic side, but in general you could actually say that’s a similar – compared to other. Adam Jonas: Okay, great. And I appreciate that deal on the sharing between FM29 and FP28. You’ve called out some parts, I didn't know if it was – if by order of magnitude the value of those parts we're thinking about. Could it be something substantial like 20% or 30% or closer to 50%? I think you’ve mentioned sharing a battery, but just want to kind of get a sense in dollar terms, among a range, how much you think you could share between those two platforms? Henrik Fisker: Because, obviously the batteries are major part of the vehicle, so as the innovative screen that we're developing together with Sharp. And then there is a few other things, as well so I would definitely say it, we'll be able to 30% in terms of value. Adam Jonas: Okay. And just the final one for me, there is so many great things to have. But last one for me, when we finalize the JV ownership structure or details about the JV itself beyond the binding agreement with Foxconn and Hon Hai. I'm wondering if you could give us a sense of timing of the details behind that binding agreement? Thanks. Geeta Gupta-Fisker: Hi, Adam, as you can imagine in a program that is so complex as the PEAR program, we are taking into consideration intellectual property, we’re take into consideration tax. Also this program needs to be a global program, so we're looking at all possibilities. At this point in time, we haven't said whether this is a joint venture of both companies will continue its operations as they are and will look at a more commercial way or commercial contractual way of investing and sharing profits. So at this point in time, we are weaving through all the complications of tax and IP, but we do have a path forward and we hope to share that in the coming months. Adam Jonas: Okay. Geeta, then – as you’re so efficient answering, I'm going to slip one more in here for you. I believed you, when you presented the Ocean timing at the time of the earlier this year. Our understanding was that, the company was fully funded through the end of 2022, again, excluding PEAR, you mentioned no need for additional capital this year, but I imagine there could be quite a big inflection spending next year. Could you say the company is fully funded through launch of PEAR or is that a totally different situation now and we need to see how those capital commitments play out into next year? Thanks. Geeta Gupta-Fisker: Good question, Adam. I did expect that one from you. So two things, first of all, Adam, we do not need to raise any additional capital in 2021 to either fund Ocean or PEAR. As you know, we took an additional $89 million that brought our cash reserves to a very healthy balance sheet of $985 million. We forecast that – or we gave the guidance today, an additional $30 million, which goes to operating expenses to the PEAR program. So given the fact that we are leveraging our existing asset base, we are on track for pear, we’re on track for Ocean. Now let's talk a little bit about your question, do we need to see additional cash in 2022? Now the balance sheet remains super strong with $985 million. We also show a tremendous discipline in giving the guidance and sticking to it in Q1 and you will see it in the coming quarters. I just want to remind everybody how we can optimize the balance sheet if we need to. So at this point in time, we're investing 100s of millions of dollars in production, tooling and equipment, some of that you see in our Q1 numbers. And a lot of this can be financed at a low cost in a variety of these in a ESG forward manner. Number two, we again have a significant amount of IP that's in both the FM29 and FP28 programs and we still have not evaluated whether we licensed them out or not. Number three, we control all our emission credits and there are opportunities to monetize these ahead of time, if we wanted to. And again, I want to remind everybody my comments last time that capital markets continue to believe that electrification is the future of automotive. So once we have some additional milestones, if we feel, we need to add more cash to the balance sheet, we will. But at this point in time, we do not see any increase additional cash this year. Dan Galves: Thanks, Adam. Next question Li, please. Operator: Yes, thank you. Your next question comes from the line of Itay Michaeli from Citi. Your line is now open. Itay Michaeli: Great. Hi everybody. Just a couple of questions. First, I think there at least mentioned some additional deals for fleet in the Europe in Q2, maybe talk a little bit about those deals? And are they – some of those in the reservation numbers? Henrik Fisker: Yes, so we actually hired a specific person over in Europe to pursue the fleet deals and we are pursuing the top 100 companies in Europe with a highest ESG goals that actually want to go fully electric. And I think we will be announcing some interesting deals here in the near future. It's a little too early to talk about it right now, but I see an incredible positive trend, because when you look at the European market in our segment of vehicle, about half of all vehicles sold in Europe are actually feed deals, and our vehicle is perfect position for that. So I'm pretty excited about the forecast of that and I think you're