DETROIT (Reuters) – Fisker Inc, which is going public through a merger with a so-called blank check company, said on Thursday auto supplier Magna International Inc MG.TO will supply the vehicle platform and build the electric carmaker’s Ocean SUV.
As part of the deal, Magna will receive warrants to purchase a stake of up to 6% in Fisker, giving the EV maker an overall valuation of about $3 billion, Fisker Chief Executive Henrik Fisker told Reuters.
“We’re full speed ahead,” Fisker said in a telephone interview. “This is a huge turning point. We realized Magna would be an amazing partner because having skin in the game obviously means we both have the same goal of getting this car to market.”
Fisker, which is merging with Spartan Energy Acquisition Corp SPAQ.N, said it had finalized a deal with Canada’s Magna to build the Ocean in Europe, marking the Canadian supplier’s first entry into contract manufacturing for an EV startup.
While Magna has built vehicles for traditional automakers for years, analysts and investors have speculated it could eventually build for technology companies like Apple Inc AAPL.O.
Magna retrofits vehicles for Alphabet’s GOOGL.O Waymo and builds vehicles for BMW AG BMWG.DE, Daimler AG’s< DAIGn.DE> Mercedes-Benz and Tata Motors Ltd’s TAMO.NS Jaguar Land Rover at its plant in Graz, Austria.
Magna also has a tentative deal to build vehicles for EV startup Canoo Holdings Ltd HCACU.O, which is also going public later this year through a reverse merger with a special-purpose acquisition company, or SPAC.
Magna’s stake in Fisker is subject to hitting three engineering and production milestones through the planned start of production of the Ocean in November 2022, Henrik Fisker said. Fisker Inc said in August it had a tentative deal for Magna to build the SUV at its Graz plant.
Magna President Swamy Kotagiri told Reuters the stake is more about Magna getting compensated.
“We really want to be the Switzerland for the automotive industry – neutrality,” he said. “We’re not siding with one customer.”
“This is a unique competitive position for us, particularly with new mobility players and (automakers) seeking to expand their electrified offerings.”
Further terms of the deal were not disclosed, but Kotagiri said Fisker’s pricing was based on volume. Fisker is targeting initial sales of 8,000 SUVs in 2022, 51,000 in 2023 and 175,000 in 2024.
Fisker had previously said it was negotiating to use Volkswagen AG’s VOWG_p.DE MEB electric-vehicle platform, but Henrik Fisker said the company remains in talks with the German automaker to use unspecified body and interior parts.
Closing a deal addressing Fisker Inc’s platform and manufacturing needs was seen as critical by investors. Fisker’s inability in July to close the deal it initially targeted with VW sent shares in Spartan Energy down 20%.
Fisker and Magna are in talks with major EV battery manufacturers about supplying the necessary batteries, a Fisker spokesman said.
Use of Magna’s aluminum-intensive vehicle platform will allow the Ocean to have an electric driving range of more than 300 miles (483 km) and enable Fisker to offer buyers the option of a third row of seating, Henrik Fisker said.
The vehicle will have a starting price of $37,499.
Fisker Inc’s merger with Spartan is expected to close on Oct. 30 and its shares will trade on the New York Stock Exchange under the symbol “FSR,” Henrik Fisker said.
Reporting by Ben Klayman in Detroit; editing by Jason Neely and Steve Orlofsky