Fisker Ties Up With Magna To Build Its Electric Ocean SUV – Forbes
Fisker Inc.’s odds of turning its battery-powered Ocean crossover vehicle into reality just got a lot better. The Los Angeles startup led by luxury car designer Henrik Fisker has enlisted auto engineering heavyweight Magna in a broad partnership to start building it in two years.
Self-described “digital car company” Fisker has said for months it would outsource Ocean production instead of building its own plant to hold down costs. The production announcement comes ahead of the listing shares on the New York Stock Exchange this month through a SPAC merger. Magna, which assembles vehicles under contract for BMW, Daimler, Jaguar Land Rover and Toyota, will build the Ocean at its Graz, Austria, plant.
“The decision is to do a very deep, strategic partnership with Magna,” Henrik Fisker tells Forbes. “It includes Magna taking a 6% equity stake in Fisker and Magna being responsible for manufacturing the Fisker Ocean, which is still on target as planned in Q4 2022. And it includes using Magna’s EV architecture and platform.”
Securing a veteran production partner that can also supply key components, engineering services and even crash-testing, combined with the more than $1 billion Fisker has raised through its stock listing and other fundraising, positions the startup to get its battery-powered SUV on the market relatively fast. Whether consumer demand in the U.S. and Europe, where Ocean will be sold first, meets Fisker’s target of 50,000 units in 2023, remains unknown.
Unveiled in January at CES in Las Vegas, the stylish, electronics-laden Ocean has the interior volume of a BMW 5-Series but a base price of just $37,500–less than half what the cheapest Tesla
TSLA Model X goes for. It can be leased for as little as $379 a month.
Fisker says the low-cost approach it’s taking–especially by avoiding the $1 billion expense of building a plant–will allow it to be cashflow positive by as early as 2023. Magna’s 6% stake is in exchange for engineering and production services and doesn’t include cash investment.
“We are very happy to be able to work with Fisker on such an exciting sustainable product and to see what additional opportunities this cooperation may bring,” said Magna International President Swamy Kotagiri. “This is a great example of our strategy to leverage our strong portfolio to scale for future mobility needs and utilize our full vehicle engineering and manufacturing capabilities.”
Fisker Inc. is the second attempt at a successful electric car company by the Danish-born designer, who’s styled premium cars for BMW, Aston Martin and was brought in to Tesla by Elon Musk to work on early versions of what eventually became the Tesla Model S. His first attempt, Fisker Automotive, ultimately filed for bankruptcy in 2013 despite having a visually stunning plug-in hybrid, early VC funding and a $527 million low-cost federal loan (of which $193 million was used). A tough experience, but one that informs Henrik Fisker’s approach with Fisker Inc.
“You learn more from failure than success, but I would rather have success,” he says. “Sometimes you need to fail to understand what are those fine things, the unique things that you need to do to get success.”
His first startup was not a “well-oiled machine” and scrambled to resolve technical glitches, battery flaws and supplier problems while trying to get its own U.S. plant ready for production. With the new Fisker Inc., the focus is vehicle design, software, a user app and sales and service–with Magna handling vehicle engineering and manufacturing. “We’re going to take more of the approach of Apple
Another big change: a decade ago the supply base for batteries and parts for electric vehicles was tiny. The current rapid pace of EV industry development, spurred largely by Tesla, has changed the supply base dramatically, creating new opportunities for startups to source batteries, motors and critical components from numerous companies. Fisker hasn’t yet identified which company will supply lithium-ion cells for its battery packs.
“I said from the beginning to the investors, ‘we’re not here to prove to the world that we can manufacture a car better than Toyota or anybody else,’” Fisker says. “We’re here to prove you can put amazing vehicles on the market that are emotional and sustainable.”