Henrik Fisker: We’re Not Raising Prices, Fisker’s Business Model Explained

Fisker Flexee Lease, Ocean Lease Program, Digital Mobility Company

Fisker’s business model is innovative and ahead of its time compared to other car manufactures.

Henrik Fisker tweeted moments ago explaining the company’s business model. He apparently keeps getting peppered with questions about whether or not the company will be raising prices of the Fisker Ocean at launch. Short answer. Fisker Inc will not be raising prices on the Fisker Ocean. See Fisker’s Tweet below. The company isn’t a traditional car manufacturer like most think.

Earlier this week Rivian faced backlash after it announced it would not honor prices for customers that had previously reserved one of their electric trucks and SUVs. Since then, the company CEO walked back the significant price increases. The CEO said it will now honor prices for customers that previously ordered a vehicle.

Why Fisker won’t need to raise prices until it has pricing power

Things are different at Fisker. The company is future forward and has a disruptive business model. As explained by Henrik, Fisker Inc is a digital mobility company with a vehicle OTA (over the air) lifetime business model that benefits from recurring revenue. Simply put. Customers will be able to unlock features after they purchase or lease a Fisker Ocean. You only pay for the features you need. The company is not your typical car manufacturer. So what does that mean? It all begins with the Fisker Flexee Lease, a revolutionary way for customers to get their next sustainable electric vehicle. Let us explain.

Fisker’s business model explained

Consumers will be able to purchase a Fisker Ocean Sport for $37,499 USD (before any applicable tax credits). The same EV with a Fisker Flexee Lease starts at $379/month with a one-time $2,999 initiation and activation fee, which includes 30,000 annual miles. Think of it like a Netflix subscription, but for an electric car.

Each Fisker electric vehicle in the Flexee Lease program will have a lifespan of 12 years. It will have multiple owners over the the life of the vehicle. The average lease is about 3 years so let’s say each Fisker Ocean Sport will have 4 owners. Of course, each time a car is turned over it will need a refresh (minimal cost).

After twelve years of leasing the same vehicle to four owners, each Fisker Ocean Sport will have a lifetime value of approximately $66,572. The math is simple. ($379/month lease x 12 months x 12 years) + ($2999 x 4 owners) = $66,572. Once a 12-year old Fisker Ocean reaches the end of its life it will be recycled. However, there are even more recurring revenue streams for the same vehicle in the Flexee Lease program and even for those that purchased the Ocean Sport outright.

Wait, but there is more! Over the air updates.

At $37,499, or the ridiculously low Fisker Flexee price of $379/month, the Fisker Ocean Sport model won’t have all the bells and whistles activated. Regardless of whether a customer purchases the Fisker Ocean outright or is a Fisker Flexee lessee, they will will have an option to purchase or subscribe to enable certain features. Each Fisker Ocean is over specced will more or less the same hardware for customers to unlock features with over the air updates. These are what Fisker refers to as OTA (over the air) updates.

Some of the features activated in the much more expensive Fisker Ocean Ultra or Fisker Ocean Extreme can be unlocked on the Ocean Sport for a recurring monthly subscription or possibly a flat out purchase much like the Tesla Model 3 performance boost for an additional $2,000. That means, lessees will need to purchase over the air updates. For example, seats can be heated in all trims of the Fisker Ocean, but the features are locked in the Ocean Sport. Other features that come in the premium versions that may be unlockable in the Ocean Sport could include steering wheel adjustments or traffic sign/light recognition among others.

That means Fisker has a chance to upsell customers additional features after they purchase a Fisker Ocean. And sell the same software upgrade to four lessees for each vehicle in the Fisker Flexee Lease program before it is sunset. Hence, the recurring revenue streams. There is clearly a lot more to the business model. However, it should give stakeholders an appreciation for what the company is trying to do.

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