Fisker Inc. (NYSE:FSR) Q3 2023 Earnings Call Transcript

Fisker Inc. (NYSE:FSR) Q3 2023 Earnings Call Transcript November 13, 2023

Operator: Hello and welcome to the Fisker Inc.’s Third Quarter 2023 Earnings Call. [Operator Instructions] I will now turn the conference over to Frank Boroch, Vice President of Treasury and Investor Relations. Please go ahead.

Frank Boroch: Thank you, operator. Hello, everyone, and welcome to Fisker’s third quarter earnings call. As the operator mentioned, I’m Frank Boroch, VP of Treasury and Investor Relations. Joining me on today’s call are Henrik Fisker, Chief Executive Officer; David King, Chief Technology Officer; and Dr. Geeta Gupta-Fisker, Chief Financial Officer and Chief Operating Officer. Please note that today’s discussion includes forward-looking statements about our expectations. Actual results in future periods are subject to risks and uncertainties that could cause our results to differ materially from those mentioned. These risks include those set forth in the press release we issued earlier today as well as those more fully described in our filings with the Securities and Exchange Commission.

Today’s discussion also includes certain non-GAAP measures, including non-GAAP operating expenses. Quantitative reconciliations of our non-GAAP financial information to the most directly comparable GAAP financial information appears in today’s earnings release. With that, I’m happy to turn the call over to Henrik.

Henrik Fisker: Thank you, Frank. Good afternoon, everyone. Thank you for joining us today for our third quarter 2023 earnings call. I want to thank all our stakeholders, teams and partners for all the hard work and continued progress we’ve made in 2023. Third quarter marks a strong [technical difficulty] to Fisker as we continue to ramp vehicle production and deliveries of the Fisker Ocean. Raised additional proceeds through an upsized financing transaction, continued to spread our brand with new Fisker facilities, test drives and pop up events in several cities across the U.S and Europe, and adjusting prices — pricing for the three Ocean trims. All of these actions continue to position us for a long-term sustainable and profitable growth.

As our focus shift towards ramping deliveries, it’s incredible to see our product land in the driveways of more and more consumers every day. And I personally met a lot of customers who admires early adopters and supporters of the Fisker brand. We have an amazing production ramp, which has proven its ability to already have manufactured almost 9,000 units, a level other EV manufacturers taken four to five full quarters to achieve and solid demand. But we have not been able to follow through with deliveries fast enough. People have paid and awaiting for the cars and some of them are really getting annoyed, and that’s something that we need to do something about. So what are we going to do? As we shift focus, we have to focus on ramping deliveries.

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Q&A Session

It’s an incredible — so we have to really think about how do we get more real estate, how do we get more people? And that’s some of the most important things that we are doing right now. We are basically hiring about 20 to 30 people a week. We are opening new facilities this months, and as you can see, the curve is going really fast up when it comes to deliveries in the last 2 weeks. We also have more logistic partners. we started out with just one logistic partners, and we have actually have multiple logistic partners at this point in time. And all this I think you will see in November and December a really, really rapid growth in deliveries. How do we continue the strong growth? We have increased our marketing efforts and have just started TV and print advertising to increase our brand awareness as we want to keep our incredible momentum going.

We also have changed our price strategy both in Europe, U.S and Canada, and it’s working. We are seeing customers interest moving from ultra to extreme and even though we don’t get the IRA tax discount for our customers, we have a very competitive pricing in the U.S and we are seeing ongoing strong demand for our unique product. In Europe, we’re even more competitively priced, even lower than pretty much all the Chinese segment competitors and of course our European competitors. As our own factory is in Europe, the lower logistic costs combined with our direct to customer sales model. All continental Europe and U.S markets are up and running — sorry, and U.K market are up and running. Germany is the strongest market in Europe, with customers coming from German premium brands that adopt the Fisker Ocean.

