Electric Vehicle Startup Fisker Inc. Closes Deal with Magna International to Build its Ocean SUV
Boosted by the runaway success of Tesla, the world's automakers, as well as a new crop of EV startups, are developing their own electric vehicles to try and grab a slice of the growing EV segment. The latest Tesla challenger is Fisker Inc. and the company has secured a deal with one of the world's biggest automotive parts suppliers and vehicle manufacturing partners.
As reported by Reuters, on Thursday, Fisker announced that Magna International will supply the vehicle platform and its subsidiary Magna Steyr will build the Fisker's fully-electric Ocean SUV. It will be Magna's first contract manufacturing deal with an EV startup.
California-based Fisker is among a new crop of electric vehicle startups, including Lucid Motors and Rivian that are aiming to capture some of the success of Tesla, which over the last decade has grown to become the world's most valuable automaker.
Fisker is billing itself as "the world's first digital car company."
As part of the deal, Magna will receive warrants to purchase a stake of up to 6% in Fisker, giving the EV startup an overall valuation of roughly $3 billion, Fisker Chief Executive and company namesake Henrik Fisker told Reuters.
"We're full speed ahead," Mr. Fisker said in a telephone interview. "This is a huge turning point. We realized Magna would be an amazing partner because having skin in the game obviously means we both have the same goal of getting this car to market."
Mr. Fisker is an automotive industry veteran and is best known for designing iconic luxury cars, including the BMW Z8 and Aston Martin DB9. Now he leads the electric car company that bears his name.
Fisker is merging with Spartan Energy Acquisition Corp to become a public company. Spartan (NYSE:SPAQ) is a special purpose acquisition company sponsored by an affiliate of Apollo Global Management, Inc. The company is a leading global alternative investment manager with assets of $316 billion under management as of March 31, 2020.
The boards of directors of both Spartan and Fisker have unanimously approved the proposed transaction in July, which is expected to be completed by the end of the month. Fisker is aiming for the upcoming IPO to provide it with the necessary funding for manufacturing its first vehicle.
The electric Fisker Ocean SUV was first unveiled to the public in January at the Consumer Electronics Show in Las Vegas. It's being designed to be the world's most sustainable vehicle, Fisker said. The Ocean will be built with the extensive use of environmentally friendly and recycled materials, including recycled fishing nets, which is reflected in the EV's name.
Magna International is an ideal partner for new EV startups like Fisker, which doesn't own a factory. Magna already has a big presence in the auto industry and has worked in the past with some of the world's biggest automakers, including BMW, Jaguar Land Rover and Mercedes Benz.
BMW contracted Magna International's subsidiary Magna Steyr to build its popular X3 SUV in Graz, Austria from 2003 to 2007. The company also built the renowned Mercedes Benz 4-Matic all-wheel-drive system for the German automaker.
More recently, Magna has built the latest BMW Z4 and Toyota Supra, which share components.
Magna also retrofits vehicles for Alphabet's self-driving division Waymo, including the fully-electric Jaguar I-Pace SUV which its also builds for Jaguar, outfitting the vehicles with autonomous driving hardware. Waymo plans to use the I-Pace in its robotaxi service called Waymo One.
Magna also has a tentative deal to build vehicles for another EV startup Canoo, which is also going public later this year through a reverse merger with a special-purpose acquisition company, or SPAC.
Reuters reports that Magna's stake in Fisker is subject to hitting three engineering and production milestones through the planned start of production of the Ocean in November 2022, Henrik Fisker said.
Fisker Inc said in August it had a tentative deal for Magna Steyr to build the Ocean SUV at its Graz plant. However the deal is not exclusive, Magna is seeking to build electric vehicles for other companies.
"We really want to be the Switzerland for the automotive industry - neutrality," Magna President Swamy Kotagiri told Reuters.
"This is a unique competitive position for us, particularly with new mobility players and (automakers) seeking to expand their electrified offerings."
Further terms of the deal were not disclosed, but Kotagiri told Reuters that Fisker's pricing was based on volume. Fisker is targeting initial sales of 8,000 SUVs in 2022, 51,000 in 2023 and 175,000 in 2024.
The Magna Steyr vehicle manufactering plant in Graz, Austria where the Fisker Ocean will be built.
Fisker originally planned to use Volkswagen's MEB modular electric vehicle platform for the Ocean SUV in order to cut costs and speed up development time, but a deal could not be reached. However, Mr Fisker told Reuters that his company remains in talks with the German automaker to use various body and interior parts for the Ocean.
Prior to the agreement with Magna, Fisker was under pressure from investors to secure a production deal, since the company does not have its own manufacturing plant. Fisker's inability in July to close a deal with Volkswagen sent shares in Spartan Energy down 20% over the summer.
Use of Magna's aluminum-intensive vehicle platform will allow the Ocean to have an electric driving range of more than 300 miles (483 km) and enable Fisker to offer buyers the option of a third row of seating, Henrik Fisker said.
Mr Fisker said in January at CES that the Ocean will start at $37,499, but will also be available with a flexible lease option of $379 per month, including insurance with a high-mileage allowance of 30,000 miles per year.
"As we move into electrification, one of the things that's going to be most important is affordability at the end of the day." said Fisker during a presentation at CES in January.
Following Tesla's lead, Fisker plans to sell the Ocean directly to customers. Mr. Fisker said at CES that he plans to take out every single "middleman" involved in the purchase of a traditional vehicle and deliver the Ocean SUV directly to customers so its more affordable.
Mr. Fisker said the company will not have a network of dealers or a website for online sales. Instead, all interactions with the Fisker brand will be done via the automaker's app, including selecting the Ocean's options and purchasing or leasing it.
Fisker's reverse merger with Spartan is expected to close on Oct. 30 and its shares will trade on the New York Stock Exchange under the symbol "FSR," Mr. Fisker said.
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