Fisker (FSR.N), an electric car startup, reported a lack of internal controls over financial reporting and lowered its production projection for 2023 on Monday. As a result, the company’s shares fell 14% after the bell.
Fisker reduced its initial estimate of 20,000 to 23,000 electric car production in 2023 to 13,000 to 17,000 vehicles to ensure that the firm does not accumulate excess inventory and better manage working capital.
Chief Financial Officer Geeta Fisker stated on a conference call following the company’s earnings, “This may be short-term pain, and it may not be something that Wall Street wants to hear, but it is extremely responsible for us, and it is essential for us that we do this for the long term.”
Fisker said on Monday that even though the supply chain has steadied, it still anticipates “the occasional bottleneck” from a few suppliers moving forward. Fisker had previously lowered its production projection in August, attributing the reduction to a crucial supplier who needs additional time to boost capacity.
Fisker’s most recent decrease comes amid concerns about a downturn in the demand for electric vehicles (EVs). Elon Musk, the CEO of market leader Tesla (TSLA.O), has warned that high interest rates—intended to combat stubborn inflation—hurt consumer confidence. At the same time, Ford (F.N.) and General Motors (GM) have also expressed caution.
The manufacturer of luxury electric vehicles, Lucid, cut its production estimate last week to accommodate the fewer deliveries.
Last month, Fisker reduced the price of its luxurious Ocean Extreme SUV, joining competitors in a profit-stealing pricing war that Tesla had started to boost demand.
Although Fisker acknowledged the effect of high borrowing rates on consumer purchasing, it maintained that its delivery and service infrastructure, not production and demand, was its primary source of limitation.
CEO Henrik Fisker stated on the call, “We have not been able to follow through with deliveries fast enough.”
“People have paid and are waiting for their cars, and some of them are really getting annoyed,” he stated. To increase delivery, Fisker recruited 20–30 people each week, expanded its logistics network, and built additional facilities.
More than the 1,097 cars it delivered in the third quarter, Fisker reported paying for 1,200 automobiles in October and predicted to have even more this month. However, revenue for the third quarter came in at $71.8 million, less than experts had expected, and there was a larger-than-expected loss of $91 million.
Fisker announced on Monday that it has “determined that it has material weaknesses in the company’s internal control over financial reporting.” Fisker had postponed its results until November 8 due to the resignation of its previous chief accounting officer.
Fisker claimed that the company was employing professionals to better handle the difficulties, which involved complicated accounting in many countries, including convertible notes, derivatives, raw materials, and finished product inventories in the contract production of its automobiles.
