This Business Insider report says Fisker has the potential to be a bigger disrupter than Tesla ever was.
Henrik Fisker may not have succeeded with making cars the first time around with Fisker Automotive, although the original Fisker Karma still lives on as the Karma Revero, but now he is expected to do much better with Fisker Inc., launched in 2016, according to this Business Insider article.
At first, Fisker wanted this new company to focus on design work and concept cars, but in 2020, he reimagined its business model. It was announced that Fisker Inc. would begin production of its first model, the Ocean electric SUV, priced from $37,500, would begin in 2022, as well as the fact that it was not the only model in the pipeline.
The company is now run according to a so-called asset-light business model which basically means it is all for outsourcing and making all the pieces fit together. In Henrik Fisker’s own words,
If I’m an architect, do I need to make my own bricks? No, but I need the bricks to come together in the right place. We don’t want to be a vertically integrated car company. We’re not going to do our own manufacturing. It would be stupid for any EV startup to make a brand-new factory.
The Ocean, for instance, will be built by Magna on the latter’s own bespoke EV platform. This approach also allows Fisker to be more flexible, adapt to changing market conditions faster. The CEO of Magna International, Swami Kotagiri, explained that
We can’t wait for the normal cycle of five-to-10 years. Power requirements might be different. We don’t want to have to re-melt and re-pour.
But could we really see Fisker as a bigger disrupter of the traditional automotive business model than Tesla? The latter has undeniably helped shake up the industry and it has forced established automakers to try to keep up with its electric offerings, thus showing their limitations – they are all massive conglomerates that cannot implement change as quickly as is needed in some situations, so Fisker believes that his business model’s flexibility will help the company become and then stay relevant.
Now even if Tesla’s products are quite different to what the establishment (still) has to offer, the company still behaves like a traditional automaker in that it owns all of its production facilities and it hardly ever outsources any part of its business.
With that in mind, according to this new report published on Business Insider, even though Tesla changed the face of the industry forever, it could not actually be classed as a disrupter. The source quotes an older interview with Clayton Christensen, the author of a book called The Innovator’s Dilemma, who said about Tesla that
You could use a lot of characteristics to describe Tesla. They’re very creative. They understand jobs needing to be done. Their technology is very good. But we would not regard Tesla as disruptive. They’re trying to make good products better. Our model is, very, very clear on this topic.
According to Christensen, is not a disrupter because it doesn’t fit the standard description for one. As explained in the source article,
The core concept is that incumbents, such as the Detroit automakers, are disrupted by new entrants who initially offer a cheaper, lower-quality, yet satisfactory, product. Consumers vote with their dollars, the disrupters improve their offerings, and the incumbents eventually can’t catch up with the innovations.
And this is where Fisker comes much closer to being an actual disrupter: it doesn’t want to become like the traditional automakers and, unlike Tesla, its first offering doesn’t cost $100,000 making it an expensive luxury item, and since the Ocean is projected to cost well then half that, it has the potential to be attractive to more people.
We’ll have to wait and see if this disrupter approach will pay off for Fisker which already has plans to launch a second (cheaper) model after the Ocean. Interestingly, it won’t be developed with Magna, but with Taiwanese Apple supplier, Foxconn.
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