Fisker , Inc. announced a deal in which Magna, the world's largest contract automaker, to take a 6% stake in the EV startup.- Magna will also build Fisker's first vehicle, the Ocean SUV, scheduled for a 2022 production start.
- According to Fisker CEO and founder
Henrik Fisker , the Magna partnership will let Fisker, Inc. bring the Ocean to market for a $37,499 price. - Fisker expects to complete a reverse-merger IPO deal at the end of October, valuing the company at nearly $3 billion.
- "The big news here is that Magna has skin in the game," Henrik Fisker said in an interview with Business Insider.
Fisker, Inc. has a new deal with a familiar name in the auto industry, Canada-based
The electric-car startup, founded by Henrik Fisker in 2016, announced the partnership on Thursday. This deal builds on a memorandum of understanding under which Fisker will use Magna's European contract-manufacturing arm, Magna Steyr, to build its first vehicle, the Ocean SUV, slated for a 2022 launch.
As part of the deal, Magna has the option to take a 6% equity stake in Fisker that would represent approximately $180 million in value when Fisker completes a $3 billion reverse-merger with Spartan Energy Acquisition Corp. at the end of October.
Spartan was formed by Apollo Global Management, a large private-equity firm, and decided to merge with Fisker in July. That deal would give Fisker about $1 billion to bring the Ocean to market.
"The big news here is that Magna has skin in the game," Henrik Fisker said in an interview with Business Insider, adding that the carmaker looked at three vehicle platforms from different manufacturers before settling on Magna's FM29 architecture, a lightweight, all-aluminum design.
Magna has a long history of manufacturing vehicles for big automakers
"This is a great example of our strategy to leverage our strong portfolio to scale for future mobility needs and utilize our full vehicle engineering and manufacturing capabilities," Magna International president Swamy Kotagiri said in a statement.
Magna has a long history of being the company that major automakers turn to when they need to add manufacturing capacity or quickly leverage design, engineering, and supply chain expertise. Clients have included BMW and Jaguar Land Rover.
Magna's stake in Fisker would be realized according to a schedule of three milestones over 24 months, Henrik Fisker said. The first would entail hitting engineering targets this year, with a supply-chain plan organized next year, and a start of production in 2022 to follow. The Ocean is currently aiming for a simultaneous US and European rollout.
"Magna understands the whole value chain, from the start of engineering to production," Fisker said. "One of the things that needs to happen in electrification is optimizing not just the cost of building and materials but also engineering. Everyone is always talking about how much easier it is to make an EV, but we haven't seen the results."
Bringing a $37,499 electric car to market
The Ocean should be priced at $37,499, an important number as a US federal tax credit of $7,500 for electric vehicles would drop the price under $30,000. According to Fisker, the Magna deal enables his company to overcome industry skepticism that a startup could deliver an EV at that low a cost.
Fisker also said that the Magna FM49 architecture was slightly larger than what Fisker had offered as a prototype. The Magna design provides room for both a third seating row and a larger battery, potentially extending the SUV's range, now expected to max out at 300 miles.
Fisker had also looked at a Volkswagen platform before decided on Magna's, but in a statement said that the Magna deal doesn't preclude continued cooperation with VW.
"Fisker and VW are in continuous discussions to grant Fisker access to specific parts and/or components mainly focusing on body and interior parts, subject to an agreement between the parties," the statement read. "Details of the specific parts being supplied will remain confidential, respecting the status of discussions, product planning and intellectual property rights of both companies."
Fisker has previously said that the company is pursuing an asset-light business model, avoiding the cost of building or acquiring its own factory, a deviation from the approach being followed by competitors, such as Tesla and Rivian.
Fisker's previous company, Fisker Automotive, took over a former General Motors factory in Delaware in the early 2010s, but struggled with its first vehicle, the Karma hybrid, losing hundred of cars during Hurricane Sandy and having problems with a battery supplier before declaring bankruptcy in 2013.
Fisker learned from the experience.
"This is the most de-risked setup I could absolutely dream of," he said.