Fisker’s staff was in chaos as they prepared to deliver the company’s first batch of electric cars to US customers.
It had been four years since famed automotive designer Henrik Fisker unveiled his Tesla rival, an SUV called the Ocean, and the vehicle still wasn’t ready.
In the weeks leading up to the big June 2023 event, Fisker staff raced to fix faulty parts on at least four of the 22 EVs that were set to be delivered — even stripping parts off the CEO and CFO’s personal cars to repair the vehicles, including door handles and seat sensors, according to 11 sources familiar with the incident.
Two days later, Fisker board member Wendy Gruel’s Ocean SUV, one of the cars that had been delivered at the event, shut off on a public road while going full speed, five sources said. Later, the same thing happened to Geeta Gupta-Fisker, Henrik’s wife and the company’s CFO and COO, workers said.
A Fisker spokesperson denied that workers used parts from pre-production vehicles for customer cars and said Gruel’s car didn’t stop on a public road. The company said Gupta-Fisker’s vehicle had malfunctioned, but the issue was resolved.
When TechCrunch previously reported the incident with Gruel’s car, the publication said the company had confirmed the incident and said the issue was fixed.
The issue was unrelated to Fisker’s part swapping, but one thing was clear: the electric cars had barely hit the road and already the problems were piling up.
Henrik Fisker’s EV startup seemed to be an easy sell at first. The 60-year-old automotive veteran boasts a long history in the industry, known for being the designer behind the Aston Martin V8, the BMW Z8 roadster that famously appeared in a 1999 James Bond film, and helping design Tesla’s Model S.
Even though it was Henrik’s second automotive startup after his first company went out of business in 2013, some workers told Business Insider that it was easy to dismiss worries early on that his second company could meet the same fate.
For his part, Henrik said he planned to do things differently this time. He would follow Apple’s model by outsourcing production through Magna International and he also aimed to target the middle of the market with a more affordable EV option that could compete with Tesla’s best-selling Model Y. Fisker Inc emerged in 2016 and went public in 2020 via a SPAC backed by Apollo Global Management. At one point, the company’s market value soared as high as $8 billion.
At the time, Fisker was one of several EV startups to burst onto the scene — Rivian, Lucid, and Lordstown all wanted the chance to compete with Tesla. Since then, production and market headwinds have pushed some EV startups to shutter and major players like Ford and GM to scale back their electric-vehicle operations. Even Tesla has struggled, seeing revenue decline and layoffs.
“I was hopeful at first,” one former VP, who worked at both Fisker startups, said. “Initially, at least, it seemed like he’d learned from his mistakes. It became obvious later on that they hadn’t.”
A Fisker spokesperson said it would be “unfair” to compare the two companies.
Today, the company is fighting for its life, pulling out all the stops in an effort to avoid bankruptcy.
Business Insider spoke with over two dozen current and former Fisker employees who worked at the startup during various periods from its launch in 2016 to the present. The workers, whose identities are known to BI, requested anonymity as they were not authorized to comment on Fisker’s behalf and feared professional reprisal.
A husband and wife duo who workers say mismanaged their way into a mess
Many of Fisker’s woes can be traced back to the husband-wife duo that launched the brand, multiple former and current workers told BI.
They described a disorganized environment in which unqualified people were brought in to lead major programs and basic automotive standards were ignored.
While Henrik often served as a figurehead, Gupta-Fisker was heavily involved in everyday decisions, including on the engineering side, 11 workers said. Prior to taking on the role of CFO and COO at Fisker, Gupta-Fisker had served as an investment manager for the Fisker family office and as an advisor at a nonprofit. She had no prior experience in the automotive industry. But at Fisker, the workers said she managed deals with Magna and outside parts suppliers, frequently popped into engineering meetings, and weighed in on everything from parts purchases to software decisions.
A spokesperson for Magna declined to comment on Fisker. A Fisker spokesperson denied comments that Henrik took on a more passive role and said he was “deeply involved.”
49-year-old Gupta-Fisker quickly became known in the company for her shrewd cost-cutting abilities. But, her strategy meant that at times Fisker ended up using components that didn’t match the correct specifications for the Ocean, five former and current workers said. Gupta-Fisker made several decisions to use cheaper parts against Fisker executive and Magana executives’ advice, two workers said. The mismatches led to issues with over-the-air updates, the five workers said.
