The Fisker Mansion Is Worth More Than The Fisker Car Company

Henrik and Geeta Gupta-Fisker made themselves billionaires when they listed their EV car company in an October 2020 IPO, and they did what many of us would do if we made billions of dollars: They bought a house. A nice house. A house that currently has a listing price that’s higher than the car company itself.

At the time Fisker IPO’d, the pitch was that it was a potential competitor to Tesla. That’s not quite what’s happened, though even Tesla itself is looking for some wins as it deals with a difficult transition to a robotaxi company amidst an economic slowdown. One way the company thinks it can make money? Bringing its FSD system to China.

Genesis, the Hyundai-owned luxury brand, is doing its darndest to differentiate itself from its more humble roots by becoming more independent. And, finally, let’s end this Monday early edition of The Morning Dump with a quick look at the economy, which is a little mixed.

The Fiskers Live/d In The BoJack Horseman House

If you haven’t seen BoJack Horseman, just know that the Will Arnet-led story of a Hollywood has-been trying to make a name for himself is bleak. It’s a dark sort of humor that can quickly turn from a light chuckle over a silly situation (one of the characters is dating a bunch of kids doing the trenchcoat adult gag) to something extremely grim. It’s also a comedy that’s often best when it isn’t funny at all, as in the almost completely dialogue-less “Fish out of Water” episode.

The most iconic location in the show is BoJack’s modernist Hollywood Hills mansion, which is a character in and of itself. Also, the house looks a lot like this modernist Hollywood Hills house, which is reportedly being listed for $35 million by the Fiskers.

As an observer of, and commenter on, the greater automotive world, I have a hard time resisting the framing: couple’s house is worth more than their car company (thus the headline). But rather than point out all the nice features of the house for the purposes of schadenfreude, I think the more helpful way to observe this is as a bit of an allegory for the EV hype train/ZIRP/SPAC world that allowed this purchase to happen.

Henrik Fisker, if you weren’t aware, is a famous car designer behind a lot of great Aston Martins, BMWs, and other attractive cars. He’s long been a proponent of environmentally friendly cars and started an electric-hybrid company called Fisker Automotive that made one car, the Karma, before declaring bankruptcy in 2013. After a long hiatus, Fisker returned with a new company, also called Fisker (Inc. this time, instead of Automotive), that would be an electric car rival to Tesla and utilize contract-manufacturing.

Fisker decided to go public before making any of its cars via a Special Purpose Acquisition Company or SPAC, aka a Blank Check Company, which is basically a shell company that allows a group to quickly raise money from investors without going through the normal due diligence of going public. Once the investors raise enough, the company is merged with another private company and that merged company is de facto a public company.

SPACs have been around for a while, but they became super popular during the early pandemic, with more than 50% of newly listed public companies in 2020 coming via SPAC according to the Harvard Business Review. That same HBR story has a prescient section:

Today, most SPACs focus on companies that are disrupting consumer, technology, or biotech markets. Some of these firms are speculative, have enormous capital requirements, and can provide only limited assurances on near-term revenue and viability. (Electric-vehicle companies often fall into this category.)

There are many reasons why SPACs were popular, but it does feel like a weird symptom of the ZIRP (zero interest rate policy) era, when central banks made it almost risk-free to borrow huge sums of money in order to try and encourage economic activity.

The Fisker SPAC went up in October of 2021 and was a success. The company was viewed as a potential next-Tesla and was suddenly valued at over $2 billion, which resulted in glowing pieces like this Forbes profile of Henrik and his wife (then COO) Geeta.

Henrik Fisker seems straight from Hollywood central casting for the role of “famous European car designer.” A tall, blonde, handsome 57-year-old Dane, he first became known outside the car world in 1999 for styling a silver, convertible BMW Z8 roadster for Pierce Brosnan’s James Bond in The World Is Not Enough. In the early 2000s he ran Aston Martin’s famed design studios before serving as an early design consultant to Elon Musk’s Tesla. In 2007, he founded Fisker Automotive, which made one of the world’s first plug-in cars, before failing spectacularly six years later.

Now he’s back–and three things are different. First and foremost, he has a vital new partner: his wife, cofounder and Fisker Inc. CFO Geeta Gupta-Fisker. Second, his Los Angeles-based company is public this time around, raising more than $1 billion in an October 2020 IPO. And finally, Fisker’s stock price, up 56% since its debut, has made both Henrik and Geeta billionaires, each worth about $1.1 billion as of Friday’s market close.

Henrik Fisker is a pretty handsome dude, I don’t disagree there. Less than a year after the IPO the couple bought the 11,000-sf house for $21.8 million.

While Fisker had a few things going for it, including a handsome car, the timing was pretty awful. Part of Fisker’s idea was to use contract manufacturing and the existing world of automotive suppliers to bring the cars to life, focusing instead on design and marketing. The pandemic ripped apart the supply chain, and being a smaller customer likely put Fisker at a disadvantage. Once the Fisker cars got to market the two-row EV crossover world was too crowded and a price war in China put the automaker in a difficult pricing position. The surprise Inflation Reduction Act also benefitted certain automakers (Tesla, GM, Ford) over others (Fisker, Vinfast).

