fisker ocean suv

Fisker (NYSE: FSR) stock is trading higher in US premarket price action today after the company said that its maiden Ocean SUV received a combined WLTP range of up to 707 km making it the highest range all-electric SUV in Europe.

The company said that one can potentially drive the Fisker Ocean Extreme from Paris to Frankfurt or London to Glasgow on a single charge.

In his prepared remarks, the company’s founder and CEO Henrik Fisker said, “From the beginning, we planned the Fisker Ocean to deliver the highest level of design, sustainability, innovation, usability, and range. We created a fantastic 5-passenger vehicle, offering our buyers range confidence and convenience in every trip.”

During the company’s Q4 2022 earnings call last month, FSR said that while it announced a range of 630 km for the model, it expects it to be “closer to 700” but would need ratification from the agencies to publicly declare so.

Markets are giving a thumbs up to the announcement and the stock is up around 5% in premarkets today.

Notably, a higher range can lead to higher EV adoption as it helps address range anxiety, which is the fear in some drivers that their car might lose charge midway.

Companies that Tesla have invested in the charging network which also acts as a competitive advantage. Tesla is the largest seller of BEVs (battery electric vehicles) globally.

Fisker Stock Rises After Announcing Range for Ocean SUV

While Fisker stock is trading higher today, it is worth noting that a mere higher range does not helps increase sales, Lucid Motors being a case in point, whose luxury Air sedan’s sales have sagged despite having the highest range in the US.

Lucid Motors expects to produce only between 10,000-14,000 cars in 2023, which is less than its planned capacity, and not even a third of its original guidance that it provided in 2021 while going public.

The company admitted that it needs to increase brand awareness to spur sales, which was another way of alluding to tepid demand.

Fisker meanwhile expects to produce over 42,000 cars in 2023 which is over four times that of Lucid Motors and only slightly below that of Rivian which forecast a production of 50,000 for 2023.

Rivian’s market cap meanwhile is similar to the cash on its balance sheet which some analysts see as a sign of undervaluation.

FSR Expects Positive Gross Margins in 2023

During the Q4 2022 earnings call, FSR said that it expects gross margins between 8-12% in 2023 and can also potentially become EBITDA positive.

If the company can indeed achieve the feat it would be no mean achievement as companies like Rivian and Lucid Motors are still positing negative gross margins and the former expects to post a gross profit in only 2024.

That said, the business models of these companies also differ. While Rivian and Lucid have followed Tesla and are setting up their own manufacturing plants, Fisker has opted for third-party manufacturing.

Magna is building the Ocean SUV for FSR while Foxconn would make the next car PEAR at the Lordstown plant that it bought from Lordstown Motors. Foxconn sees a big opportunity in EV contract manufacturing and hopes to make cars for Tesla one day.

Foxconn has also formed a joint venture with Saudi Arabia to produce electric cars in the kingdom.

Fisker PEAR Would be a Budget EV

Fisker intends to price PEAR at a base price of $29,900 which is quite competitive. Volkswagen recently unveiled a low-cost EV while Tesla is also contemplating one. EV prices have anyways fallen over the last few months as companies ranging from Tesla, Xpeng Motors, and Ford have lowered prices raising fears of a price war.

For now, markets seem upbeat about Fisker’s prospects after the release of Ocean’s range. While there has been a bloodbath in startup EV companies, FSR stock has held up relatively well and trades just below $6.

Many other EV names like Canoo have fallen below $1 as markets have been apprehensive of their execution capabilities.

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