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Fisker Files for Chapter 11 Amidst Recall Crisis and Financial Struggles

Fisker Files for Chapter 11 Amidst Recall Crisis and Financial Struggles
Fisker Files for Chapter 11 Amidst Recall Crisis and Financial Struggles (Fisker)

Fisker, the electric vehicle manufacturer, filed for Chapter 11 bankruptcy protection on Monday, becoming the second company in its sector to do so within the past year, following Lordstown Motors.

This decision comes shortly after Fisker issued a recall for all 2023 model-year Ocean SUVs, totaling 6,864 vehicles, due to a critical issue with the Motor Control Unit (MCU). The MCU problem could cause the vehicle to unexpectedly enter fail-safe mode, resulting in a loss of drive power.

In a statement, Fisker cited various market and macroeconomic challenges that have hindered its operational efficiency, leading to the conclusion that Chapter 11 bankruptcy and the sale of assets were the most viable paths forward. The company emphasized its commitment to maintaining reduced operations to continue paying employee wages, benefits, and essential vendor expenses during the restructuring process.

Founded or relaunched in 2016 in Manhattan Beach, California, by automotive designer Henrik Fisker, the company went public in 2020. However, its financial woes were exacerbated this year when its stock price fell below $1, prompting a warning from the New York Stock Exchange. Earlier layoffs and production halts followed, alongside significant price cuts on the Ocean SUV as Fisker sought additional funding.

Fisker Files for Chapter 11 Amidst Recall Crisis and Financial Struggles

Fisker Files for Chapter 11 Amidst Recall Crisis and Financial Struggles (Fisker)

Despite the Chapter 11 filing, Fisker Inc. and its U.S. and international subsidiaries outside the bankruptcy filing remain operational for now. The recall of all 2023 Ocean SUVs was reported to the National Highway Traffic Safety Administration (NHTSA) just days before the bankruptcy filing.

The issue, related to faulty MCU and Vehicle Control Unit (VCU) software, necessitates an over-the-air update to resolve the software glitch that causes the vehicle to shift unexpectedly from Drive to Neutral to Park.

Fisker’s bankruptcy filing underscores the severe financial and operational challenges faced by the company amid a competitive and rapidly evolving electric vehicle market.

The recall of its entire 2023 Ocean SUV fleet due to critical software issues further highlights the difficulties in maintaining product quality and customer confidence. As Fisker navigates through Chapter 11 proceedings, the company aims to stabilize its operations and financial position while continuing to support essential business functions and customer commitments.

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