Henrik Fisker unveiled two prototypes from his EV startup Fisker last August, aiming to propel the company into the mainstream: the Pear, a budget-friendly EV targeting mass appeal, and the Alaska, Fisker’s foray into the booming pickup truck market. However, subsequent events revealed cracks in the company’s financial foundation.
A recently filed lawsuit in federal court alleges that Fisker ceased payments to the engineering firm responsible for developing these prototypes and wrongfully retained associated intellectual property (IP). The lawsuit, brought by a U.S. subsidiary of Bertrandt AG, a German engineering giant, seeks approximately $13 million in damages.
This legal action is just one among several challenges confronting Fisker, which teeters on the brink of bankruptcy. In addition to the engineering lawsuit, the company faces at least 30 lawsuits for alleged lemon law violations, several of which have been settled. Furthermore, a former director has initiated a proposed class action suit over unpaid wages, while a textile supplier has sued Fisker for over $1 million in unpaid dues.
The engineering lawsuit is particularly noteworthy as it suggests financial instability within Fisker as early as last August, despite the optimistic projections made by its CEO during the prototypes’ unveiling. Matthew DeBord, Fisker’s vice president of communications, dismissed the lawsuit filed by Bertrandt, asserting its lack of merit and characterizing it as an unwarranted attempt by a former partner to extract payments and intellectual property. However, he refrained from commenting on the other pending cases.
According to the complaint filed in the Michigan Eastern District Court by Bertrandt, the engineering firm entered into a “design and development agreement” with Fisker in May 2022 to provide engineering, design, and development services for the Pear EV. This contract, valued at over $35 million, also included previous work on a feasibility study, cost analysis, and timing proposal for the Pear EV.
Although no formal written agreement was executed for the Alaska pickup truck, Bertrandt claims to have provided a quote of $1.66 million for similar services, which Fisker agreed to pay.
However, Fisker ceased payments to Bertrandt at the end of August 2023 and failed to settle invoices through January 31, 2024, resulting in unpaid dues totaling $7,061,443. Furthermore, Fisker’s decision to pause development work on the Pear and Alaska EVs, as stated in the complaint, constitutes an additional breach of the contract, leading Bertrandt to incur delay costs.
A meeting held on February 6, 2024, saw Fisker allegedly acknowledge its liability for the outstanding invoices and agree to make a partial payment of $3,685,000. However, this payment was never received by Bertrandt. As a result of these breaches, Bertrandt claims to have suffered additional damages totaling $5,858,000 in lost profits, delay costs, and incidental damages, bringing the total damages sought to $12,919,443.
Furthermore, Bertrandt asserts that it demanded the return of all its intellectual property from Fisker on April 22, along with written certification that no copies were retained by Fisker. However, the complaint alleges that Fisker has failed to comply with these demands.
In the complaint, lawyers representing Bertrandt assert that “Fisker has been unjustly enriched at the expense of Bertrandt.” This statement reflects the firm’s contention that Fisker has benefited unfairly from the services provided by Bertrandt while failing to compensate the firm appropriately.
Bertrandt is not the sole supplier taking legal action against Fisker. Another lawsuit was filed by Georgia-based Corinthian Textiles in the Los Angeles Superior Court in early April. Corinthian alleges that it entered into an agreement with Fisker in early 2023 to supply “customized products for use in Fisker’s automobiles.”
Although the specific products provided by Corinthian are not disclosed, the company’s automotive division specializes in floor, trunk, and cargo mats, as well as automotive carpeting. Corinthian asserts that Fisker has refused to pay invoices and other fees totaling $1,077,571.75.
Working overtime
Days prior to Bertrandt’s lawsuit in federal court, Robert Lee, a former employee of Fisker from October 2023 to March 5, 2024, initiated a proposed class action complaint in the Los Angeles Superior Court. Lee alleges a consistent pattern of employee overwork and inadequate compensation by Fisker, asserting that the company failed to properly reimburse expenses and pay owed wages upon employees’ separation from the company.
According to Lee’s complaint, he and other hourly employees regularly worked well beyond the standard eight hours per day and 40 hours per week, often exceeding 12-hour workdays and frequently being required to work weekends. Despite this, Fisker allegedly did not provide compensation for the additional time worked. Lee further claims that Fisker neglected to accurately track employees’ hours and deducted commissions from their hourly pay.
Lee alleges that Fisker established policies to underreport hours worked in order to meet certain goals and boost sales. Additionally, he contends that Fisker pressured non-exempt employees to work off the clock, had their wages deducted or miscalculated, and either shortened or eliminated meal and rest periods without proper compensation.
Overall, Lee’s complaint paints a picture of a work environment at Fisker where employees were routinely overworked and undercompensated, with alleged coercive tactics employed to enforce these practices.
Lemons
Fisker began facing lawsuits in California as early as November, alleging violations of the state’s lemon law. The company has initiated settlements for some of these cases, essentially repurchasing the affected vehicles, as indicated by court filings and insights from an individual familiar with the settlements.
Despite these settlements, additional lemon law lawsuits continue to surface in California, where Fisker has predominantly distributed its vehicles in the United States. It’s likely that customers in other states where Fisker operates, such as New York, Florida, and Massachusetts, have also pursued legal action. However, arbitration requirements in these states complicate the assessment of pending actions against the company.
Furthermore, in its 2023 annual filing, Fisker acknowledged defending against a proposed class action lawsuit by shareholders alleging violations of securities laws. The company vaguely mentioned various other legal actions, including matters related to alleged product defects, employment disputes, product warranties, and consumer protection laws.
Additionally, Fisker disclosed receiving inquiries and requests for information from unidentified government agencies, including subpoenas—a new addition to its SEC filings. However, Fisker’s Vice President of Communications, Matthew DeBord, clarified that the company currently faces no pending subpoenas from governments.