Fisker, the U.S. electric carmaker, expects that operating expenses will reach between $490m and $530m this year. This is a slight increase in its business outlook driven by R&D expenditure on prototypes for Ocean SUV, testing of advanced technology, and hiring.The company reported second quarter earnings on Thursday, after the market close. It raised its business outlook to include key non-GAAP operating expenses, capital expenditures, and other non-GAAP items for the full year, from $450 million to $510 millions. In the earnings report, R&D expenditures on prototype activities for 2021 were highlighted. This was driven by validation and testing of advanced driver assistance systems, powertrains and user interface. In-house costs such as hiring, virtual validation software tools and physical testing, and hiring, have increased to reflect the tightened Euro NCAP/IIHS safety regulations.Geeta Gupta Fisker, co-founder, CFO, and COO, said during an investor call, that the company made a strategic choice to build internal capabilities to validate and test its products, rather than relying on third parties.Henrik Fisker, co-founder and CEO, stated in an interview that Foxconn's partnership is moving at a faster pace than expected. This is also contributing to an increase of spending.Fisker stated that they were truly aligned in a Thursday interview. It's a unique business deal, because we both invest in this program. We are not just hiring Foxconn to build a car.Fisker currently has two vehicle programs. Magna Steyr, an automotive contract manufacturer in Europe, will build the Fisker Ocean SUV electric vehicle. According to the company, production will still begin in November 2022. Deliveries will start in Europe and the United States in November 2022. The company plans to increase its production capacity to more than 5,000 vehicles per year by 2023. Delivery to China customers is also planned for 2023.Fisker and Foxconn, a Taiwanese company that makes iPhones, signed an agreement in May to co-develop and produce a new electric car. Henrik Fisker stated that the two companies worked quickly on the design and are now focusing on engineering and technical details, including a patent application for a new method of opening a trunk.He said that we have made great progress and will probably have prototypes by the end this year.These companies also agreed that the EV would be suited for urban living.He said that you can't make a car to suit everyone. It is impossible to make a car that suits both a farmer or someone who lives in an apartment.Project PEAR, which stands to Personal Electric Automotive Revolution, is being produced in North America, Europe and China. It will then be sold under the Fisker name in India, China, India, China, and Europe. Fisker announced Thursday that pre-production will begin in the U.S. at the end of 2023 and will continue into the next year.Henrik Fisker did not reveal the U.S. manufacturing site. He did visit the Foxconns Wisconsin manufacturing facility and noted its impressive facilities. Fisker said that Foxconns will make the final decision. Fisker however wants the electric car to be produced in a state where automakers can sell directly to customers. This is currently prohibited in Wisconsin.He noted that this is going to be one the most important things to change in order to sell our electric car at the store.Earnings resultsHere's a summary of the second-quarter earnings. Two important points to remember: Fisker was not publicly traded at this point last year so there aren't any year-over-year comparisons yet. This company is also pre-revenue although they did make $27,000 in merchandise sales.Fisker reported $27,000 in revenue, which is 22% more than the previous quarter. Fisker reported a net loss in the first quarter of $46.2 million or $0.16 per share compared to $176.8million in the prior quarter. The large net loss in the quarter was due to changes in the way the SEC treated non cash items. This resulted in warrants liability totaling $138 million in Q1. The company claims that the public warrants have been retired and will not impact future earnings.The second quarter's loss from operations was $53.1 million, compared with a $33 million loss in the first quarter. The company's asset light approach to cash management means that it has not built a factory and instead relies on its partners. As of June 30, cash and cash equivalents stood at $962 million, slightly less than the $985.1 Million in the first quarter.
