Shares of Fisker appreciate by over 22% in pre-market trading on February 24, following the designer and manufacturer of electric vehicles’ (EVs) decision to enter into a memorandum of understanding (MOU) with Hon Hai Technology Group (Foxconn) to develop a “breakthrough” EV. The electric vehicles project has been tagged ‘Project PEAR’ (Personal Electric Automotive Revolution).
“The creation of Project PEAR with Foxconn brings together two likeminded and complementary companies, each focused on creating new value in a traditional industry. We will create a vehicle that crosses social borders, while offering a combination of advanced technology, desirable design, innovation and value for money, whilst delivering on our commitment to create the world’s most sustainable vehicles,” said HenrikFisker, CEO and Chairman of Fisker’s (FSR).
The companies plan to jointly develop the electric vehicles, with production expected to start in the fourth quarter of 2023.Foxconn will be in charge of manufacturing the vehicle at projected annual volumes of 250,000. Both companies expect that this project has a global scope in different markets including Europe, China, India and North America.
FSR and Foxconnare also expected to enter into a formal partnership agreement during the second quarter of 2021.
About a week ago, R.F Lafferty & Co analyst Jaime Perez initiated coverage with a Buy rating and a price target of $23.
“The company is developing the Fisker Ocean, an all-electric midsize luxury SUV for the consumer market with an MSRP [manufacturer suggested retail price] between $37,499-$69,900. Fisker will introduce a prototype of the Ocean all-electric SUV in mid-2021. Then, the company will launch production of the Ocean in late 2022,” said Perez.
“Also, the company is simplifying the auto purchasing experience to consumers by using a directto-consumer sales model, which skips the traditional OEM-dealer model. This sales model is based on a digital platform where potential buyers may place a reserve on the Ocean through the Fisker app or on the company’s website. In addition, the company plans to offer flexible leasing where consumers may elect to cancel their auto lease early,” he added.
The rest of the Street expresses cautious optimism on the stock with a Moderate Buy consensus rating. That is based on 2 Buys and 2 Holds, with the average analyst price target of $21.33 implying 30.9% upside potential to current levels.
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