July 21, 2024

Fisker’s Bankruptcy Resulted from a Series of Comical Mistakes

Greetings! It’s a bright Thursday morning on June 20, 2024, and welcome to The Morning Shift, your daily source for the latest automotive news from around the globe, all in one spot. Here are the key stories you should be aware of.

1st Gear: Fisker Made Missteps At Every Corner

When Fisker declared bankruptcy earlier this week, the now-defunct car manufacturer did everything except acknowledge its own errors. It commended itself for achieving “remarkable progress” and fulfilling promises before attributing its downfall to “various market and macroeconomic challenges” affecting the electric vehicle industry as a whole.

While the slowdown in EVs didn’t help its situation, it was far from the only reason Fisker met its demise, even though it had a better chance than most to succeed. According to Bloomberg:

Henrik Fisker and his wife, Geeta Gupta-Fisker, were fortunate four years ago when investors seemingly forgot the challenges of starting and sustaining a car company due to the Covid-19 pandemic’s unusual effects on the stock market. Fisker’s second venture into plug-in cars exemplified this. The company was struggling financially in early 2020, with the founders forgoing pay and furloughing employees. However, they struck gold when SPACs began offering large sums to EV startups.

Without revenue, but armed with significant funds, Fisker struck a deal with a SPAC sponsored by Apollo, bringing in about $1 billion in cash. This led to a partnership with Magna, a Canadian auto-parts manufacturer.

On the surface, Fisker appeared to have a major advantage over other new carmakers. They didn’t have to worry about building a factory, as Magna’s Austrian facility would handle production. However, the early Ocean cars were lacking in basic features like cruise control and required ongoing updates.

The situation took a turn for the worse when automotive sales revenue only began trickling in last year. Fisker struggled to handle customer payments, lost track of funds, and faced investigations into vehicle defects. Despite these challenges, the company blamed external factors for its downfall, resembling a petulant child refusing to acknowledge its mistakes. This may not bode well for Henrik’s future ventures.

2nd Gear: Toyota Shareholders Growing Concerned About Akio Toyoda

Over a quarter of Toyota shareholders expressed opposition to reappointing Chairman Akio Toyoda to the board. This indicates a rising discontent with Toyota’s corporate governance following Toyoda’s transition from CEO last year.

Toyoda was eventually reelected to the board with 72 percent of the vote, a notable decrease from previous years. Proxy advisers had urged investors to reject Toyoda, citing governance issues and lack of independent directors on the board. Despite the certification problems affecting Toyota, the stock price remains strong, largely due to the success of hybrid vehicles.

Some shareholders feel Toyoda retains excessive control over the company, even after appointing Koji Sato as CEO. When questioned about corporate governance, Toyoda and Sato affirmed Toyoda’s ultimate responsibility.

A Toyota spokesperson commented on Toyoda’s diminished support:

“We view this year’s approval rate at the shareholders’ meeting as valuable feedback from institutional investors.”

3rd Gear: EU Requests Extensive Data on Chinese EVs

China’s commerce ministry has reported that the European Commission requested a significant amount of detailed information from Chinese automakers regarding their supply chains during an investigation into subsidized electric vehicle imports. This request led to additional duties on Chinese EVs, sparking tensions between the two parties.

The EU’s request for information was described as “unprecedented” and went beyond what is typically necessary for such investigations, according to the Chinese commerce ministry. The Commission sought data on raw materials sourcing, manufacturing components, pricing, and sales channels from Chinese automakers.

European automakers are facing stiff competition from lower-cost Chinese EVs, posing a challenge as these vehicles are priced 20% lower than their EU counterparts.

4th Gear: Toyota Halts Production on Six Lines

Toyota has announced the suspension of production on six lines at five plants in Japan due to a parts shortage. Further details about this decision are currently limited.

The automaker will assess whether to resume production on these lines by Friday, June 21. The specific part causing the shortage and the impacted vehicle models remain undisclosed.

Toyota has faced challenges with its production lines in the past, including plant shutdowns due to emissions test scandals and system failures.

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