Electric vehicle startup Fisker (FSR.N) faced significant challenges as it lowered its 2023 production forecast to 13,000 to 17,000 vehicles, down from the previous estimate of 20,000 to 23,000, in a move aimed at preventing excessive inventory buildup and improving working capital management.
This decision, while causing a 14% drop in its stock price after trading hours, was described as a responsible long-term move by Chief Financial Officer Geeta Fisker.
The company had previously revised its production forecast in August due to delays caused by a key supplier’s capacity issues.
While the supply chain situation has improved, Fisker expects occasional bottlenecks from certain suppliers moving forward.
This production cut coincided with concerns of a potential electric vehicle demand slowdown, with Tesla CEO Elon Musk attributing it to high interest rates affecting consumer sentiment, and Ford and General Motors expressing caution.
Last week, luxury EV maker Lucid also reduced its production outlook to match lower delivery expectations.
To stimulate demand, Fisker recently lowered prices for its high-end Ocean Extreme SUV, following a pricing strategy trend initiated by Tesla.
The primary challenge for Fisker appears to be its delivery and service infrastructure rather than production capacity or demand.
CEO Henrik Fisker acknowledged that customers were experiencing delays, attributing them to operational constraints.
The company is actively working on improving this aspect, with efforts including hiring 20-30 new employees weekly, collaborating with more logistics partners, and opening new facilities.
In October, Fisker managed to deliver 1,200 vehicles, exceeding the third-quarter delivery count of 1,097, and aimed to increase deliveries further in the current month.
However, the third-quarter results were below analysts’ expectations, with revenue at $71.8 million and a larger-than-expected loss of $91 million.
The release of these results was delayed due to the departure of the former chief accounting officer.
On Monday, Fisker revealed the presence of material weaknesses in its internal financial controls, attributed to complex accounting issues in various countries, including convertible notes, derivatives, and inventory management for its contract-manufactured vehicles.
The company intends to address these issues by hiring experts.
Despite these challenges, Fisker remains committed to its long-term vision and aims to navigate the current difficulties to establish itself as a prominent player in the electric vehicle industry.