NASDAQ: TSLA, otherwise known as Tesla, the star of the burgeoning luxury electronic vehicle (EV) market, seems to get all the admiration from Wall Street as Elon Musk and his company has pioneered and dominated the space in the market’s most desirable vehicles. However, the other luxury EV automaker Fisker Inc., has been making some waves with its reverse merger with Spartan Energy Acquisition Corp (SPAQ) through its registered NASDAQ: SPAQ stock. Thanks to this EV maker’s talent pool, CEO Henrik Fisker who has already established himself as a legend in the world of luxury automobile design, threatens to serve as a true rival to Tesla in the expanding luxury EV universe.
Fisker vs. Tesla
However, Fisker is not out to dethrone Tesla and its boss, Elon Musk. Fisker, for now, seems content as a solid second filled as its $4 billion USD market cap value is considerably lower than Tesla’s $400 billion stock price. However, the SPAQ stock has the potential to be a huge long-term investment bonus as the boom of EVs continues to show no sign of slowing down anytime soon. According to Investor Place, buying into Fisker now before it becomes the next Tesla is advised. It is believed among investors there will be no greater disruption in the 2020s than turning the automotive transportation world into full electrification. So far, over 64.3 million new passenger vehicles were sold on a global scale in 2019 that only saw slightly over two million of them being EV units. While the numbers may not seem that impressive, the shift towards EV units is increasing and it is expected to accelerate during the 2020s. With improved technology going into EV units that show better performances in battery charging and usage, this has been meeting the demand of eighty percent of prospective car buyers that want to switch to EV units. In the state of California, there is a stipulation in place that by the end of 2035, no more gasoline-powered automobiles are allowed to be sold. Since 2011, the average range of an EV unit has increased by 140 percent and the improvements keep coming. The cost for an EV unit has also been falling, dropping as much as seventy percent since 2010. Every automaker in the business is shifting to manufacturing EV units as the race seems to be on to move away from gasoline-powered vehicles as quickly as possible. EVs are literally disrupting the multi-trillion-dollar auto market and it is expected over the next twenty years to continue restructuring how the automotive industry works. Because of this disruption, opportunities are brewing. This also means increased competition among EV makers where there will be buyouts and mergers that will shape the landscape of the New York Stock Exchange, as well as global trading arrangements as the world.
Fisker and SPAQ
Both Fisker and SPAQ are receiving nods as worthwhile long-term stock investments, at least for now. However, with more interest and investors pouring into EV manufacturers that show the most promise, the window of opportunity will likely narrow fast, as that’s how the world of the stock market goes. Unlike most up-and-coming EV manufacturers, Fisker has as its company leader Henry Fisker, someone who has a solid reputation in the luxury automobile market. This is the brainchild behind many of the world’s most iconic luxury vehicles such as the Aston Martin DB9, the Aston Martin Vantage, the BMW X5, and the BMW Z8. Already in the past several years, Henrik Fisker has spent a considerable amount of time and effort into Fisker Ocean, which is scheduled for launch in 2022 as the official rival against Tesla’s X and Y EV models, at least in terms of design, features, and performance. The Fisker Ocean currently offers a three hundred-mile driving range, which is currently the best in the market. As for cargo space concerns and seating space, the Fisker Ocean it is smaller than Tesla’s EV models, but this is made up for with a built-in solar panel roof that allows auto-recharging while driving. This ultimately leads to longer driving ranges, which is one of the leading concerns potential EV automobile buyers are looking for. The interior is entirely vegan as it is made up of recyclable materials. For the sake of the math, Fisker Ocean has forty-five cubic feet of cargo space compared to Tesla’s sixty feet. The Fisker Ocean also seats five passengers, not seven. However, with the retail price being $37,500 USD as opposed to $50,000 from Tesla’s Model X and Model Y units, this math works in Fisker’s favor. The aesthetics and technical math between the two rivals are equal. The vehicle price works in Fisker’s favor to win over potential car buyers who normally spend an average of $30,000 USD for gasoline-fueled automobiles that range anywhere from mid-size to SUVs. Bearing that cost in mind, plus the constantly forking out money for fossil fuels, the $37,500 USD investment seems like a real bargain as gas and oil prices continue to wreak havoc on the consumer market. For SPAQ, this is math that works in its favor as Fisker Ocean’s game-changing price tag in the luxury EV market.
Recognizing Risk Factors
Investments of any kind, whether it’s short-term or long-term, always face risk. When it comes to large-scale manufacturing for a new car, there is always an execution risk factor involved, especially among companies that match Fisker, or even Tesla for that matter. Among those who are familiar with Henrik Fisker’s name, his first foray into the EV industry came through his electric sportscar known as Karma. Both Justin Bieber and Al Gorce became customers, but the momentum came to a halt once the company’s battery supplier went out of business. Since then, however, Fisker has aimed to outsource all of the manufacturing this time, primarily through the world’s largest automobile maker, Volkswagen. By doing so, Fisker has vastly reduced the execution risk, battery supplier reliance, capital requirements, and manufacturing costs. Furthermore, Fisker’s partnership to hyper-focus on design and software will help the company firmly establish and sustain competitive advantages. Although there are still a number of execution risks here, there is far less risk for Fisker than among most other emerging EV makers. This helps make SPAG become that much more attractive as a long-term stock investment. The hotbed of EV stocks is expected to become even hotter.
