Inside EV startup Fisker’s collapse: how the company crumbled under its founders’ whims | TechCrunch

An autonomous pod. A solid-state battery-powered sports car. An electric pickup truck. A convertible grand tourer EV with up to 600 miles of range. A “fully connected mobility device” for young urban innovators to be built by Foxconn and priced under $30,000. The next Popemobile.

Over the past eight years, famed vehicle designer Henrik Fisker suggested his electric vehicle startup would deliver on all of these promises.

None came true.

Instead, Fisker Inc. is on the brink of bankruptcy after having delivered just a few thousand electric Ocean SUVs. As the company grasps for an improbable rescue, employees who spoke to TechCrunch say the blame largely rests on the shoulders of two people: the husband-and-wife team whose name is on the hood.

Taking Fisker’s first and only model, the Ocean SUV, from the sketchbook to the assembly line was no small feat. One look at the wreckage left by other EV startups that tried to recreate Tesla’s success illustrates how difficult it can be.

The road to Fisker’s ultimate ruin may start and end with its flawed Ocean SUV, which has been riddled with mechanical and software problems. But it was paved with hubris, power struggles, and the repeated failure to set up basic processes that are foundational for any automaker.

“The lack of processes and procedures was kind of mind-blowing,” Sean O’Grady, a former regional sales manager at Fisker, told TechCrunch. “The same excuse that I kept hearing all the time was, well, if you’ve never worked for a startup before, this is what it’s like, it’s chaotic.”

That chaos may be what ultimately dooms the company, according to O’Grady and seven other employees, who have spoken to TechCrunch on the condition of anonymity over the last few months. It persisted throughout the company, seeping into seemingly every division.

There was inadequate customer service, no properly functioning warranty system, and a dearth of spare parts, four of the employees said. Fisker had trouble keeping track of money it collected, at one point losing around $16 million, according to O’Grady and several other employees who were directly involved in finding the payments.

Employees say they were drowning from this lack of process while the leadership team focused on protecting Fisker’s reputation. Every wrong decision took the company further from its goal of making and selling a mass-market EV.

The fallout from all this: Customers have been saddled with dying cars, faulty brakes, stuck doors and more, and often had to wait weeks or months for fixes. The company has been hit with dozens of lemon law lawsuits. It’s also mired in other legal trouble involving employee complaints and unpaid bills that TechCrunch has previously reported.

Fisker employees, meanwhile, often slogged through 18-hour days to field concerns, fix problems, find the missing payments and properly document the SUVs, often going far beyond the duties typically associated with the roles they were hired to perform.

Many, if not most, have now been laid off.

Driven by “cool”

Chaotic episodes were a constant at Fisker, and that made it all the more difficult to build, sell and ship cars, the employees say.

A year before Henrik Fisker handed over the first 22 Ocean SUVs in the U.S., the founder and CEO made an unusual change in the auto industry: he wanted wheel spacers installed on the vehicles.

Wheel spacers go in between the wheel and the wheel hub, making the tires look more pronounced. They are also uncommon. Two people familiar with the decision said Henrik Fisker wanted to do this to make the cars look “cool.” He also wanted to sell them as accessories, they said.

But it was already pretty late in the process to make a change like this, and the spacers had not gone through the typical internal approvals. The spacers had no internal part number, meaning they couldn’t be easily tracked if something went wrong. Some employees felt there had not been enough internal testing done to validate that the spacers were safe.

The decision eventually rocked Fisker’s engineering team. The lead chassis engineer at the time, Brent Demers, sent an email in March 2023 to a group that included the VP of engineering, William Stinnett, saying Fisker’s Design and Studio team was “acting alone” installing the spacers “without proper validation and regard for previous engineering recommendations,” according to a copy viewed by TechCrunch. Demers asked to “introduce the spacers into the project by means of proper channels” instead.

As word continued to spread that the spacers had been installed, Henrik Fisker agreed to abandon the idea. Both Demers and Stinnett left the company in July, after the first deliveries. (Demers declined to comment. Stinnett did not respond to emailed requests for comment.)

Fisker vice president of communications Matthew DeBord told TechCrunch in an email that the company used wheel spacers “only on demonstration vehicles,” but declined to define that term. He also said “Fisker has never sold spacers” and that it “made a business determination not to sell spacers in the aftermarket.”

