Tesla-rival Fisker CEO touts ‘totally different business model’ after IPO launch
- Electric auto maker Fisker became a public company on Friday as part of a SPAC reverse meger.
- The company has no revenue and won't have a product to sell until 2022.
- Company CEO went on the offensive in an interview and explained it is a car company built for the future.
Fisker (NYSE: FSR) is a maker of electric vehicles that traded for the first time on a public market on Friday. The initial public offering was part of a growing wave of special purpose (SPAC) reverse mergers that dominated the markets in recent months.
Fisker traded for the first time on the New York Stock Exchange Friday as part of a SPAC reverse merger with Spartan Energy Acquisition (NYSE: SPAQ). Fisker will raise $1 billion as part of the IPO process and will allocate the funds towards manufacturing its first product, the Fisker Ocean electric SUV.
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Fisker currently doesn’t have any working products and is in the pre-revenue stage. On Friday, Fisker CEO Henrik Fisker was a guest on CNBC’s “Squawk on the Street” to make the case why investors should bother considering a company that is still two years away from launching a product.
Want to read about other SPAC deals in 2020? Here is a January report that details Far Point Acquisition’s purchase of Swiss payments company Global Blue as part of a $2.6 billion deal.
There are less than 2 million electric vehicles that are sold across the world yet the market size could be as high as 80 million vehicles, Fisker said. The market is currently experiencing a gradual uptick in demand but will “explode” in 2022 or 2023.
Fisker, the former President and CEO of BMW Designworks USA, said the company is being very transparent about its multi-year progress. The company has completed manufacturing prototypes of its vehicle and is on track to show the world its final vehicle next May.
The future of a car company
The company is focused on creating today the “future of a car company” that offers consumers an entirely new digital experience, the CEO said. On the production end of the equation, Fisker has partnered with Magna, the third-largest auto supplier.
Partnering with Magna eliminates all the “pain” associated with manufacturing a car in-house, he said. This also implies that Fisker can remain an asset-light business that can focus on what it does best: next-generation software and design and create a superior customer experience.
The partnership calls for the production of 50,000 vehicles in the first year and this will help Fisker become cash flow positive. In exchange, Magna will assume a 6% ownership stake in Fisker.
“That’s a totally different business model than anyone else has out there,” he said.
The reality is it takes two or so years to make a car and the process can’t be sped up, he said. But it is easier to build a car from scratch today than it was just 10 years ago as automakers today have access to resources that didn’t exist before, such as proven battery makers with years of experience.