Fisker filed for Chapter 11 bankruptcy on Monday, aiming to sell assets and restructure debt after burning through cash in a bid to ramp up production of its Ocean SUVs amid mounting financial challenges.

The bankruptcy filing comes as Fisker struggled with production issues, failed investment deals, and significant quality control problems with its Ocean SUVs, leading to regulatory investigations and disappointing sales. This move marks another setback in the highly competitive electric vehicle market, where Fisker follows several other companies that have recently faced similar financial difficulties. The company is now in advanced discussions with financial stakeholders about the sale of its assets in hopes of emerging from bankruptcy with a sustainable business model.

Fisker had been facing doubts about its viability since February, primarily due to its rapid cash burn while attempting to scale up production of the Ocean SUVs. The company sought investment from a major automaker, reportedly Nissan, but was unable to secure the deal. This investment was crucial as it was linked to $350 million in funding from an unnamed investor, which was contingent upon securing the automaker's backing.

Fisker's financial difficulties are further evidenced by the estimated assets and liabilities reported by its operating unit, Fisker Group Inc., which listed assets between $500 million and $1 billion and liabilities between $100 million and $500 million. Among its 20 largest creditors are major corporations such as Adobe, Alphabet’s Google, and SAP.

The company previously went public in late 2020 through a merger with a blank-check firm, a deal that valued Fisker at $2.9 billion. Despite this, the production and quality issues plaguing the Ocean SUV have been significant. Consumer Reports labeled the Ocean SUV as 'unfinished business,' highlighting its various problems. These included software and hardware issues, as well as regulatory investigations into braking issues, difficulties in shifting into park and other modes, and doors that failed to open at times.

Fisker's woes were compounded by its inability to deliver vehicles as promised. Last year, less than half of the 10,000 vehicles produced were delivered to customers. In January, Fisker shifted from a direct-to-consumer sales model, which had been popularized by Tesla, to a dealership-based distribution model. The company signed agreements for 15 dealer locations in the United States and 12 partners in Europe, yet over 5,000 cars remained unsold in its inventory.

In addition to production and sales challenges, Fisker faced public criticism over the quality of its vehicles. Notably, YouTuber Marques Brownlee harshly reviewed the Ocean, calling it 'the worst car I’ve ever reviewed,' which negatively influenced the company's stock. Henrik Fisker attributed many of these quality issues to software incompatibilities stemming from different suppliers.

It’s not the first time Henrik Fisker has seen one of his ventures face financial collapse. His previous company, Fisker Automotive, filed for bankruptcy in 2013. Prior to his entrepreneurial efforts, Henrik Fisker was a design consultant for Tesla, bringing a notable pedigree to his ventures even as they faced turbulent outcomes.

The bankruptcy filing of Fisker comes amid a broader context of the slowing growth in global electric vehicle (EV) sales. Last year, worldwide sales of plug-in vehicles rose by 21%, down from 35% in the previous year. This slower growth poses a significant challenge to EV manufacturers, including Fisker. The hyper-competitive EV market has seen several other companies, such as Proterra and Lordstown, also file for bankruptcy due to similar challenges.

Fisker is now looking to navigate through its financial restructuring under Chapter 11 by selling its assets and working towards a sustainable business model. The company remains in 'advanced discussions with financial stakeholders' about these plans. The success of these efforts will be critical for Fisker's ability to emerge from bankruptcy and continue its operations in the electric vehicle market.