Currently, SPAQ’s potential to score early investors huge gains shows impressive math, to say the least. So far, management is targeting 225,000 deliveries that will generate $13.2 billion USD in revenue, and $2.8 billion USD adjusted EBITDA by the year 2025. Given that the EV market is likely to have over ten million units sold at a global scale by then, this target seems easy enough to achieve. So far, Tesla’s stock throughout 2021 has averaged a forward EV/EBITDA multiple of ~20X. Going with a 20X forward multiple, that’s $2.8 billion USD in 2025 adjusted EBITDA, which implies a 2024 enterprise value of $56 billion USD for Fisker. This puts SPAQ at the potential to rise by at least twenty times over the span of the next five years, perhaps even in just four. According to 2020 projection by The Next Avenue, SPAQ’s stocks can provide investors with massive long-term gains, despite its questions revolving around management’s projections. When SPAQ merged with Fisker Auto in 2020, its stock value shot u by fifty-six percent. The EV-focused company was recognized by Henrik Fisker as an answer to his company’s battery supply problems he experienced with the Fisker-Karma. Since then, SPAQ has been listed as a special purpose company that has continued to show signs of significant growth since the 2020 merger. At the time, this was seen as unrealistic management expectations, but 2021’s events have seen the speed course laid out for the EV industry to be as realistic as it gets. The investors recognize this, as well as consumers, who are watching every little move the automotive industry is making.
More About Fisker Ocean
Fisker Inc. was founded by Henrik Fisker and his wife, Geeta Gupta-Fisker in 2016 out of Los Angeles, California, USA. It is the spawn of Fisker Automotive, which was also founded by Henrik Fisker, but in 2007. It was through Fisker Automotive that Fisker Karma was produced, but had issues with its battery supplier. Fisker shut down Fisker Automotive in 2014, only to bring forth Fisker Inc. in its stead. Taking the hard lessons learned from the now-defunct Fisker Automotive, a determined Henrik Fisker has been making all the right moves to ensure Fisker Inc.’s Fisker Ocean succeeds as an all-electric SUV made from recycles and vegan materials. The driving range for this EV unit is expected to stretch anywhere from three hundred miles to three hundred and fifty miles. This time, instead of relying on an outside source for battery supply, Fisker, as a company, has directly aligned with the largest automobile maker in the industry, Volkswagen. Together, along with new battery technologies, these two companies are promoting a battery that can charge up a five-hundred-mile range battery in as little as a minute. At the time, publications saw Fisker’s claims of superior battery performance questionable, but upon the acquisition of SPAQ, which is backed by the private equity firm, Apollo Global Management, it seems Fisker is on course to achieve the impossible.
Where is SPAQ Going
When Fisker announced plans to have four vehicles in its portfolio by 2025, it raised anticipation, speculation, and questions about, SPAQ was in direct mention how this was going to happen. The first of these four vehicles is the SUV, Fisker Ocean, which will be followed by the Fisker Emotion, which is a coupe-style SUV unit. There is also a Fisker Alaska pickup truck in the works. The Fisker Orbit is an all-electric shuttle planned to operate in technologically smart cities that has a network of sensors that collect and send data, much like a Smartphone and similar devices. Already, as of July 30, 2020, it was announced there were already 7,062 reservations made for the Fisker Ocean SUV models. Come September 24, 2020, Fisker opened up a new technology center in San Fransisco, California to serve as the focal point for the development of the company’s software and vehicle electronics. This is where SPAQ comes in. On October 14, 2020, Fisker then announced its new global headquarters, Inception, which was to be located in Manhattan Beach, which is in Los Angeles County.
Fisker announced on October 15, 2020, it would be outsourcing its Fisker Ocean EV SUV units to Magna Steyr, which is an Austrian-based contract manufacturer. This is to reduce the complexities and costs related to building and operating the units in its own factory. Plans are in the works for Fisker to utilize Magna’s electric vehicle platform, which sees the Australian company have a six percent stake in Fisker’s equity. Plans for Magna to start building the Fisker Ocean in Europe were slated to start in 2022. Also in October 2020, the Danish ride-hailing service, Viggo, ordered three hundred Fisker Ocean SUV units for its fleet, which is scheduled to be delivered in 2022. Since then, additional agreements have been made with Credit Agricole Consumer Finance, as well as the UK’s electric car subscription service, Onto, that will see up to seven hundred Fisker Ocean SUV units hit the streets by the end of 2023. If this isn’t enough to cause potential investors to salivate SPAQ’s long-term investment interest, perhaps the contract agreement for the Fisker Emotion EV SUV with Foxconn of Taiwan may heighten the interest. The coupe-style SUV unit is currently being referred to as the Project Personal Electric Automobile Revolution (PEAR), which is Foxconn’s intent to produce up to 250,000 of these EV models per year for Fisker, by the end of 2023. These models are expected to come from the former GM plant Foxconn recently purchased from Lordstown Motors, as well as anything the Taiwanese manufacturer builds for Lordstown. It was also agreed between Fisker and Japan’s Sharp Corporation where infotainment screens and other related components are to be installed in all upcoming Fisker vehicles. There is also a Popemobile SUV, which is based on the Fisker Ocean model, that’s in the works for Pope Francis, which will be the first emissions-free EV unit designed specifically for the Pope.
Fisker and SPAQ
As of June 28, 2021, Fisker was added to the Russell 3000 Index, which means SPAQ is a part of that pie. There are also a series of global brand experience centers opening up across Europe and the US, as well as a ten million dollar private investment in public equity funding in SPAQ. There is also a partnership between Fisker and Bridgestone that will see the tire company’s product become the exclusive supplier for Fisker’s EV units.