Fisker Inc., a Los Angeles-based electric vehicle startup planning to deliver European-built SUVs late this year, is looking into adding a U.S. production site for its Ocean model now that changes to federal EV tax credits given to carbuyers favor those assembled at domestic plants.
Fisker’s Ocean SUV is expected to go into production in November at a plant in Graz, Austria, operated by auto parts and engineering giant Magna that can supply 50,000 of the units annually. But with reservations for the model now exceeding 58,000 units before deliveries have begun Fisker says it may also need a U.S. production base for future demand. The company insists the loss of tax credits for its customers under the Inflation Reduction Act signed into law by President Joe Biden this week isn’t a trigger for the move.
“We already considered U.S. manufacturing for the Ocean before the Act,” Fisker CEO and cofounder Henrik Fisker said by email. “Once you reach more than 50,000 in sales in a region, local production makes sense. I project that we should pass 50,000 in sales in 2024 in the U.S. market.”
Until this week every new electric vehicle qualified for a $7,500 tax credit under an Obama-era program regardless of where they were built, with up to a 200,000-vehicle limit per manufacturer. Companies including Tesla and General Motors long ago used up their credit and no longer received it, but startups such as Fisker, Rivian and Lucid had hoped to take advantage of the program. As of this week, the credit is only available to vehicles assembled in the U.S. Additionally, it’s only available for SUVs and other light trucks priced below $80,000 and cars that cost no more than $55,000. Also, only families with a maximum gross income of $300,000 or individuals making up to $150,000 can now receive the credit, which is available at the time of purchase.
The Fisker Ocean is intended to be one of the more affordable EVs on the market, with a base price of about $37,500, with top-end versions going for more than $70,000. The company plans to sell the model across Europe as well, but expects the bulk of its sales to come from the U.S. In addition to working with Magna, Fisker’s second model, the sub-$30,000 Pear, is to be built at an Ohio plant operated by Foxconn starting in 2024.
If the Ocean were to be eligible for the tax credit, it would be one of the cheapest electric SUVs on the market, with an effective base price of about $30,000. General Motors, which will again be able to qualify for tax credits starting next year, plans to begin selling an electric version of its small Equinox SUV in 2023 priced from about $30,000. That model is to be built in the U.S. and should become even more affordable after the $7,500 credit.
Fisker is using contract production rather than building its own plants. Henrik Fisker declined to say whether Magna or Foxconn would likely be its U.S. partner for the Ocean.
“We have not decided or released information on specifics surrounding potential U.S. manufacturing operations,” he said. “Our senior VP of manufacturing is working on the strategy as we speak.”
The company said last month that it had sold out of the first 5,000 units of its Fisker Ocean One, the version that goes into production in November, and now expects to have 80,000 reservations for all grades of the five-passenger vehicle by the end of the year.
Fisker shares fell about 2.6% to $8.91 in afternoon Nasdaq trading on Friday.