going to see some significant upside already this year. Itay Michaeli: Okay. That's helpful. And just as a follow-up, two product questions. First on the Ocean, any update on when we'll see, or you will launch the kind of full configurator for all the trim combinations? And then secondly on the FP28, anything you could share in terms of targeted range and performance for the starting price? Henrik Fisker: Yes. So on the Ocean, we are sort of waiting on still November, because we got some pretty significant news on technology that we're going to show it on the Ocean in – at November at the LA auto show. So we have decided to actually make that coincide with our app and website update, will you then be able to fully configure the vehicle colors, options, packages, we'll announce details of specifications, details of the pricing and everything is pretty much in line with our forecast. So you'll unfortunately have to wait until November, but it really is born out of the fact that we added some new technology features in the vehicle that we think is going to really put us way ahead of the competition, so we don't want to show that too early. When it comes to the PEAR program, as I mentioned, this is kind of a really revolutionary program. The reason we are working with Foxconn on business, because we truly want to create a revolutionary vehicle. And that's something that doesn't happen often in the car industry. And the point where this vehicle is trying to see if we can re-imagine what our vehicle should be for the future consumer. And I see personally a lot of trends that will change significantly over the next three to five years, that I think this vehicle can cadence with. First of all I think people are going to move away from the traditional segmentation of vehicles and this year already with the Ocean, where more than 50% of the people who has ordered the Ocean are coming from other vehicle categories, which is kind of unique. I've been in the industry for 30 years, and when you develop a vehicle, you always look at your main competitors and you get 95% of your customers from those, that's not the case with the Ocean. So because of that, we are specifically targeting the PEAR as almost like a non-segment vehicle that could take customers away from any vehicle of any type. And because of that, you need to have a vehicle that also then basically introduces some completely new innovative features and nobody else have, but everybody will desire. And I'm sorry to kind of use this very typical example, but that's exactly what happened with the iPhone, when it came out, it was the first phone, that was a small computer with no buttons and it attracted people from Motorola, Nokia and every other phone maker, Blackberry, the laugh that held out even with that went to Apple, and of course, now you have Samsung, et cetera. But the point of this vehicle is exactly to do that. And I can't imagine anybody better than Foxconn to do that, in terms of specifications, absolutely no. I don't want to give away to the competition what we're thinking, because it's so radical, it's a complete departure away from today's thinking of making a car. I personally had to get completely out of my little car bugs and think about how would a tick company design a vehicle rather than how would a car designer or car company design a vehicle. Itay Michaeli: Thanks for your time. Dan Galves: Next question, Li. Operator: Thank you. Your next question comes from the line of John Murphy from Bank of America. Your line is now open. John Murphy: Good afternoon, everybody. Maybe just a quick follow-up to that. Henrik as you're developing a revolutionary new product in the industry $30 million in spending, this year seems like not a lot of money. Could this cost a lot more money in the future for both yourselves and Foxconn and how should we think about program costs for this – I mean for something that's very revolutionary, that sounds very inexpensive? Henrik Fisker: Yes. So I think there is couple of things that's very unique to this program. First of all Foxconn and Fisker is jointly investing into this program, both of us have quite a lot that we bring to the table, we now have pretty well staffed in the engineering and design group. So we don't have to go out and hire those people for that, they're sort of coming into this program as the Ocean is moving to the next phase of commercialization. And then you have Foxconn, of course, that has an immense supply chain. And here is what I think a lot of people – what nobody is talking about. The fact is that as we move from gasoline vehicles, which have been perfected over 100 years, we move from gasoline vehicles into electric vehicles, that's only part of the story, we’re actually moving into vehicles with theoretically are computers on wheels. Now, who would be the best supplier in the world to supply the most cost effective, highest quality components for your computer, your smartphone? Probably up, Foxconn, they have one of the biggest supply chains of electronics in the world, I have been amazed when I've seen the pricing for some of these components, I mean, I couldn't even imagine, because the pricing is so different what I'm used to in the car world and that's why we're going to be able to make a vehicle for less than $30,000. So