The electric vehicle (EV) industry has encountered significant challenges over the past year and into the beginning of this one. It appears that one company has reached its breaking point.
Reports of Fisker (NYSE: FSR) preparing to declare bankruptcy have caused FSR stock to plummet by 40%.
Specifically, it appears that Fisker had enlisted restructuring advisors to explore the possibility of filing for bankruptcy, as per the Wall Street Journal.
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Although Fisker refrained from commenting on the report, the EV manufacturer had previously cautioned in February that it might not possess adequate funds to endure another year.
Mounting troubles for the EV industry
Fisker is just a part of a broader EV industry that has experienced trouble over the previous period.
Chinese stocks in the new electric vehicle (EV) sector faced a setback on March 14, reflecting the overnight decline in their US counterparts. Adding to the negative sentiment surrounding EV stocks were losses in Tesla Inc (NASDAQ: TSLA) overnight, following Wells Fargo’s downgrade to an underweight (equivalent to a sell) rating, a significant blow to the world’s most valuable EV maker.
Shares of Xpeng Inc.(NYSE: XPEV), NIO Inc.(NYSE: NIO), and Li Auto (NASDAQ: LI) declined by approximately -2% in Hong Kong trading.
The probable Fisker bankruptcy filing underscores the headwinds the EV industry has been facing in recent months. Financial reports indicate continuous quarterly losses and falling sales.
FSR stock price chart
Since the news of potential bankruptcy emerged after the markets closed, FSR stock has yet to react.
However, the performance of FSR stock over the past five trading sessions paints a clearer picture, with losses amounting to -21.77% during this period.
Looking at the year-to-date (YTD) performance, Fisker stock appears even bleaker, having declined by over -80%.
The challenges facing the EV industry are only beginning, and there is no indication of easing up in the near future. This leads producers to halt their operations and completely restructure their production methods to stay afloat.
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