- Henrik Fisker is back in the car business with a new company, Fisker, Inc., and a new kind of business model.
- Fisker aims to capture the imaginations of younger customers who aren’t hung up on horsepower.
- The company intends to offer a “flexible leasing” option for its Ocean SUV when the vehicle arrives in 2022.
- A “new generation of buyers has a different view of mobility,” Fisker told Business Insider.
- Visit Business Insider’s homepage for more stories.
Henrik Fisker is back, but he isn’t on his second act. With his eponymous new company, he’s on his fourth, and maybe his fifth, incarnation. And he has a plan for changing how everyone, but especially younger people, get around.
The 57-year-old, Danish-born Fisker was famous in the auto industry before he was famous outside of it. Stints at BMW, Aston Martin, and later with his own custom coachbuilding firm were mere warm ups for the main event: Fisker Automotive, the high-end purveyor of hybrid-gas-electric vehicles, that he founded in 2007.
Fisker Automotive, with its rather gorgeous Fisker Karma sedan, stole thunder from Tesla and CEO Elon Musk in 2011 when the Karma hit the market and captured the attention of Hollywood celebrities and the automotive media. But a combination of battery-supplier A123’s bankruptcy, the loss of 300 cars during Hurricane Sandy, and other missteps and misfortune led to Chapter 11 in 2013.
The comeback kid
Fisker bounced back, partnering with veteran industry executive Bob Lutz and engineer Gilbert Villarreal to launch VLF Automotive and an over-the-top supercar, the Force 1 V10, while keeping his irons in several design fires, ranging from consumer products to yachts. But that was mere thumb-twiddling, time-biding for the main event: Fisker Inc., which debuted in 2016.
Fisker’s tireless efforts, particularly on social media, to promote his new car company were starting to look like an end in and of themselves until this year, when the carmaker merged with a blank-check fund, backed by giant private-equity firm Apollo, and listed on the New York Stock Exchange at a nearly $US3 billion valuation, with $US1 billion in the bank to build its Ocean SUV and commence deliveries in 2021.
For someone who has created some of the most memorable vehicles on four wheels â€” the Aston Martin DB9, the BMW Z8 â€” Fisker sounds as though he’s thoroughly over the idea that a car should be an object of desire. For him, younger people aren’t interested in horsepower and stick-shifts. They crave connectivity and flexibility.
“What we’ve thought about is, ‘How are people going to love a Fisker?'” he said in an interview. “And how are we going to interact with potential customers?”
He added that a “new generation of buyers has a different view of mobility,” noting that their first experience of an automobile was as a passenger on an Uber ride.
Rethinking the car as an interface â€” not a lifetime commitment
For these customers, the user interface â€” shaped by computers, smartphones, and gaming systems â€” is far more significant than what’s under the hood. And so Fisker and his team (which he said has grown by 50 employees since the Apollo deal) have focused on designing cars, a car company, and perhaps most importantly an ownership experience that begins with an interface and extends all the way through financing the vehicle.
The Ocean has a range of 250 to 300 miles and a sticker price of just under $US37,500, meaning that when a full $US7,500 federal tax credit for electric-vehicles is applied, the car costs less than $US30,000. That’s nothing new for EVs; General Motors priced its Chevy Bolt EV similarly when it launched in late 2016. What’s innovative for Fisker is a flexible-leasing option.
Buying versus leasing is an eternal debate among consumers, but for young people, leasing can be appealing because one can always be driving the latest technology, with minimal maintenance costs. The main disadvantage is that lease contracts are usually three or four years, with an up-front payment and penalties for exceeding annual mileage limits or trying to get out of the lease early.
“A lot of young people don’t want to borrow $US40-50,000 to buy a car, and they want to be able to give their car back after a year or two if they don’t want or need it anymore,” Fisker said.
For this group, the traditional leasing process is penalising. And in a world transformed by the coronavirus pandemic, that could discourage new customers from taking the plunge and finding a vehicle that fits a lifestyle that requires more mobility.
A new way to road trip
With air, train, and bus travel now challenged by COVID-19 and widespread fear of exposure to the virus in various transportation environments that we’ve developed over decades to move hundreds of thousands and people around as efficiently as possible, many Americans are reconsidering the old-school road trip, or thinking about how they can leave crowded cities to live in suburbs, or avoid mass transit and commute by car.
For about $US3,000 up front and $US379 a month, Fisker could lease you an Ocean and you could keep it or give it back, at your discretion, while also enjoying a generous, 30,000-mile annual allowance. That monthly payment is significantly lower than the $US466 average reported by Experian for 2020.
Furthermore, if the vehicle has been leased and returned, another customer could lease it, but at a lower cost. Rolled into the lease is a comprehensive service agreement, and Fisker said that the company is also trying to figure how to offer insurance that fits with the overall package and to reduce the cost of repairs.
The ultimate objective of the lease is to get more people into electric vehicles, and to do so without taking a business-as-usual approach, with all the expenses and obligations that are embedded in getting a car.
Fisker thinks that the flexible lease could remove another barrier to choosing an EV over a gas-powered car and support the company’s brand. And with leasing amounting to a $US12 billion business in the US alone, the opportunity is considerable.
“We see that there are more and more people who want to buy an EV from an EV maker only,” Fisker said. “Wall Street is thinking there might be room for one or two more Teslas out there.”
Tapping into a subscription generation
Karl Brauer, executive analyst at auto data firm iSeeCars.com, thinks that going after the youth market with the Fisker flexible lease makes sense.
“Cost remains a huge barrier for many millennials and Gen Z car buyers, yet both generations were essentially raised on flexible subscription models,” he said, alluding to services such as Spotify and Netflix.
“If Fisker can offer a monthly fee that covers every aspect of car ownership, and if that fee can be cancelled whenever the customer wants, it will be a familiar and easily-grasped concept for younger car shoppers.”
Brauer also commended Fisker for “repurposing” returned vehicles for new customers.
“If the modern EVs provide the kind of long-term durability their simplified drivetrains suggests, it could be a great business model for a young EV startup like Fisker,” he said. “Rotating the same EV through countless short- and medium-term customers could finally make EVs as profitable as traditional cars.”
Fisker is optimistic that, after decades of creating dream machines, he’s tapped into a fresh type of ambition with his new company.
“Young people aren’t going to be talking about the brand of brakes that are on their cars,” he said. “All those things are disappearing from their vocabulary. Instead they’re going to talk about whether the vehicle fits their lifestyle. But they still essentially want a car that looks good and that fits their image.”
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