The company said Magna oversaw the majority of parts sourcing and a “significant” amount of the parts came from Magna and its suppliers.
In conversations with BI, staff blamed many of the Ocean’s faults on the cost-cutting efforts.
Several workers said that in the months leading up to the vehicle’s launch, they filed internal reports recommending that the product undergo further testing and development before its release. They said they were told the company planned to proceed anyway.
“The focus was on getting the car to market as soon as possible,” one former worker said. “The overarching belief was we could fix things with updates later on.”
A Fisker spokesperson said Magna was responsible for testing and releasing the Ocean and it had been fully certified by regulators in the US and Europe. The company has been sending out over-the-air updates since 2023, the company said.
Ahead of the release, Fisker engineers were aware of multiple issues with the vehicle, according to five current and former workers, as well as internal documents viewed by Business Insider. Engineers had identified issues with the effectiveness of the car’s door handles, key fobs, and seat sensors.
Over the past year, the National Highway Traffic Safety Administration (NHTSA) has launched four investigations into Fisker’s SUV, including issues with inadvertent braking and flaws in the vehicle’s door latch system. The company said it is cooperating with NHTSA.
Fisker has also faced dozens of lemon law lawsuits.
Cutting corners led to compounding issues
In its haste to bring the car to market, Fisker failed to set up an effective system for processing repair orders and warranty claims, seven current and former workers said. Technicians were tasked with filling out the work orders and many of them said they hadn’t been trained on the process.
In lieu of a working warranty system, some workers began processing the repairs without the proper California Bureau of Automotive Repair codes and EPA license numbers, using “123456” as a placeholder on a number of repairs, according to an internal document viewed by BI. In March, a VP at Fisker warned the issue made the company non-compliant with NHTSA protocols and unable to properly track and report safety concerns.
A Fisker spokesperson said the issue was “an internal error with only draft work orders early in the service process that was immediately corrected.”
Without a proper system to process warranties or repair orders, the majority of repairs went unaccounted for, seven current and former workers said. That meant there wasn’t an adequate way for Fisker to keep track of which parts were being used for repairs for its own financial records. It also meant many customers did not get a record of their repairs, workers said.
Meanwhile, Fisker also struggled to find the necessary parts for all of the fixes. The company hadn’t set up much inventory for aftersales parts, so some of the parts used for customer fixes either came directly off the factory line, meaning they were meant for production vehicles, or the parts were stripped off pre-production and production vehicles, 11 workers with knowledge of the issue said.
In one instance, Fisker stripped parts off an engineering test vehicle that had been shipped from Magna’s facility in Graz, Austria under an import bond, according to three former workers and emails viewed by BI. The vehicle was supposed to be destroyed in its entirety shortly after it was delivered to comply with the terms of the import. This is typically within a year, according to NHTSA, but the period can be extended in one-year increments up to 3 years. The vehicle’s parts were not intended to be used for customers’ cars.
The company denied any test vehicles had been used for parts and said all vehicles that had been imported for testing were destroyed under NHTSA’s supervision within the allotted time period.
The spokesperson also denied that Fisker had a shortage of after-sales parts: “The Service department made its own forecast for parts, based on their sector knowledge. The Purchasing department supported those requests.”
Fisker staff also looked for clever ways to address the parts shortage. In some instances, workers who visited Graz were told by managers to bring parts back in their suitcases to avoid paying import fees, seven workers said. One worker recalled having to leave personal belongings behind to fit air vents and key fobs into their luggage; another said they packed a larger bag to fit trim panels.
Fisker declined to comment on the claims.
A sales scramble amid negative reviews and vanishing demand
Fisker was initially successful in generating interest in the Ocean, with over 65,000 reservations initially placed.
But in the year since the Ocean’s release, the company has delivered around 7,000 vehicles, a Fisker spokesperson said. Negative reviews — including YouTuber MKBHD calling it the “worst care I’ve ever reviewed” — took a toll on the brand, driving thousands of would-be customers to cancel their reservations.
