Fisker gears up for 300 Ocean EV deliveries a day

Fisker Inc. is expanding its retail teams and adding delivery centers in the U.S. and Europe in preparation for deliveries of up to 300 Ocean crossovers a day as it ramps up production, the EV startup said this week.

Bank of America said Fisker should see a jump in revenue, earnings and volume next year on rising Ocean production. The bank's analysts also see strong market potential for the 2025 Alaska pickup that will share the Ocean platform.

After trimming its 2023 production forecast significantly in August, Fisker said it reached a production milestone of 5,000 vehicles as of Sept. 26. The stylish two-row Ocean midsize crossover launched in June.

Fisker, which sells directly to customers, did not give a detailed timeline for its delivery plans. A sales volume of 300 Oceans a day would require production of about 9,000 a month.

The California-based automaker slashed its 2023 production forecast to a range of 20,000 to 23,000 Ocean crossovers from its previous estimate of 32,000 to 36,000 because of a supplier issue, the company said last month.

Fisker said it had delivered 900 customer vehicles as of Tuesday, with several hundred more expected by the end of the week.

"We want to thank our customers for their patience," said CEO Henrik Fisker in a press release. "As we complete the third quarter and move into the fourth, we our preparing to significantly increase our pace of deliveries."

The CEO said the automaker is "expanding both our teams and physical locations and we are targeting deliveries of 300 vehicles per day to meet strong demand for the Fisker Ocean."

The Ocean is built by Magna Steyr in Graz, Austria, a third-party auto manufacturing unit of Canada's Magna International. The fully loaded Ocean launch editions start at $68,999, excluding shipping, which varies by location. The base Sport trim, expected this year, starts at $37,499, excluding shipping.

Bank of America rated Fisker Inc. stock as a "buy" in a research note this week, with a price target of $8 per share. Fisker shares closed at $6.40 Thursday.

"Fisker is well-positioned from a product and manufacturing standpoint," Bank of America said. "Its first production vehicle, the Ocean CUV, is an attractive and compelling product."

Two future products planned for 2025, the Fisker Pear subcompact crossover and Alaska pickup, "serve large markets and, at the right price points, have potential to be relatively high-volume vehicles," the bank's analysts said.

Henrik Fisker has said the Pear and Alaska are slated to be built in the U.S., also with a contract manufacturer, which would allow them to qualify for EV incentives.

Rather than spend billions of dollars to build factories and perfect the manufacturing process, Fisker uses contract manufacturing to reduce its capital needs and production risks.

Bank of America said it likes that approach.

"The company's flexible platform design allows for contract manufacturing, lessening the risk of production hurdles that many startup EV OEMs run into while also lowering the upfront capital commitments," the bank said. "This meaningfully lessens the downside risk to earnings that investors in EV companies have become accustomed to."

In the second quarter, the Manhattan Beach, Calif., automaker lost $87.9 million. Fisker also recorded its first revenue from sales, booking $825,000 from 11 vehicle deliveries.

Bank of America also noted that Fisker faces risks from having less control of the manufacturing process, which could affect its ability to secure sufficient production capacity to scale its business. Fisker could also be impacted by market leader Tesla Inc., which has slashed prices this year to expand its EV business at a rapid pace.

"The competitive nature of the EV market has been notably evident with Tesla's price cuts," Bank of America said. "These pricing actions have adversely impacted the pace of reservations for the Ocean CUV, and future pricing adjustments could not only impact Fisker's volumes but also its overall profitability."