Even if the Fisker Ocean launched with zero problems, that deck was already stacked against the company. Unfortunately, the car launched with many problems. The Ocean may be better now, but it’s hard to reverse that headline.

The company’s stock started to fade with other EV brands and, after a long period trading below $1 per share, it was de-listed from the New York Stock Exchange and production was paused. It’s possible the company could avoid bankruptcy, but it’s certainly in a tough position, as Nick Bunkley, who reported on the listing, points out in Automotive News:

Fisker Inc., which the billionaire couple founded in 2016, recently warned that it could file for bankruptcy protection within 30 days unless it can get relief from creditors and enough liquidity to meet debt obligations. The company, which had a market cap of $33.7 million when it was suspended from the New York Stock Exchange in March, recently missed an interest payment and has appointed a chief restructuring officer who works with distressed businesses.

As of this morning, Google Finance shows a market cap (the value of all shares) of $25.31 million, which is a lot less than the listing value of the house.

Elon Musk Visits China

Honored to meet with Premier Li Qiang.

We have known each other now for many years, since early Shanghai days. pic.twitter.com/JCnv6MbZ6W

— Elon Musk (@elonmusk) April 28, 2024

Elon Musk might be kinda bored with being the CEO of a car company, but China is an important market, and so when he got the chance to meet with Chinese Premier Li Qiang he took a break from tweeting nonsense and hopped on a plane.

From the Associated Press:

Chinese Premier Li Qiang told Musk that he hopes the U.S. will work more with China on “win-win” cooperation, citing Tesla’s operations in China as a successful example of economic cooperation, China’s state broadcaster CCTV said on its main evening news program.

For China, Musk is a welcome antidote to the tough talk from U.S. officials, which played out most recently during a visit by Secretary of State Antony Blinken. Li’s remarks also reflect China’s efforts to attract foreign investment to boost its flagging economy.

So this dog-and-pony show is good for China, but how is it good for Tesla?

This time from Bloomberg:

Elon Musk’s quick visit to China paid immediate dividends, with Tesla Inc. receiving in-principle approval from government officials to deploy its driver-assistance system in the world’s biggest auto market.

The US carmaker was granted the approval under certain conditions, according to a person with knowledge of the matter, who asked not to be identified because details of all the criteria aren’t clear. Tesla did manage to clear two of the most important hurdles: reaching a mapping and navigation deal with Chinese tech giant Baidu Inc., and meeting requirements for how it handles data-security and privacy issues.

Isn’t that convenient?

Genesis Declares Independence

If you’re of a certain age and grew up in an American suburb, there’s a non-zero chance that you went to a movie theater and cheered when Bill Pullman gave his big speech in the film Independence Day.

Claudia Marquez, the North American COO of Hyundai’s Genesis brand, doesn’t have to face off with genocidal aliens, but she’s still excited to talk about independence, as she does in this interview with Automotive News.

“When we launched, we needed a lot of support from Hyundai, but now we are growing and every single function that is consumer facing is becoming completely independent,” Claudia Marquez told Automotive News. That includes adding dedicated teams for sales, field operations, marketing and customer experience.

Hyundai Motor North America CEO Jose Muñoz, who is CEO to Genesis in the region, has been vocal about the critical need to build Genesis apart from mainstream Hyundai to compete on the same level as established rivals. That includes the physical separation of dealerships.

I think that’s probably the correct path. Hyundai (and Kia) have a great reputation, but even if everyone knows that a Lexus is also a Toyota, the separation between Lexus and Toyota helps the brand.

Economy Is Mixed Ahead Of Federal Reserve Meeting

A quick and helpful way to keep up with the economy comes in the form of these little weekly summaries from Cox Automotive economist Jonathan Smoke. The U.S Federal Reserve will have its quarterly meeting and it’s a good time to look at where we’re at to try and guess what the Fed will do:

The first estimate of Q1 real GDP performance showed a bigger deceleration in growth than expected, falling to an annualized rate of 1.6% from 3.4% in the fourth quarter. Personal consumption decelerated to growth of 2.5%, a decline from 3.3% in Q4.

Spending on goods also decelerated, falling to a 0.4% decline from 3.0% growth in the prior quarter, while spending on services accelerated further to growth of 4.0% from 3.4%. Accelerating residential investment drove a 3.2% increase in private domestic investment despite declining inventories. Government spending decelerated in Q1 but remained positive. Exports increased less than imports, so net exports were also a drag on growth. Real GDP growth year over year decelerated to 3.0% from 3.1% previously.

GDP price measures, which are quarterly but consistent with the monthly PCE measures that the Fed follows closely, showed troubling reacceleration in inflation as the GDP price index grew 3.1%, up from 1.6% in Q4. The core price index accelerated to 3.7% from 2.0% in the prior quarter.

There was a brief moment last year when inflation seemed to wane considerably and there was hope that the Fed might lower rates, but that seems a distant memory today. This impacts car buyers as higher interest rates have contributed to higher financing costs.

What I’m Listening To This Morning

Rubblebucket is a weird band, but there’s something about that voice and those horns. Also, this appears to be a 360-degree music video for some reason.

The Big Question

The Fisker mansion is a three-car garage, but it has 20-foot ceilings so it can fit six cars. What’s the minimum acceptable number of garage spots for a house that costs more than $30 million?