Fisker Faces Chapter 11 Bankruptcy

Earlier this month, Fisker recalled 6,864 of its Ocean SUVs due to an issue with the Motor Control Unit (MCU), which could cause the vehicle to lose drive power. This problem can be fixed with an over-the-air software update. Just days after announcing the recall, Fisker filed for Chapter 11 bankruptcy protection. In their filing, the company mentioned they are working with stakeholders to secure financing and arrange the sale of their assets.

On Monday, Fisker became the second electric vehicle manufacturer in the past year to file for Chapter 11 bankruptcy protection, following Lordstown Motors. This development came less than two weeks after the recall of almost all 2023 Ocean SUVs because of the MCU issue. The Ocean is currently the only model that Fisker produces and sells.

In a statement on Monday, Fisker explained that, like many companies in the electric vehicle industry, they have faced various market and economic challenges that have affected their operations. After considering all options, Fisker decided that selling their assets under Chapter 11 was the best path forward.

Fisker’s statement also mentioned that a previously announced pause in manufacturing would continue indefinitely. During this period, the company hopes to maintain limited operations. This includes paying employee wages and benefits, supporting certain customer programs, and compensating essential vendors while working on selling assets and restructuring debt.

Fisker was relaunched in Manhattan Beach, California, in 2016 by automotive designer Henrik Fisker, who has been the company’s chairman and CEO since then. After going public in 2020, Fisker received a warning from the New York Stock Exchange earlier this year when its stock price fell below $1. In February, the company laid off 15 percent of its workforce and issued a grim outlook on its future. These layoffs were followed by a pause in production and significant price cuts for the Ocean SUV as the company sought additional funds. According to the Chapter 11 announcement, Fisker Inc. and its other U.S. subsidiaries, as well as subsidiaries outside the U.S., are not included in the bankruptcy filing.

The recall of all 2023 Ocean SUVs was reported to the National Highway Traffic Safety Administration (NHTSA) on June 5, less than two weeks before Fisker filed for Chapter 11 protection. The recall was due to a software issue in the MCU and the Vehicle Control Unit (VCU), which could cause the Ocean to enter a fail-safe mode unexpectedly, resulting in a loss of drive power.

Documents related to the recall indicate that all the affected vehicles have defective MCU and VCU software. This defect could cause the car to automatically shift from Drive to Neutral to Park when coming to a stop, requiring a power cycle to fix the issue. Fisker plans to resolve the problem with an over-the-air update for both the MCU and VCU.