I can concentrate not on having to invent certain electrical components, but rather coming up with two innovative things and innovation doesn't necessarily need to cost more money, it's about being brilliant, coming up with smart ideas, thinking out of the box and taking risk. And this is the risk of product, the rewards could be huge, which I think there will be, the people who’ve kind of seen this program and is very few, – the chop sheet work, quite frankly amazed by it. But it is so new that we don't want to go out and talk about it right now, it's just too early, I mean, we're 30 months away and it would give too much away to the competition. But in terms of investment, the big investment will really start happening in 2023 and at that point, Fisker is making a wholesome revenue. John Murphy: Second question real quick, headcount is the same kind of thing you're being incredibly efficient, and I got to know you're getting a lot done with 203 people. I'm sure everybody is sweating hard here at the company and working really hard to get all this done, because it's a lot for 203 people. At some point, do you think you need to expand and accelerate that headcounts dramatically as you get closer to SOP? Or are you going to be able to operate with this very efficient army of very hardworking people, they get a whole lot done and leverage partnerships to get it done. Henrik Fisker: So if you truly dig into the traditional car industry, you will realize that despite it only talk about it, a lot of the components in cars today are made by suppliers. I think we have just kind of gone a little on a more extreme level on that, where we have said, a lot of things that are not really creating IP or our mundane task, we are getting out of suppliers. So we have a great relationship with Magna and they have an amazing engineering force, while we have 100s and 100s of people working there on our behalf on our program, of course we keep expanding, and that's why I’ve said, I can see us adding quite a lot of development people, but we are trying to avoid is hiring fillers. I know some companies out there are really excited about announcing when they've hired 1,000 people and maybe half of them 500 at just fillers, but we don't have any fillers, we don't want any fillers. Tupac doesn't even have a secretary, sometimes he uses me, but the things is, that we are just so efficient that I'm myself designing the cars. And I think that's – again, even innovating doesn't come, if I give you a million people doesn't mean you're going to come up with an amazing idea. Einstein and a few others did it pretty much by themselves. So I'm not worried about that. I think of course as we get out to the market, we're going to hire a ton of marketing and sales people, we’re going have people standing and I experienced sends us explaining all vehicles, but that's still about 18 months away, until then we're really just hiring a lot of brilliant engineers, software engineers really smart people that helps create innovative products. Geeta Gupta-Fisker: Hey, John; this is Geeta. Just want to – John, I just want to highlight a little bit about our asset-light model and your question is actually quite good because it kind of answers the fundamental philosophy of the company, which is the platform sharing the SF process. So I just want to remind that we start our programs with something called platform sharing, and as a result we are not developing every single component in the car from scratch. So you don't need to have an engineering talent that is designing and engineering every single component. If you don't do that, you don't need to have a corresponding purchasing team or a corresponding SG&A staff. So platform sharing is really critical for that lean asset-light. The second part I want to highlight in both the programs, we are co-engineering. So we do have a staff at Magna that supports the engineering program. The third part I want to highlight also, we talk about direct staff at Fisker, we also have a huge pool of indirect and direct labor on the books of Magna Steyr, where they will be building our cars. So there will be thousands of people who will be building our car at Magna Steyr, same at Foxconn. And then finally, as Henrik alluded to, we are ramping up our sales and service staff, both in Europe and U.S. So yes, we will ramp up, but in the right manner, we would not have staff that is like Henrik said fillers, but they are everyday adding incremental value. Dan Galves: Thanks, John. Li, I'm just going to jump in, we took some questions from the technology platform over the last couple of weeks from retail investors. I want to ask a couple of those. The first one is that there are actually several highly voted questions on chip supply and how Fisker plans to secure supply in that third area. Burkhard? Burkhard Huhnke: Yes, happy to take that. The so-called chip shortages, it's a difficult challenge for the industry, but its not really a shortage, the result of the choice by the chip industry to repurpose capacity towards higher value consumer electronics chips and translate from low margin legacy automotive microcontrollers and let's say 28 nanometer nodes and higher. So the general industries, this situation will work itself out over the next 12 months. But even if it