Fisker bullish on pricing strategy

California EV start-up Fisker has a pricing strategy is set up to compete head-on with Chinese market entrants in Europe and against competitors’ price cuts in the US market, its founder says.

“We have also changed our price strategy in Europe, the US and Canada and it is working. We are seeing customers' interest go from ultra to extreme,” the company’s eponymous CEO Henrik Fisker says.

“Even though we do not get the IRA tax discount for our customers, we have very competitive pricing in the US and we are seeing ongoing strong demand for our unique product.”

And the CEO emphasises that the firm’s pricing strategy positions it to capitalise at a time of major US OEMs stepping back from EV production targets, with Ford for example attributing postponed spending to “incredible downward pricing pressure”. And he believes that the firm’s Alaska e-pickup is thus poised to makes a splash in an underserved mid-size e-pickup market segment.

“Now that several OEMs have postponed their EV programmes, this sweet spot is about the size of a Ford Ranger, so that Alaska fits right in a new segment where there is currently no EVs, Fisker says. “The price is confirmed to start at $45,900. That really puts it in a complete unique segment”.

It is arguable whether Fisker’s view is correct. Rivian’s R1T e-pickup, for example, is smaller than an average full-size crew-cab truck, albeit bigger than most mid-size trucks and, according to consultancy Kelley Blue Book, with a hefty starting price of $73,000. If it materialises, the Canoo e-pickup is variously described as compact or mid-size. Similarly, the Alpha Wolf promises to be a compact e-pickup, with extended and double cab variants also trailed.

But it is true that many offerings in an increasingly crowded US e-pickup market — GM’s Hummer, Silverado and Sierra EVs, Ford’s F-150 Lightning, Tesla’s Cybertruck and Jeep’s Ram 1500 — fall into the full-size category. Whether being mid-size broadens the appeal in a pickup space that Ford CEO Jim Farley predicts is “not going to go EV any time soon” remains to be seen.

And it is not just other e-pickups against which the Alaska needs to compete. At its starting price — combined with the fact that consumers cannot apply the US Inflation Reduction Act’s $7,500 tax credit to purchases of Austrian-made Fiskers — puts the Alaska approximately on par with the Tesla Model 3, the market-leading offering from the Elon-Musk led firm.

But further price cuts from the likes of Tesla, which could put additional pressure on Fisker’s pricing strategy, are not widely expected. “I believe 95pc of the price cuts are in the rear-view mirror,” says Dan Ives, an analyst at investment bank Wedbush.

Europe calls

The pickup segment is unlikely to be a great source of orders in Europe for Fisker, but the company is confident in its pricing on the EVs it is offering in the continent. CEO Fisker believes his firm is ready to take on the challenge of an influx of undercutting Chinese EVs.

“In Europe, we are even more competitively priced, even lower than pretty much all the Chinese segment competitors and of course our European competitors,” he says.

The continent may allow the firm to price at a level that is not repeatable outside of Europe, Fisker acknowledges, owing to a handful of advantages the company leverages in the continent, including that it is the location of Fisker’s contract manufacturing and “lower logistics costs combined with our direct-to-customer sales model”.

And there are other advantages currently. “The ramp in production and deliveries is coming at an opportune time where we are benefiting from several cost tailwinds. For example, our predominantly Euro denominated supplier contracts are benefiting from forex rates that are close to their lowest levels in nearly two decades,” says CFO Geeta Gupta-Fisker. “Raw material and battery prices have also continued to ease, favourably impacting input costs.”

“We have unique place in automotive market, we have strong demand, and I expect us to keep growing with a potential strategic partner in the works, where we can go even faster. But first, we need to increase the speed of deliveries,” CEO Fisker adds.

One caveat to management’s confidence in strong demand is Gupta-Fisker’s concern that “interest rates are near 20-year highs, and they are of course impacting consumer spending”. But “our commitment to sustainability and the EV transition is unwavering”, while other OEMs’ less steadfast approach to producing as many EVs as quickly as previously planned only, in her view, offers more opportunity for Fisker.

“This reduced industry supply is to a certain extent [positive] for Fisker as it gives us more runway to develop our amazing portfolio of vehicles,” she says.