Fisker, the California-based EV startup renowned for its Ocean SUV, disclosed that it built over 10,000 cars in the past year. However, a significant hurdle emerged as the company struggled with its direct sales approach, resulting in the delivery of fewer than half of the produced vehicles.
This intriguing development, reported by Reuters on Jan 26, 2024, sheds light on Fisker’s journey and its shift towards a dealer-partner model.
The undelivered cars, most of which have been pre-paid by eager customers, hold a staggering value of approximately $290 million, according to Fisker. Last year, around 4,700 Ocean SUVs were successfully delivered, showcasing a considerable gap between production and delivery. This discrepancy prompts a deeper examination into the factors contributing to Fisker’s challenges.
Direct Sales Setback
Fisker’s direct sales approach faced a setback as inventory piled up in 2023, causing the company to rethink its strategy. Despite initial optimism, the company acknowledges the need for a shift in its business model to efficiently manage its inventory and meet customer expectations.
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Acknowledging the limitations of its direct sales model, Fisker now plans to empty its inventory by the end of the first quarter in 2024. The company is strategically involving dealers to facilitate this process, signaling a shift from its prior approach. This shift comes after the automaker cut production output in December 2023 to prioritize liquidity, emphasizing a commitment to financial prudence.
Managing Production Targets
Fisker’s production targets for 2023 experienced a series of adjustments, starting with an ambitious goal of nearly 42,400 vehicles. However, challenges led to successive reductions, ultimately culminating in just over 10,000 units built by the end of the year. This volatility in production targets highlights the adaptability required in the ever-evolving electric vehicle market.
Dealer Franchise Experiment
In response to the challenges faced, Fisker is actively exploring the dealer franchise model. Over 100 dealers in the United States, Canada, and Europe have expressed interest in becoming Fisker dealers. The company aims to strike a balance between dealer sales and its direct approach, emphasizing the strategic decision-making process.
Henrik Fisker, the company’s CEO, shared insights into the decision-making process. He highlighted challenges such as high-interest rates, expensive real estate, and training complexities. Fisker acknowledged a realization that redirecting resources towards dealerships could expedite the company’s expansion.
Future Steps: A Glimpse into 2024
To jumpstart the dealer franchise experiment, Fisker plans to host dealers at its headquarters and participate in the National Automobile Dealers Association (NADA) show in early February. These initiatives underscore the company’s commitment to forging strong partnerships with dealers as it navigates the dynamic electric vehicle market.
In conclusion, Fisker’s journey in 2023 was marked by production challenges and a strategic shift necessitated by the direct sales model’s limitations. The company’s transition to a dealer-partner model in 2024, coupled with its efforts to engage potential dealers, signifies a proactive approach to overcome challenges and align with the evolving landscape of the electric vehicle industry.