In November, Fisker moved to bring in hiring recruiters to help sell the vehicle, as well as orchestrate the delivery of the car after the sale had been processed, six former workers said. In many cases, the recruiters, who had initially been brought onto the human resources team, had zero experience in automotive sales.
A Fisker spokesperson said that recruiting staff did join the sales efforts, though the company said they were asked to stay because they were successful in the new role.
Selling the car wasn’t easy either. The recruiters found themselves directly competing with the company’s established sales team and there weren’t enough leads to go around. Four former workers said Fisker’s reservation numbers included many duplicate names in its count and it was difficult to track which customers had connected with a sales worker. As a result, some people on the reservation list would find themselves getting multiple calls per day from different Fisker representatives.
At one point, sales workers were instructed to target customers who had canceled their orders and pepper them with calls in an attempt to get them to reverse their decision, three former workers said.
Fisker also began hosting pop-up events to boost sales, including events in partnership with fan blog Fiskerati, two former employees told BI. The events varied from meetups at Panera parking lots to larger-scale test drive events. In at least one instance, the event was shut down after Fisker failed to get permission from the owner of the location, the two sources said. Queues of Fisker owners that needed repairs also showed up at the events, three former workers said. Fisker told BI that the event hosted at Panera was not a company event.
“Sometimes it was hard to sell the cars when you’d take someone on a test drive and any number of error messages would pop up,” one former worker from sales said. “As time went on and it became clear the writing was on the wall, we became even more honest with the customers on the risk,” they added.
Fisker said it was aware of the ADAS issues but it was fixed with an update.
Meanwhile, some customers who’d canceled their orders and never paid for the car ended up mistakenly receiving delivery of the vehicle anyway, four former workers said. Former Fisker Ocean owner Kurt Mechling told BI he received delivery of the vehicle before he’d signed off on the order or had his payment successfully processed.
In March, TechCrunch reported that Fisker temporarily “lost track of millions of dollars in customer payments” for multiple months. Four workers with knowledge of the issue confirmed to BI the incident involving misplaced payments occurred.
When the carmaker conducted an internal audit in December over the issue, workers began scrambling to find the missing payments and bring some of the vehicles that had been mistakenly delivered back, the workers said. Some workers were encouraged by upper management to threaten the customers by saying they’d put them on a repossession list which could impact their credit score, the former workers said.
A Fisker spokesperson said the company had an “organized process” to address issues with vehicles that had not been paid for that was in line with industry standards.
Facing the threat of a repeat bankruptcy
Over the past year, Fisker has dropped prices by as much as $24,000 for some versions of the vehicle.
The company warned in March that it might go out of business within the year. The stock was delisted from the New York Stock Exchange in April after it fell to 9 cents per share. Fisker warned staff in an April filing that they will be laid off if the company can’t find a buyer or additional investor. The company brought in a chief restructuring officer who was given “sole authority” over some financial matters, including a potential sale, as part of an agreement with one of its investors.
Layoffs have stripped the staff to the bone. Its workforce is now less than 100 people, according to two sources with knowledge of the issue. Many of the workers who remain are involved in last-ditch efforts to offload Fisker’s remaining inventory, the people said.
The company said it does not have less than 100 workers left and continues to sell vehicles in the US and in Europe. It declined to specify how many workers remained.
Meanwhile, workers have been dissatisfied with what they view as Henrik and Gupta-Fisker’s inability to take accountability for their actions. A Fisker spokesperson pushed back on the comments questioning Henrik’s business prowess.
“I think it’s a story of ego. He wanted to make a car and stamp his name on it. Henrik is a great designer, but he doesn’t have the business acumen beyond that,” an individual who worked with Henrik at several companies, including his first automotive startup. “The lessons he should have learned from the first startup were never implemented and he rushed a car to market once again.”
For Henrik, finding a buyer or cash infusion could partially salvage a reputation that has taken a hit over the past six months. Without a rescue, the automotive veteran faces the prospect of a nightmare scenario: back-to-back bankruptcies.
June 12, 2024: Added clarification that NHTSA requires temporarily imported vehicles to be destroyed within 3 years and that Fisker said it had done so within the allotted time period.
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