Why Fisker Failed
Electric vehicle manufacturer Fisker is on the brink of bankruptcy due to a tone-deaf customer experience.
You may not even know the name Fisker when it comes to electric vehicle offerings, but it is typical of the throngs of emerging independent manufacturers, including Tesla, Rivian, and Lucid, testing out various go-to-market strategies for the next generation of transportation.
Tesla started at the high end of the market to build awareness and generate sales, which provided the baseload for their second act, the more affordable, compact Model 3 designed for the heart of the market. Those cars moved upscale a bit too, but ultimately enabled Tesla to succeed as a new automaker, with 51% share of today’s electric vehicle sales.
Fisker took a more circuitous path. They started life in 2007 as Fisker Automotive, an independent, boutique manufacturer of plug-in electric luxury vehicles, led by their namesake, Danish designer Henrik Fisker. The Fisker Karma turned heads as an extravagant, electric sports sedan. Let’s just say that things didn’t go so well, and by 2013, Fisker Automotive declared bankruptcy, selling assets to the Wanxiang Group and relaunching as Karma Automotive. Again, things didn’t go so well, and in 2016, Fisker Inc. started operations as an IPO, traded on the New York Stock Exchange, with backing from Apollo Global Management.
This time around, Fisker decided to follow Tesla and focus on the core of the market, introducing the Ocean, an attractive, compact, all-electric SUV.
Intoxicating design: check.
Modern, software-driven technology: check.
Environmental sustainability: check.
Potentially affordable: check.
Okay, the lure of a shiny object - we get it. But what’s missing from this story? I think you might be able to guess - taking care of the customer.
The customer experience for the Fisker Ocean launch was one of the worst on record in any industry. Here’s why:
Customers order vehicles online, so there is no human interaction. The build page on their website has a chat line which isn’t always staffed, so the first touch is sterile.
Completed vehicles are delivered at dealer-partners. I’m in the greater NYC area, and the closest location is over two hours away.
An approximate delivery date is offered, which could vary by weeks.
Vehicles may be delivered by trailer using contractors having no association with Fisker. Is that the experience you want for an average transaction value of USD56k?
Despite assembly by the prestigious Austrian coachbuilder Magna, vehicles are plagued with build quality, software issues, and inoperability. The Ocean’s hood is intentionally fastened shut, only to be accessed by authorized service centers, wherever they might be - that should be a red flag right there.
In short, customer satisfaction leaves much to be desired.
Consumer Reports was brutally scathing in its buyer experience, recounted in a new podcast. Does the vehicle have a lovely shape, and a design evocative of the future? Is the technology enticing? Yes indeed. It would be something to drive and be seen in, but at what expense and aggravation?
Customers are now heading for the hills. Fisker Ocean reservation cancellations have topped 40,000 as the company tries to fight off bankruptcy. Keep in mind that they’ve only sold about 6,000 units thus far.
Fisker has now suspended production and lowered pricing up to 39% in order to incentivize a new crop of buyers (aka selling off inventory), but with the company’s future in doubt, a heavily discounted Ocean is a tempting proposition for about 10 seconds, before buyers regain their senses.
Indeed, there are business models in which minimally viable products (MVPs) are offered to customers in exchange for insights and feedback toward further development and optimization of the product. This shouldn’t be one of those times.
A Fisker Ocean is not an appliance. It is meant to attract middle income consumers, luring them into the electric vehicle ownership experience. By modern standards, it’s a rolling smartphone, with software at its core. Wide acceptance from the customer base was critical to charting Fisker’s path to financial stability, enabling the continual launch of new vehicles, products and services. But if the customer is chronically annoyed, right from the start of the buying process, continuing through delivery and ownership, then what is the point? Is a welcoming video from Henrik Fisker enough to pacify owners? Remember when Elon Musk slept in his factory to address quality issues on the Tesla Model 3? The car went through growing pains, but then it shined.
If you were a vehicle buyer in the 1990s, you may have visited a Saturn dealer out of curiosity. For Saturn, the customer experience was the polar opposite of what has been described above. Saturn used lots of different tag lines in their advertising, but the most memorable one was People First. The customer was front and center, starting with job one. Everything about the buying experience was crafted to delight the customer. When a vehicle was delivered, the entire dealership would gather to congratulate the buyer. Any tiny issue was resolved instantly. Customers were invited to tour the service bays, talk to employees, and share experiences with other buyers. Demand was strong, even for a mildly novel, mostly mediocre American daily driver. Did Saturn succeed? For 25 years, it sure did, but then GM started tinkering with brand management.
Businesses must understand that the customer is at the core of their very existence. While technology and flash may be idolized, they’re not enough to win business and grow companies. Some think of the customer experience as old school, something your grandfather talks about, but it’s never gone out of style.
Want to learn more about how to improve the customer experience for your business? Reach out today for an initial consultation.
[Update: Fisker filed for bankruptcy protection on June 18, 2024.]