doesn't, we see a few reasons that will be less impacted than most if at all. Let me explain, number one, we have the luxury of finalizing the concept phase for the Ocean is the full knowledge of this situation to our own context in our own partners. This allowed us to make design and supply chain choices that focused on needs to areas of supply chain, if they need supply for chips. For example, we are in-sourcing the weaker control module chipset through our partner, Magna. Another example is in displays, we are also playing a short, is designing the components right now and sourcing semiconductors based on what is readily available. So number two, we always have plans in electrical and computer architecture that is more centralized. We are focused on high-performance domain controllers based on most modern SoCs. So this is to the extent, it’s a general chat with a Mobileye vision systems, the solid-state for the radar sensors, powertrain ECU, 5G connectivity module and these chips are not in short supply. So finally, and probably most importantly in comparison to other startups is our partner network is Magna and Foxconn financially invested in other ability to satisfy demand. We have two partners with deep influence and a vested interest in ensuring supply commitments for all components, not just chips. We've always seen multiple instances where this has helped us. Dan Galves: Thanks Burkhard. Next question is do you have a definite date to begin production of the Ocean? What's your plan to show early prototype version for the vehicle and what government subsidies do you anticipate? Henrik Fisker: Yes, absolutely. We have very high confidence, as I mentioned early in our Q4 2022 SOP next year in fact, the actual SOP date is November 17 next year, if you want to have an exact date. And I'm super confident supported by Magna that we will actually make that big. Secondly, we started initial deliveries, both in U.S. and five key European markets also end of next year. And then more importantly, a full run rate production will happen in the first half of 2023. That's something that no other EV startups have done. And I think quite frankly, will only be possible with somebody like Magna, in terms of demonstrate vehicles. I mentioned already we'll show first production vehicles in November. We're planning then to show it in Europe shortly beginning of next year. And then in Q1 next year, we'll actually get the first journalist and some analysts in the vehicles and drive them, first demonstrate our vehicles and quite frankly both Burkhard and me, we already drove our powertrain. It's unbelievable the powertrain. It actually makes you feel like a Formula One driver because we have some really unique electronics in this powertrain that allows you to handle this vehicle on the limit in such an amazing way. I can't wait for people to try it. It's unbelievable in this class, so I'm super excited about it. Again, remember our vehicles starts at 37,500 in U.S. Now, finally, in terms of subsidiaries we believe we are legible for all the subsidiaries that are available at least the way it is today. And that includes in Europe. And just to give an example in Germany with subsidiaries, our vehicles will be priced to low €32,000. Now, for anybody on this call, you go and take a look at, what'd you get for €32,000 in Germany, and that's including near that total, which has sales tax in Germany, which is pretty high. So that's an incredible competitive vehicle. And that's why Germany is one of the first countries we're going to launch in Europe as well and where we've gotten a lot of orders from already a lot of reservations. Dan Galves: Okay, one more retail question. And then we'll get back to the analyst queue. Fisker is now one of the most-shorted stocks on the market. Does the company have any plan to help protect shareholder value against short selling and manipulation? Geeta Gupta-Fisker: Absolutely. We are only thinking of long-term shareholder value. Now the challenge is there are so many new mobility and EV companies that are using the SPAC method to raise capital. As we've seen in the last few months and several companies along the way have changed their strategies or targets. Now not only the – casting doubt on all EV players, it is also putting everyone in the same bucket. The only differentiator is execution and the ability of an experienced and dedicated company like Fisker to deliver quarter-on-quarter. And we are doing exactly that. Just want to remind everybody that we knew we needed to raise $1 billion. And we did exactly that to de-risk whilst we're not generating any revenue over the next few months. Number two, our original targets are still intact. Our original business model has not changed. We have not changed goalposts and are now based primarily on contracts, not just estimates. Number three, we have kept true to our asset-light business model in a positive way, by signing two partners, to be able to deliver the cars we planned for in our original filing, which is why we have the ability to forecast updated guidance on the PEAR program. Number four, in 2021, our milestone, delivery and spending very much on target with our guidance. We are disciplined. We are an experienced management team that knows what they're doing. So credibility