Fisker Inks MOU With Foxconn To Develop EV; Shares Pop 22% Pre-Market

Shares of Fisker shot up by 22.3% in pre-market trading on Feb. 24 as the designer and manufacturer of electric vehicles (EVs) entered into a memorandum of understanding (MOU) with Hon Hai Technology Group (Foxconn) to develop a “breakthrough” EV. The EV project has been codenamed ‘Project PEAR’ (Personal Electric Automotive Revolution).

Fisker’s (FSR) Chairman and CEO Henrik Fisker said, “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.”

FSR and Foxconn intend to jointly develop the EV, and production is expected to begin in the fourth quarter of 2023. Foxconn will manufacture 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.

Both FSR and Foxconn expect to enter into a formal partnership agreement during the second quarter of this year. (See Fisker stock analysis on TipRanks)

Around a week ago, R.F Lafferty & Co analyst Jaime Perez initiated coverage with a Buy rating and a price target of $23.

Perez said, “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.”

“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,” Perez added.

The rest of the Street is cautiously optimistic on the stock with a Moderate Buy consensus rating. That’s based on 2 Buys and 2 Holds. The average analyst price target of $21.33 implies 30.9% upside potential to current levels.

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