When I was in Germany a couple of days ago, I actually asked to call three random customers in Germany. And I want to find out why they bought the Fisker Ocean, what was the top reasons and all three actually happened to come from a BMW car, and they all said it was about sustainability. They wanted to be with a brand that not only made only electric cars, but also had top priority and focus on sustainability. Some of the features they liked in the vehicle apart from that was basically the California Mode, the Solar Roof, and even the Tacos Trays. So that’s obviously unique features that nobody else have. And I think that again put us in a really unique competitive situation. Let’s go to the detailed Ocean update. As mentioned earlier, we are encouraged to have delivered 1,097 vehicles in Q3 and exceeded that pace in just the month of October and November is tracking even higher.

Now that we have filled our outbound logistic pipeline with finished vehicles moving through various stages, we can provide consumers with more accurate delivery estimates and strategically ramp our deliveries. With a demonstrative ramp in production well underway, this heightened focus on our delivery capability will reduce the gap between production and delivery times. We have continued to add sales and service team members to support the strategic focus. Our total number of marketing, sales and service employees has increased more than 4x since the end of 2022. This remarkable team continues to work around the clock to bring world class vehicles to consumers. Not only are we expanding into new markets, but also expanding within existing markets.

In Europe, businesses are responsible for a large share of vehicle purchases more than in the U.S. For example, in the U.K., over 50% of new vehicles were sold to businesses last year. Employer fleets programs are quite popular, especially those where companies offer their employees the ability to lease a vehicle with pre-tax money. Fisker is negotiating over 20 agreements with operators in Europe that will provide broader consumer access to the Fisker Ocean and represent a new growth channel for us. These agreements could add tens of thousands of potential Ocean customers. It has been exciting to see the positive feedback and reviews from early customers and third-party sources. We also recognize we are continuing to pursuit to optimize the user experience and we are pleased to have recently rolled out our first over-the-air software update to address bugs and enhance the driving experience.

Very few companies actually have OTA capabilities for in depth engineering functionality of the vehicle beyond entertainment functions. I’m happy to say that Fisker does. Our new Chief Technology Officer, David King will address these updates and over-the-air software strategy further in his comments. Additionally, we launched a series of how to tutorial videos designed to help Ocean owners navigate the way around the Fisker Ocean. Fisker Ocean Max Range Challenge, a competition to see who can lock the longest range to Fisker Ocean recently concluded. We are excited to see who emerged among the contestants in each country as a winner of our $1,000 prizes and who will be the grand winner of them all and win an all expense trip out to our manufacturing facility in Graz, Austria.

With deliveries already underway in 10 countries, we are poised to rapidly expand in coming quarters. Our deliveries in third quarter of exactly 1,097 cars is the fastest first full year quarter delivery ramp of any U.S based EV OEM. And I want to thank our team for making this all possible. To date, we have delivered over 3,000 Oceans with many more on route to customers and people are still anxiously waiting to get theirs. I know some customers in the U.S wondered why we started — already started delivering Ocean Extreme models in Germany a few weeks ago. Well, we have actually sold out of the Ocean Extreme’s in Germany, meaning we have delivered all of the Ocean Ones in Germany, so we have to start now delivering the Ocean Extremes. And that’s actually quite exciting that we were able to do it that fast and we already are seeing strong demand for our Ocean Extreme.

And of course Germany is the biggest market in Europe as I mentioned earlier. And now future product updates. In August, we held a Product Vision Day in Southern California, showcasing Fisker’s exciting future product lineup, including PEAR, a radical new segment-busting compact SUV designed to capture a large addressable market; RONIN, a luxury sports car, and Alaska in a segment of its own. Now the several OEMs have postponed their EV programs, this sweet spot is about the size of a Ford Ranger, so that Alaska fits right in a new segment where there’s currently no EVs. And it’s got unique features, of course, it’s got more luxury than the counterparts that have gasoline engines, and it’ll have a flexible between 4.5 foot to 7.5 foot and the price is confirmed to start at $45,900, that really puts it in a complete unique segment.