does not happen overnight. And we intend to continue to put out our proof points that we're not part of this crowded startup, inexperienced EV space. And it is no doubt. It will be reflected in our stock price, in the medium, and in the longer term, we care for all our stakeholders and we are building the company for long-term success. Henrik Fisker: I just want to add something what Geeta just said, I know that there's some hedge funds that needs to go out and do some shorting, but I actually feel sorry for the people who's invest in those because it's clear that some of those shorts, they just are very superficial. They don't have deep knowledge of how the complex the automotive industry is. And I think if you spend a little bit of time understanding our business relationship with Foxconn and Magna, you will quickly understand that you stand to lose a lot of money if you show it against Fisker, but hey, that's my opinion and I hope we can prove everybody wrong. Dan Galves: Okay. Thanks Henrik. LI, can we go back to the analyst queue for the last few minutes. And everybody, please limit your question to one, please. Operator: Thank you. Moving on, your next question comes from the line of Jon Lopez from The Vertical Group. Your line is now open. Jon Lopez: Hi, I think so much. I'll hold it to one, but I'm going to do a two-parter if that's okay. I apologize. But I wanted to push your digging a little bit more on powertrain and battery specifically. So sort of Part A here, are you just make sure I'm clear, you're comfortable with commitments both pricing and volume on the sell side, not just through the initial production launch, but all the way through the full volume ramp in 2023. Can you speak to that for a second? And then the second part, just to throw it in, you've talked about comfort in up to 350 miles of range on the higher train versions models of the Ocean. I'm wondering if you can just talk for a second about any sort of range dispersion as we get closer to the base model. Are you willing to start talking to us a bit about range? What it might look like there? Thanks very much. Geeta Gupta-Fisker: I'll take the first part of the question. So what excites me about our powertrain is three things. First of all, we have very high quality suppliers. We're not ready to reveal the names yet. We want to keep it a secret a little bit, but both our partners, suppliers, vendors, our partners on the Ocean program, and we'll be partners on the PEAR program really, really excited. They are committed. They know in fiscal, they have a long-term partner. Second thing, yes, our partners are committed. We are in the testing phase. We are not just in a concept phase on PowerPoints. We're actually in testing phase. We're testing both for the systems on their own. So we are testing dummies, we're testing the systems on their own, and we have plans to testing in the ecosystem, so different views, different prototypes, the PPTs all of those. And then finally, the third thing that really excites me, it's actually the pricing. I think we are at such a good pricing for both the systems, which is in fact at the par as some of the Tier 1 OEMs, and we are fully sourced for both the sell and the drive units. Now I believe on the batteries, we are at a cost position, which is very competitive at the cell levels. The places where I see a father cost an opportunity, which will make us extremely competitive is in pack assembly. As we finalize our legal integration, testing and validation, but we will review more information on both sell and pack infrastructure in due course, once we finalize our localization. I also want to remind everybody that for Ocean, we are looking at Europe and of course, for PEAR program, we are looking at U.S. and both our partners are geared up for both these locations. On range, I’ll pass it on to Burkhard. Burkhard Huhnke: So we believe the 350 mile target for the high-end powertrains very likely because that is what our original powertrain is telling us. We are able to assimilate EVHS cycle and now that the powertrain is fully charged and specked out with all the variables and efficiency rates. That we know we'll be done for next version. So because we completely act as one team and all the non-powertrain engineering groups available. And a six year plan to achieve the aerodynamics and weight targets required to achieve our goals and range mix valuation. So physical testing with production in 10 components, but begins later this year. So the bottom line is challenging targets, but our modeling in our plan is saying, we can achieve them with high confidence. Henrik Fisker: Maybe I can just add to this that when we showed our vehicle originally in beginning of 2020, we had estimated 250 mile range. And again, that comes back to the point. We were able to put newer technology on the vehicle, which is riding out close to 350, in terms of our base car. It hasn't changed, like I said 250 to 300. So the base Todd will be closing on 50 miles, but I think you will see two types of people in the future. Those people who are okay with carrying around the expensive battery, want the range. Now I think you're going to see people who realize that most of the daily commute is 30, 40 miles, and they don't really need to pay for a giant battery pack carried