Fisker to enter emission credit market to boost cash flow

Fisker announced the company has signed a deal with a major automaker to sell emission credits. Fisker declined to name the automaker with which it is partnering.

Governments around the world are actively promoting the reduction of carbon emissions by implementing incentives aimed at encouraging automakers to prioritize the development of electric vehicles or cars with minimal carbon footprint. As part of these initiatives, car manufacturers are granted credits for producing and selling environmentally friendly vehicles.

These automakers are obligated to attain a specific quantity of regulatory credits each year. If they fail to meet the target, they have the option to purchase credits from other companies that have surplus amounts. Given that Fisker exclusively sells electric cars, the company can accumulate surplus regulatory credits. Consequently, they can sell these credits for a profit.

Per Reuters, the company hopes the deal will help shore up cash flow through an uncertain market and an ongoing price war with Tesla and other EV automakers. Tesla’s continual price cuts have forced Fisker to reset its ambitions in 2023 and beyond, as the market is still settling in North America and Europe.

Fisker is not the first automaker to enter the emission credit market to help sure up finances. The market has long been a lucrative revenue stream for EV start-ups and has been used by Tesla and others. The announcement comes as Fisker lowered its 2023 production target while reporting increased losses in quarter one.

Fisker hopes its Ocean SUV, which has started deliveries in Europe and is expected to begin deliveries in the US next week, will provide some much-needed cash flow.

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