DeBord told TechCrunch the spacers were supplied by Claus Ettensberger Corporation, a luxury aftermarket wheel company, and said it “provided validation in the US for spacers that were made with dimensions provided by Fisker engineers.”

Ettensberger was one of the first 22 customers to receive an Ocean SUV, according to documents viewed by TechCrunch. He did not respond to a voicemail seeking comment.

Customer service, a chatbot and unpaid bills

Geeta Gupta-Fisker’s decisions also gave employees whiplash. As the chief financial officer and chief operating officer — and also Henrik’s wife and co-founder — she has held considerable sway at the company.

In 2021, as the company was still working its way toward entering production, one employee recalled Gupta-Fisker’s reticence to use a customer service call center once vehicles were launched.

Instead, Gupta-Fisker wanted customer service requests to be handled digitally, including via a chatbot on the company’s website. That decision would prove problematic years later as the first SUVs were delivered to customers.

Problems cropped up within weeks of the first U.S. deliveries, which began in June 2023. Customers struggled to contact the company for help. Documents previously reviewed by TechCrunch show the company scrambling to triage incoming requests. Sales representatives were getting calls on their personal cell phones from owners stuck on the roadside, or unable to get into their Oceans.

It wasn’t until then that Gupta-Fisker reversed course, according to former employees. To help address the influx of customer service calls, Fisker hired a company in October 2023 called Prelude Systems, which promised to provide a mix of on- and off-shore service representatives.

That fix didn’t last long, though. By January 2024, the call center workers had vanished from Fisker’s internal Salesforce system, according to two of the employees.

Most workers didn’t know it at the time, but Fisker had stopped paying the company, according to a new lawsuit filed in federal court in May. Prelude alleges in the lawsuit that Fisker owes at least $660,000.

DeBord declined to comment on the lawsuit. He told TechCrunch that Fisker “always planned for the Customer Relations team to have multiple ways to communicate with customers, including email, chatbots and telephone.” But he also said the “Marketing, Sales, and Service department requested outside support” after the launch of the Ocean because “internal headcount was insufficient to deal with incoming customer inquiries.”

Parts shortage

Gupta-Fisker also turned down requests to build out a large stockpile of service parts, according to two of the employees. It’s a crucial buffer that automakers usually build up to handle repairs and other fixes as they iron out the kinks in the initial run of cars.

According to employees, Gupta-Fisker’s resistance to the idea was driven by an effort to save money. Fisker leadership supported the decision by pointing to a McKinsey survey that showed EVs require less service and fewer parts, according to one of the employees.

The employees said Gupta-Fisker pinned too much hope on the quality of the cars. They recall her saying the build quality at Magna, Fisker’s contract manufacturer, was “superior” and therefore the Ocean would not run into many problems. (Magna declined to comment for this story.)

The company accumulated some spare parts, according to the employees. However, they struggled with the quality and supply cadence. The employees say this was exacerbated because Fisker waited too long to stand up a proper supplier quality team – a group typically tasked with auditing suppliers to make sure their parts and processes are up to snuff.

Magna had its own supplier quality team but it was only responsible for the parts it directly sourced. DeBord told TechCrunch that Fisker’s “Service department made its own forecast for parts, based on their sector knowledge” and that the “Purchasing department supported those requests.”

The spare parts issue became problematic as Fisker’s Ocean SUV ran into myriad mechanical and software issues. There were problems with the door-locking mechanisms and door handles. The key fobs didn’t regularly work. The bolts on the Ocean’s hood had a tendency to come loose, which led to some flying up and cracking the windshield, or doing damage to the body.

As Fisker became inundated with customer service requests, the employees found themselves struggling to provide the right replacement parts thanks to the lack of a service stockpile.

In an attempt to alleviate this, Fisker started “pinching” parts from Magna’s production line in Austria, multiple employees told TechCrunch. The list of parts approved for pinching included electronic control units, locking mechanisms, windshields, hoods and exterior panels, among others.

But even that wasn’t enough, since those parts would still have to make it all the way to the U.S. before Fisker could fix some of the affected cars.

