The People Who Actually Build Fiskers Don’t Expect To Make Them Anymore

Merry Christmas, Lizards! My challenge today is to share some positive electric car news because it’s been a little bleak around these parts lately. And I will do that. But first, I’ve got to talk a little bit about Fisker and Tesla, and neither of them are exactly good news factories. Hell, Fisker doesn’t have a factory at all.

And that’s part of the problem. Fisker utilizes contract manufacturing, which seemed like a good idea at the time, but brings with it its own problems. One of those is that its contract manufacturer, Magna, is a public company and therefore has to report honestly what’s going on with its business to its shareholders.

Tesla’s problem isn’t that it has too little manufacturing but, given its current product mix and the market, probably too much of it, at least momentarily. This is leading Elon Musk to cut pretty deeply as the company engages in more layoffs.

So what’s the good news? Chinese/Swedish company Zeekr is going to IPO and so far it seems to be going well for the EV automaker that most sounds like it was named by Nick Denton. And, finally, in non-EV news it looks like Penske is going to build out a facility to help automakers build special cars. We love special cars.

Magna Assume ‘No Further Production”

There’s an argument to be made that the Inflation Reduction Act picked winners and losers, mostly because the IRA…picked winners and losers. The winners are the established American car companies with production somewhere in the USMCA zone (US, Mexico, Canada) and access to certain components sourced from outside China. The losers are everyone else.

That’s not quite fair. President Biden essentially slapped departing Senator Joe Manchin by thanking Manchin for helping to pass the IRA and then immediately making concessions to allies by allowing ‘leases’ to qualify for the full $7,500 discount. So automakers that can pull off major lease programs (Hyundai/Kia, especially, but also the Europeans) are not the biggest losers.

The biggest loser might be Fisker. This isn’t to say that Fisker would have made it work, given the problems with the cars, but someone smarter than me is going to look at the pull-forward effect of  the IRA and my sense is we’ll see that the IRA had a huge temporary shift on the EV market.

Specifically, my guess is that the early period allowed a huge number of certain cars to qualify for the $7,500 (Tesla, GM, Ford) and this caused buyers who were potentially in the market for an EV to get off the fence and just buy a car. This had the double-whammy result of taking away potential buyers for EVs from other automakers and also making those EVs $7500 cheaper.

Fisker’s whole concept was to be focused on design and marketing and let someone else (in this case Magna International) actually build it. This was a great idea, in theory. Magna already makes plenty of cars for other people and can do so more efficiently than Fisker ever could, plus this lowers the initial financial outlay.

It didn’t work for reasons we’ve covered here, even though I think it could have worked. But the IRA and the pandemic put up too many obstacles. And now Magna, in its quarterly call with investors had to put it all out there. From the company’s CEO Swamy Kotagiri:

It is important that I provide an update on our current status for the Fisker Ocean program. Production of the vehicle is currently idled. Our current outlook issued today assumes no further production. Consistent with disclosure, we provided in our annual information form, this assumption reduces our 2024 sales by about $400 million and impacts our adjusted EBIT margin by about 25 basis points. We fully impaired our operating assets and warrants in the first quarter totaling $294 million. We have $195 million in deferred revenue associated with the Fisker contract that could offset the $294 million in asset impairments that cannot be recorded in Q1. This amount will be recognized in income as performance obligations are satisfied or upon termination of the fiscal contract manufacturing agreement. In order to mitigate the impact of the lower sales on this program, we recorded additional restructuring costs of $22 million in the quarter. We continue to monitor the situation, and we’ll evaluate opportunities to further mitigate the impact on our business.

At some level, Magna has to assume it isn’t going to be building more Fiskers as the Fisker is talking to bankruptcy lawyers and has already paused making cars. Still, this little bit stuck out to me:

We have $195 million in deferred revenue associated with the Fisker contract that could offset the $294 million in asset impairments that cannot be recorded in Q1.

If there is a bankruptcy… I have a good sense of which company think it’s at the front of the line to get paid.

Tesla Plans To Lay Off 10% Of Workforce But… Maybe Closer 20%?

If you want a good wrap-up of WTF is going on with Tesla I will direct you to this post. Needless to say, the automaker thinks it needs to cut costs in order to maintain margins and is doing so pretty ruthlessly. The timing of this alongside Musk asking for the biggest paycheck in human history is, uh, interesting, but I’m not quite well-versed enough in Deleware Chancery Court contract law so I’ll just let that one simmer for a minute.

Either way, Tesla said it would cut back 10%, but based on its behavior (like cutting the bulk of the Supercharging team) it might be aiming a little higher. At least that’s what Electrek thinks:

However, we reported prior to the announcement that the layoffs could be closer to 20% of the workforce once everything is said and done.

Sure enough, Tesla had another significant wave of layoffs last week.

Now, we hear of yet another round of layoffs at Tesla.

Several sources familiar with the matter told Electrek that workers across several departments, including software, service, and engineering, have received the dreaded “employment status” email between Friday and Sunday.

Layoffs suck. I’m sorry if you work at Tesla and this happened to you. I think The Autopian will always be like 10% understaffed because I can’t bear to do another round of media layoffs (don’t forget to become a member!).

Zeekr Is Probably Going To IPO This Friday

To explain the Nick Denton joke above. Denton was the creator of Gawker Media and thus the guy responsible for basically all of us meeting and having jobs. He also had a specific way of making portmanteaus and other word-mashes to name his sites (Jalopnik is Jalopy + Beatnik, Kotaku is Japanese for small + obsessive). Zeekr is apparently Gen Z + Geek?

It’s a strange name, but the company is going to probably go public in New York on Friday and, in spite of everything, the Geely-owned quasi-Sino-Swedish company might do ok:

Per Reuters: 

The deal books are already multiple times oversubscribed, one of the sources said.
The sources declined to be named because they were discussing confidential information.
Zeekr declined to comment.
The company is selling 17.5 million American depository shares in a price range of $18 and $21 each, according to its filings. At the top of that range, Zeekr will be valued at $5.13 billion.

This will be a fun one to watch.

Penske Is Setting Up Its Own Custom Factory

Mega dealer/transport company/race team Penske is set to open up a new facility in Auburn Hills, Michigan to do specialty work for automakers according to Crain’s Detroit Business:

Penske Vehicle Services, a subsidiary of Penske Corp., is looking to use the building for its paint film program after winning contracts with Ford to customize special edition Mustang and Bronco models, according to details submitted to the city.

Penske might also use the building for its wet painting program, which involves disassembling parts of a vehicle, such as doors and hoods, for a custom paint job — think black stripe down the middle of a Ford Mustang Shelby GT500 or a Lincoln Navigator Black Label series topped with a black roof. Plans include about 6,000 square feet for office space as well.

In addition to low-volume paint operations, the space may also be used for customizing show cars, modifying EV products, addressing quality holds, vehicle retrofit and prototype assembly.

We love custom cars, though GAS is where all the cool people go.

What I’m Listening To While Writing TMD

I’m a little tired, but in a good mood this morning as my friend’s kid pulled through surgery and the tumor in his brain was successfully removed. The little guy had a rough night and probably has a few rough days ahead, but he’s moving in the right direction. Thanks for your thoughts/prayers yesterday. Let’s celebrate with some Andrew Bird.

The Big Question

What’s your favorite automaker- or dealer-created special edition car and why is it the Ford Ranger Splash?