Fisker Says It’s Targeting An Overlooked EV Feature: Affordability

The CEO of Fisker says the company plans to target a big segment of the auto market that most manufacturers have so far avoided: vehicles priced around $30,000 that appeal to younger people.

Fisker said this week that production of the battery-powered Ocean will start in November in Austria, with shipments to customers soon after. The base price of the vehicle is $37,499, which is below the top-selling Model Y, which starts at $62,990. Rivian's R1T pickup starts at $67,500 and the Lucid Air starts at $77,400, both at the high end of the market.

The average price of a new electric vehicle is $65,111, while the average price of a new car is $65,471. The average transaction price for all new vehicles is $46,528, which is $20,000 less than the industry average. As inflation grinds on in the U.S., higher prices for EV mean less market share.

That is the problem right now. People are upset. You can say it in EV if you tell me five cool cars for $80,000 to $100,000. Fisker tells Forbes that the problem is that five cool EV under $40,000 is the problem.

The company expects to have up to 75,000 reservations by the end of the year, according to the results call. Fisker says it has orders for base-price versions of the Launch edition, which is priced around $70,000. The electric PEAR will be an even more affordable option and will be built by Foxconn in Ohio.

“Tell me five cool cars for $80,000 to $100,000, you can easily say it in EVs. But tell me five cool EVs under $40,000 and that's the problem.”

In the first quarter of 2022, battery-powered models made up 16% of new vehicle sales in California. In the first quarter of this year, EV sales doubled from a year ago, but still make up less than 10% of total sales. It is difficult for manufacturers to hold prices down and make money selling them because of the supply chain challenges and surging cost of commodity metals. It is less of a concern for the time being.

EV buyers are the richest in terms of demographic, so affordability isn't a problem. They typically have household income over $150,000.

It was the top concern in a recent consumer study looking at obstacles to broader EV adoption, followed by driving range and charging infrastructure.

Musk had promised that the Model 3 would have a base price of $35,000 when it came to market. Although technically it was possible to order the base version of the car for a limited period from company stores, it was never confirmed whether or not it actually sold any of the electric sedans at that price. Musk admitted that the company couldn't make a profit on the Model 3. The cheapest version of that car is $46,990 before taxes and registration fees. The tax credits forTesla are no longer available. Musk has said that the company will make a $25,000 EV someday.

Fisker says it made some design decisions with the Ocean and PEAR that will help hold prices down when production starts. Fisker says that the latter are cheaper to repair. The Ocean doesn't have a front trunk that is common on many electric vehicles, which saves on material costs. The PEAR, which Fisker hasn't shown yet, is going further in terms of design decisions to make it affordable.

We are taking a more radical strategy with the PEAR. He said that they are looking at reducing complexity and parts in the actual vehicles, and that they are looking at how to manufacture the car faster and with fewer parts. It is just a few. This is our chance.

Young consumers who have shown little interest in car ownership are PEAR's target market.

I see a generation of buyers in their 20s who haven't bought a car yet, but are getting to the point in their life where they want one. They grew up with ride-Hailing and now want a car, but they want a super- connected mobility device. They don't care about the brand of the brakes.

The company hopes to sell 1 million vehicles a year from the three models that will be derived from the PEAR platform.

Fisker is working on other things, like low-priced EV and styled luxury vehicles. The company showed off its Ronin concept, a four-door convertible that will offer up to 600 miles of driving range per charge. Fisker says the three- motor, all-wheel-drive vehicle would accelerate from 0 to 60 miles per hour in six seconds and cost $150,000 or more.

He said in the May 4 conference call that the vehicle has a unique space within Fisker.

The idea with this vehicle is that it will replace the luxury gasoline Grand Tourers. The Ronin will be able to compete against all of the luxury cars in the market segment from $100,000.