So the company started cannibalizing cars that had been returned, or ones that the company had on hand for marketing purposes, according to multiple employees. This included the Ocean SUV that Henrik Fisker used. Employees removed his car’s steering wheel, some interior panels, and even his driver’s seat cushion for use in customer cars.

Employees also salvaged parts from the Ocean that former Chief Accounting Officer John Finnucan used, weeks before he left the company.

DeBord told TechCrunch that all these claims are false. Finnucan did not respond to a request for comment.

In a few desperate moments, according to two employees, Fisker had Magna employees bring parts to the U.S. in their luggage so that the company could service customer cars. (DeBord said Fisker “cannot comment on another company’s employees or that company’s travel policies.”)

Even if Fisker had built up a proper stockpile of spare parts, the employees say, the company never put a proper warranty process in place, which created more headaches.

Fisker was relying on its technicians not only to repair its vehicles, often in the field, but also to fill out work orders – which is not typically a job that vehicle technicians do. This left many work orders incomplete, sitting in Fisker’s Salesforce system. For completed requests, employees often had to manually transfer data from Salesforce to the company’s accounting software, provided by SAP.

Fisker also did not set aside money to cover warranty repairs, according to the employees – marking another departure from a standard industry practice.

DeBord said any claims that Fisker’s warranty system was a mess are false, and that “the information flow from Salesforce to SAP is seamless.”

Inside the winding down

The chaos has continued to haunt the company in its declining months. On March 27, employees received alarming news: the company was immediately leaving its headquarters in Manhattan Beach. Dozens scurried to the glass-and-steel building in a panic, gathering their belongings to bring home or move to the company’s engineering facility in La Palma.

Hours later, after some moving trucks had come and gone, employees were told that Fisker actually still had another month before it would lose access to the headquarters. Those who remained were told to sit down and get to work.

Many were told at the time to tackle the backlog of unprocessed title and registration paperwork, which had left hundreds of customers without permanent license plates.

The company had already scrambled to perform an internal audit to track down the missing $16 million in customer payments. Its external auditor, PwC – which said this month that it will not stand for reappointment – was constantly peppering the startup with document requests in the run-up to the release of its annual financial report.

O’Grady told TechCrunch that Fisker leadership also asked employees to contact owners of the Ocean One, a special version of the SUV limited to 5,000 units. The company had promised a “benefits package” that included a warranty extension, special tires, a more advanced computer to run the infotainment system and $1,000 worth of charging credits. The total value was promoted to be around $7,500, making it a sort of stand-in for the federal EV tax credit, which Fisker vehicles weren’t eligible for since they’re built in Austria.

Owners had not yet received any of those benefits. And as the company was looking to cut costs, it wanted to track down who it owed the benefits to, and whether they had flipped the car or not. If they had, Fisker would essentially be off the hook for that value. (DeBord said benefits packages will be “appropriately managed as Fisker restructures.”)

“If you’re talking about 5,000 Ocean Ones, then you’re talking about $37.5 million in benefits that you owe to these customers. And to this point in time not a single customer has seen a penny,” O’Grady said.

Fisker’s push to sell its remaining cars hasn’t been cheap. Earlier this month, the company told some sales staff it would pay out $1,000 bonuses for every Ocean sold directly (versus at a dealership), according to two of the employees. While this energized some, it was a sign of how much – and how quickly – the company wanted to offload its remaining assets. Fisker has also since waived the destination and handling fees for each vehicle, which typically ran over $2,000.

Fisker was eager to sell the remaining Oceans because it was losing access to the largest places where the SUVs were stored. In early May, the company lost access to the so-called vehicle processing center in Atlanta, according to two of the employees. That meant it might have to find new homes for hundreds of cars.

Some of those EVs have gone to “dealership partners.” The company has claimed a “growing roster” of around 15 of these partners. But Fisker has been sending those vehicles on consignment, according to O’Grady and others – meaning the company does not get paid until the dealers sell the vehicles. Even then, it’s unclear how much money Fisker is recouping.

“​​The company cares too much about their reputation,” O’Grady told TechCrunch. “It’s almost like that’s the first thing on their mind all day, every day.”

Correction: The original version of this article stated that Geeta Gupta-Fisker is Fisker’s chief financial officer and chief commercial officer. She is the chief financial officer and chief operating officer. The article has been corrected to reflect this.