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No one really saw this one coming. A year ago, Henrik Fisker was an admired veteran of the auto industry, but with a failed start-up behind him. Fisker Automotive’s bankruptcy in 2013 sent Fisker back to his design roots for a spell, but that didn’t deter him from taking another chance at building an automotive business.
However, Fisker Inc. was primarily concept vehicles and Henrik’s one-on-one marketing machine until mid-2020. Much of the electric vehicle narrative until then revolved around Tesla, with the frantic efforts of the traditional auto industry to catch up with CEO Elon Musk forming the key subplot.
Leading to history was a single, powerful, but misunderstood word: disruption. Big Auto, stretching from Detroit to factories in Europe to Toyota City in Japan, was about to be moved by a group of nimble newcomers collectively proclaiming the long-awaited arrival of the era of electrification.
Tesla had been there the longest, over a decade and a half, and Wall Street loved its prospects. By the end of 2020, the California-based company had become the world’s most valuable automaker by far, with a market cap approaching a trillion dollars.
Tesla is not much of a disruptive innovator
Disturbance? At first glance, maybe, but Tesla wasn’t doing anything much different from what Ford and General Motors had for over a century: designing and designing cars assembled in factories that manufacturers owned and operated, and sold in the world. public. . Tesla’s cars were powered exclusively by electricity, but at a basic level they didn’t deviate massively from the auto-manufacturing standard. They had four wheels, four doors and Tesla had to spend at the surprisingly predictable level of global industry to produce them.
The bottom line was that Tesla had succeeded in replacing more than 100 years of deep-rooted internal combustion technology with electric transmissions. Few thought it was possible, even for a large automaker with tens of billions in the bank.
But it wasn’t disruptive, at least not according to the researcher who proposed the much-cited theory of “disruptive innovation”.
“You could use a lot of characteristics to describe Tesla,” Clayton Christensen told me in 2018.
“They’re very creative. They understand the tasks at hand. Their technology is very good. But we wouldn’t view Tesla as a disruptor. They’re trying to make better products. Our model is very, very clear about that. . “
Christensen, who died in 2020, was a Harvard Business School professor who, in 1997, wrote the most important and most cited book on the subject, “The Innovation Dilemma: When New Technologies Fail Big companies ”.
The basic concept is that incumbents, such as the Detroit automakers, are confused by new entrants who initially offer a cheaper, inferior, but satisfying product. Consumers vote with their dollars, disruptors improve their offerings, and ultimately incumbents cannot catch up with innovations.
Why Fisker is disruptive
Tesla’s approach to improvement contrasts with Fisker’s thinking about how a car brand puts its vehicles on the market. Ultimately, Fisker is much closer to Christensen’s true disruptive innovator, even if the company isn’t a perfect fit.
“We don’t want to be a vertically integrated auto company,” Fisker told Insider last year. “We’re not going to do our own manufacturing. It would be foolish for any EV startup to set up a whole new factory.”
Instead, Fisker has partnered with Magna International of Canada, the world’s largest contract manufacturer, to build a first vehicle, the Ocean SUV, which is slated for production in late 2022. Fisker also has reached an agreement with Foxconn of Taiwan, famous as Apple’s iPhone maker, to develop another vehicle, named “Project PEAR”, which fits into the 2023 timeline.
The approach contrasts with other startups, such as Rivian and Nikola, which have embarked on an old-fashioned factory footprint. The risk for these companies is that they have never built vehicles on a large scale before. As Tesla discovered, building automobiles is anything but easy; his vehicles have all endured what Musk called “production hell.”
Fisker’s model has been tested but never undertaken as the only way forward. BMW and Jaguar Land Rover worked with Magna to handle production overflows and to assemble specialized vehicles. But Fisker is the first significant experience in a drastically “active-light” electric car business model.
Something completely different
The asset-based approach has obviously been used by large companies. Apple is essentially a design and software company, with almost 100% of its manufacturing outsourced to suppliers. In the automotive industry, brands like Aston Martin rely on partners like Mercedes-Benz for engines, transmissions and infotainment systems.
But Fisker started out with almost nothing other than Henrik Fisker’s reputation and Instagram account. In 2020, the company’s plans were impressive enough to result in an IPO that raised $ 1 billion and created a market cap of $ 3 billion, which has since grown to almost $ 8 billion. . If all goes according to plan, the Ocean SUV is expected to hit the streets in late 2022 and early 2023.
The Ocean starts at $ 37,499, so this isn’t a classic example of Christensen’s disruptive theory. He told me that the very cheap, short-range electric city cars in China might be a better fit.
But there’s no doubt that Fisker is something completely different. And if the company can make its business model work, it would be the most disruptive thing the auto industry has ever seen.
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