Fisker Inc., the electric vehicle startup founded by famous designer Henrik Fisker, announced more details about its upcoming SUV this week. The company released its first footage of the SUV on Monday and shared some new specifications after the 2020 Geneva Motor Show was canceled out of caution following the novel coronavirus outbreak.
The Fisker Ocean, as the SUV is called, made its debut at this year’s Consumer Electronics Show. It’s supposed to offer up 300 miles of range and is stuffed with tech, like a big dashboard-mounted touchscreen, a heads-up display, and an optional solar panel-lined roof. Fisker Inc. has boldly called the Ocean the “world’s most sustainable vehicle,” citing “fully recycled carpeting” made from fishing net waste “pulled from the oceans” and “100 percent polycarbonate polyurethane surfaces” with “reinforced Rayon backing.”
And yet, when Fisker Inc. puts the electric SUV into production, perhaps as soon as next year, the company is promising an aggressive starting price tag of $37,499. The Ocean will also be available on what Fisker says will be a flexible lease plan with no long-term commitments. The young company is apparently so set on making the Ocean succeed that it indefinitely suspended a previously announced electric sports car called the EMotion. (The company is also working on solid-state batteries, but it has said that the Ocean will use more traditional lithium-ion ones for the foreseeable future.)
Building an electric vehicle startup from the ground up is an awfully fraught proposition, let alone one that makes promises that sound a little too good to be true. And if anyone should know this, it should be Fisker himself whose first eponymous startup — a hybrid sports car outfit called Fisker Automotive — went bankrupt after just six years. The Verge caught up with Fisker at CES this year to find out more about how he plans to accomplish all of these complicated goals.
On the company’s big environmental claims
Vegan interiors are not a new thing anymore in the car world. In fact, as Fisker is quick to point out, his original company helped kickstart the movement. But Fisker Inc. is going far beyond using animal-friendly materials in the Ocean. The company has said it is the “world’s most sustainable vehicle,” which is a vast (and simultaneously vague) claim. And it’s backing that claim up by promoting the use of things like recycled plastics and fabrics. But materials like polycarbonate polyurethane and Rayon can sometimes come with their own environmental baggage.
Fisker says his company has been working with suppliers for a year and a half on making sure the environmentally friendly materials are both “automotive grade” and “that they are as sustainable as” the suppliers claim. “Obviously, these materials are not made by us. You know, nobody makes their own materials inside the car. But we have gone through suppliers and really looked at getting the most sustainable materials,” he said.
“I see this really as the first step where we are saying, ‘Hey, yeah. Not every material in this car is recyclable,’ but I feel like somebody has to take the first step and try to make as an environmentally friendly car as possible. And that’s just the first step,” Fisker said, noting that the car industry has a “huge opportunity to improve” when it comes to carbon usage. “We want to be the brand that’s known for being out there early on trying to create an environmentally friendly car.”
But being “an environmentally friendly car” is a much different goal than what Fisker Inc. has so far advertised, which is that the Ocean will be “the world’s most sustainable vehicle.”
To that, Fisker told me that is more of “a target that we want to reach” as a company. “And I did a lot of research on vehicles. And I think when I look at it, I don’t think anybody has put as much sustainable materials in any vehicle so far as we have. Hence the claim,” he said.
“Our vision is really a clean and a better world for everybody. And we can only do that if everybody participates. Everybody. Everybody has to do something. And we are going to try to make the world’s most sustainable vehicle. And that means we have to add and become better and better and better,” he added.
The word “sustainable” can have a different meaning to lots of people, and it’s something companies often try to hide behind without offering any specifics. Fisker told me that, to him, “it really means that you try to use materials that are manufactured in a way that uses as few or as low emissions as possible, or that the materials themselves are recycled, specifically waste materials that are harmful to the environment.”
And while some people view car ownership — even of electric vehicles — to be in tension with the push for a better environment, Fisker argued that continually leasing cars to new customers could cut down on the number that need to be made in the first place.
On how Fisker is hitting that price point
Automakers notoriously make a small percentage of profit on each vehicle they sell, which is one reason why they’re so focused on selling a huge number of them each year. Cars are expensive to build, and dealers eat into the profits. That profit margin is even smaller for startups at the outset since they can’t just start making tons of cars right away without a surefire customer base and a lot of money to burn.
This is why so many of the EV startups that have emerged in the last few years have tried to start with luxury vehicles. The higher the starting price, the better chance there is to turn a profit early on.
Fisker Inc. was going down that route with the EMotion, but it has since shifted gears. One big reason, Fisker told me, is that his company struck a deal with a “very, very big partner” to source everything it needs for the Ocean and one that he said is helping multiple companies get access to lower-cost components.
“Nobody’s making millions of electric cars. So to get the pricing down over the next years, the only way you can do it is if you collaborate and purchase components together with other people, with other companies, so you can get higher volume and lower the cost,” Fisker said. “That’s what we have done.”
Like many other startups, Fisker Inc. wants to skirt the dealership model and sell directly to customers, which would also help keep costs low. But unlike some of those startups, Fisker Inc. will only sell digitally and won’t rely on brick-and-mortar showrooms. Considering how much of a financial drag the “Nio Houses” have been for Chinese EV startup Nio, that could certainly help limit costs further.
“We have a very lean business model,” Fisker said. “We go via app directly to the customer. We don’t have dealer margins. We don’t have all the other stuff that goes with that.”
As for the product strategy shakeup, Fisker doesn’t believe his company is necessarily trading high margins on the EMotion for a car with lower profit potential in the Ocean.
“I’m probably the only guy who’s actually started a car company before, and I can tell you [starting with a luxury car] doesn’t work,” he said. Fisker points out that even Elon Musk, whose “master plan” for Tesla was to use the money from expensive cars to fund the design and production of more affordable ones, still had to raise billions of dollars to get the Model 3 to market.
“The reason to do the luxury car first ... is you don’t have to worry, initially, about the cost of some of the technologies that, a few years ago, were very expensive,” Fisker said. “For somebody who doesn’t have any [established] brand name, you may want to do a luxury car to sort of say, ‘Hey, we know how to make cool cars.’
“But in our case, we’ve already done the Fisker Karma, we’ve designed the EMotion. I think everybody knows we can design a cool luxury car,” he continued. “So I didn’t feel we have to prove ourselves in that respect. I think going straight to the high-volume vehicle was much more exciting. It brings us a lot more revenue and actually will fund the luxury car.”
On funding and car ownership
Fisker says his company has already closed “several funding rounds,” including an investment from construction company Caterpillar’s venture arm, and from the family behind oil drilling company Schlumberger. He says he’s working with Credit Suisse on a larger funding round, too, before a potential IPO. Pitchbook pegs the startup’s total funding at around $16 million so far, so Fisker will need a lot more money in order to get a car into production.
Despite a growing number of new options like ride-hailing and micromobility, Fisker still believes people will want their own cars. But he wants to make that experience less of a burden, which is why his company is pushing the idea of a flexible lease.
“I don’t believe people truly want to go out on the street in the morning and just pick a random car and get into it, as do some of these car-sharing programs, because you don’t want to get into a car that may not have have been cleaned, or there’s an old coffee cup from this last guy,” he said. “You want to get in to your car with your sunglasses there, with maybe your coffee mug from yesterday, or whatever it might be, your cap or something. So we’re providing that mobility and that sense of ownership without necessarily having to own it. Without you having to commit.”