Henrik Fisker’s second chance at an automotive company isn’t going so well. After founding Fisker Automotive in 2007 and releasing the Fisker Karma, he watched his first shot file for bankruptcy in 2013. Now, Fisker (OTCMKTS:FSRN) is at risk of experiencing the same fate.

Fisker began trading in late 2020 following a SPAC merger valued at $2.9 billion. In its SPAC presentation, the electric vehicle company guided for 2023 revenue of $3.3 billion. Its preliminary 2023 revenue turned out to be $272.9 million, 92% off the original estimate. Fisker’s market capitalization is hovering around just $13 million today.

The company’s only vehicle is the Ocean SUV, which comes in four different trim levels. Last month, Fisker announced price cuts of up to 39% for the Ocean, leaving existing owners bewildered at the rapid pace of depreciation. Ocean owners are experiencing depreciation of as high as 70%. 

So, with a stylish vehicle and a founder with decades of automotive experience, what exactly went wrong?

Fisker’s Fizzled Ocean Debut

First, it’s hard to miss the extremely competitive EV landscape that has witnessed a multitude of headwinds during the past few years, including supply chain issues, price wars and a higher cost of borrowing. Making matters worse, Fisker was dealing with its own internal issues at the same time.

The company hit its first roadblock after the U.S. government restricted federal EV tax credits to vehicles assembled in the U.S. Since Fisker outsources its production to Magna Steyr (NYSE:MGA) in Austria, the Ocean wasn’t eligible for these tax credits in 2023, taking a major customer incentive off the table.

Deliveries of the Ocean began in June 2023. That came following a delay due to software issues, which resulted in Fisker lowering its production guidance to between 32,000 and 36,000 vehicles from 42,400 vehicles. Its initial guidance for 2023 was 50,000 vehicles. Actual 2023 production was just 10,193 vehicles.

And unfortunately, the delivery delay didn’t result in a flawless software experience. 

In February, Marques Brownlee, one of the most popular technology reviewers in the world, published a scathing video review of the Ocean, titled “This is the Worst Car I’ve Ever Reviewed.” Prior to the publication of the video, Fisker had gotten word that Brownlee was about to film a review and asked him to delay filming until it pushed out its Ocean OS 2.0 software update. Brownlee declined.

“I feel like it’s going to take a long time for this car to be acceptably usable given how many issues I’ve had with it,” Brownlee said in the review.

The Ocean’s software issues include accelerated battery loss, key fob connectivity challenges, the front hood opening at high speeds and faulty sensors. Edmunds noted that the recent Ocean OS 2.0 update has alleviated some of these problems, which Brownlee corroborated in his second Ocean video review. However, the update doesn’t fix the fact that many customers – and potential customers – have lost trust in the company.

Fisker Loses Track of Money, Fails to Partner with a Legacy Automaker

By the beginning of 2024, it was clear that Fisker was in hot water. 

In its preliminary fourth quarter earnings, the company announced a 15% workforce reduction, a delayed Form 10-K and an impending going concern warning following the submission of its 10-K. Fisker produced 10,193 Oceans in 2023 and delivered only 4,929 of them, signaling a clear demand problem.

“Furthermore, to the extent Fisker’s current resources are insufficient to satisfy its requirements over the next 12 months, the company will need to seek additional equity or debt financing, and there can be no assurance that Fisker will be successful in these efforts.” 

A Form 10-K details a company’s financial performance over the course of 12 months and unlike quarterly earning reports, the filing is audited. That turned out to be a major problem for Fisker, because according to TechCrunch, the company temporarily lost track of millions of dollars of payments. In some cases, Fisker even delivered vehicles without receiving any payment at all. Its auditor, PwC, had requested additional vehicle sales information during the preparation of the 10-K, and Fisker wasn’t able to provide this information.

“Checks were not cashed in a timely manner or just lost altogether,” a person familiar with the situation told TechCrunch. “We were often scrambling to find checks, credit card receipts and any wired funds a few months after a vehicle was sold.”

Panic had likely set in at Fisker. In March, the company disclosed that it was in preliminary negotiations with a large automaker, which was later reported to be Nissan (OTCMKTS:NSANY). If successful, the partnership would have provided Fisker with a major lifeline that would echo the strategy of Rivian (NASDAQ:RIVN) partnering with Amazon (NASDAQ:AMZN) and Lucid (NASDAQ:LCID) partnering with Saudi Arabia’s Public Investment Fund (PIF).

A few weeks later, Fisker shares plunged below 10 cents after the company announced that the negotiations had been terminated. Because of this, Fisker was unable to satisfy a closing condition for a separate agreement that would provide it with a $150 million financing commitment.

Fisker’s Future Remains Unstable

Fisker trading below 10 cents caught the attention of the New York Stock Exchange (NYSE), which decided to delist the stock due to its low price. Today, Fisker trades on the over-the-counter (OTC) market in the 2-cent range.

A combination of several other detrimental themes contributed to Fisker’s delisting, such as its lack of profitability and falling demand for EVs in favor of hybrids. To fix its growing inventory, the company announced that it would pause production for six weeks beginning on March 18. Last week, the company withdrew all of its guidance for 2024 after previously providing delivery guidance of between 20,000 and 22,000 vehicles.

Currently, there doesn’t seem to be any compelling reasons to invest in FSRN unless you believe that Henrik and his team can turn things around and regain the trust of their customers and investors. That may require a miracle, something Henrik wasn’t able to pull off with his first company.

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On the date of publication, Eddie Pan held a LONG position in AMZN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.