Here is your weekly Pro Recap of the past week's biggest headlines in the electric vehicle space: Fisker makes a deal; Tesla hits a sales speed bump; and Polestar shrinks.
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Fisker's strategic agreements propel stock surge
Fisker Inc (NYSE:FSR) witnessed a remarkable turnaround on Monday, experiencing a 15% surge in mid-day trading. The rally was ignited by the announcement of a strategic agreement with a 2025 convertible notes investor.
According to an 8-K filing with the SEC, Fisker and the investor mutually agreed to lift all liens on intellectual property upon finalizing an agreement with a strategic OEM partner. This move is expected to pave the way for Fisker to actively seek collaborations and partnerships.
The revised agreement not only eliminates financial covenants related to restricted cash but also marks a significant reduction in outstanding debt associated with the 2025 convertible notes. As of January 19, 2024, Fisker successfully decreased its debt to $324.5 million, a substantial $185.5 million reduction from the initial aggregate issuance amount of $510.0 million. This reduction was achieved through the conversion of a portion of the 2025 notes into equity by the investor.
Fisker's Chairman and CEO, Henrik Fisker, expressed satisfaction with the outcome, stating, "I am pleased that we were able to reach an agreement with one of our investors that will provide increased flexibility and better position us to execute on potential strategic business deals."
Additionally, Fisker unveiled plans to sell the remaining inventory of nearly 5,000 vehicles manufactured in 2023 by the end of the first quarter. The company's new dealer-partner model has attracted interest from over 100 potential dealers in the United States, Canada, and Europe.
Tesla faces stock decline
In stark contrast, Tesla's (NASDAQ:TSLA) shares plummeted over 10% on Thursday following CEO Elon Musk's cautionary remarks about a slowdown in sales growth for the year. Musk attributed the anticipated lower growth to the company's focus on developing a more affordable next-generation electric vehicle, slated for production in the latter half of 2025 at its Texas factory.
The market's negative reaction could lead to a potential $50 billion reduction in Tesla's market value if the losses persist. As of Wednesday’s close, the stock had already declined by 16.4% this month.
Compounding Tesla's challenges, the National Highway Traffic Safety Administration (NHTSA) announced a recall affecting nearly 200,000 electric vehicles due to a software glitch effecting backup cameras.
The recall covers specific 2023 Y, S, and X model vehicles in the U.S. equipped with "Full Self-Driving" computer 4.0 and specific software versions. The glitch may impede drivers' visibility while driving in reverse, increasing the risk of a crash.
Tesla has resolved the issue through an online software update, reporting no crashes or injuries related to the problem.
However, this development comes less than two months after the company recalled nearly all its vehicles in the U.S. to install new safeguards in its Autopilot system.
Shares of TSLA ended trading on Friday down 13.69% for the week after dropping nearly 11% on Thursday.
Polestar announces workforce reduction
Polestar Automotive Holding (NASDAQ:PSNY), the emerging Swedish electric automaker, announced on Friday its plans to cut 15% of its global workforce, approximately 150 jobs. The company cited "challenging market conditions" as the primary reason for this decision.
Like many other car manufacturers, Polestar has faced obstacles in the electric vehicle market, including weak demand, significant price reductions, reduced subsidies, and supply chain challenges.
In November, the company adjusted its delivery projections and unveiled a modified business strategy aimed at achieving cash flow breakeven by 2025 and reducing dependence on external funding from major stakeholders like Volvo (OTC:VLVLY) and Geely.
"As part of this business plan, we need to adjust the size of our business and operations. This involves reducing external spending and, regrettably, also our number of employees," stated a Polestar spokesperson.
Shares of PSNY ended trading Friday up 3.16% for the week after reaching a high of $2.28/sh Friday morning.