around. Let's not forget sustainability on the environment, caring hundreds of pounds around every day. If you own it go 30 or 40 miles, doesn't really make any sense. So we really see two types of people here ordering our vehicle. Those who probably have less of a need for super long range, and then those who have need for super long, but the super along on we call it the ultra long range is available both in the medium and the top version. So only the base version would have slightly less range are more than adequate. And I think more than most vehicles in the segment. Jon Lopez: Great. Thanks Henrik. And let's try to squeeze one more question, but I have to be pretty efficient, thankfully. Operator: You're welcome. Next question comes from the line of Jeff Osborne from Cowen & Company. Your line is now open. Jeff Osborne: Henrik, all of your comments are about the $37,000 vehicle, but the medium term operating model for the company suggests that the prices will be up in the mid-$50,000 to $60,000. So I didn't know what level of comfort you have that some of the features that you'll be showing at the LA Auto Show and other performance features will be actually what the consumer wants, just especially given in response to your question about environmentalism and the limited range that people need? Henrik Fisker: Yes, I'm fully confident. We have not changed any of that course in fact, only our top vehicle will be over 50,000. I think they'll be very surprised with our first two vehicles. In fact, we have scrapped the base, we call it now the base to sport model, and the second vehicle is the power sport. And the power sport will also be on the 50,000. So we are very comfortable with the equipment we have in the vehicle. We are going to be able to offer additional things with all the updates. But I don't think there's any car out there, any vehicle that's even close to compete with what we are we offering. Dan Galves: Across the range. Okay. Thanks, Jeff. We're out of time. So Li, can you close out the call, please? Thanks everybody for your participation. Thanks for your interest in Fisker. We really appreciate it. Henrik Fisker: Thank you very much, everybody. Appreciate it. Operator: Thank you, presenters. And ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.FSR Ratings Summary
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Fisker Stock Drops 43% on Possible Bankruptcy
Fisker (NYSE:FSR), an electric vehicle startup facing financial difficulties, has reportedly sought the assistance of restructuring advisers to explore the possibility of filing for bankruptcy, according to the Wall Street Journal. After the news emerged, Fisker's stock plummeted more than 43% intra-day today.
The company, which is in danger of running out of cash this year, has appointed FTI Consulting for financial consultancy and the law firm Davis Polk for legal advice regarding the potential bankruptcy proceedings.
Fisker's financial struggles were highlighted last month when it reported $273 million in sales for the prior year, while grappling with over $1 billion in debt.
Additionally, Fisker expressed significant concerns about its future, revealing doubts about its capacity to continue as a going concern. The company is currently in the process of seeking additional capital from investors and searching for a new manufacturing partner in the U.S.
Fisker Stock Drops 43% on Possible Bankruptcy
Fisker (NYSE:FSR), an electric vehicle startup facing financial difficulties, has reportedly sought the assistance of restructuring advisers to explore the possibility of filing for bankruptcy, according to the Wall Street Journal. After the news emerged, Fisker's stock plummeted more than 43% intra-day today.
The company, which is in danger of running out of cash this year, has appointed FTI Consulting for financial consultancy and the law firm Davis Polk for legal advice regarding the potential bankruptcy proceedings.
Fisker's financial struggles were highlighted last month when it reported $273 million in sales for the prior year, while grappling with over $1 billion in debt.
Additionally, Fisker expressed significant concerns about its future, revealing doubts about its capacity to continue as a going concern. The company is currently in the process of seeking additional capital from investors and searching for a new manufacturing partner in the U.S.
Fisker’s Rating Slashed at Evercore ISI
Evercore revised its rating for Fisker (NYSE:FSR) from Outperform to In-Line and set a 12-month price target of $2.00 for the stock. This downgrade follows Fisker's announcement that it has lowered its production forecast from an initial range of 13,000 to 17,000 units to just 10,000 units.
The analysts at Evercore believe that 2024 will be a critical year for Fisker, requiring careful planning to navigate recent challenges. These challenges include risks to the brand's reputation, the necessity of raising additional funds, and the potential dilution of capital. In their note, Evercore ISI analysts expressed concerns about Fisker's execution capabilities and the absence of solid evidence of improved performance.
They described the upcoming year as a "highly precarious tightrope" involving execution challenges, brand risks, the need for capital raises, and the possibility of dilution.
