What happened

In a much-needed respite for investors in Fisker (FSRN -9.04%), the languishing electric vehicle (EV) stock went parabolic this week after the company provided a crucial business update that could be a game changer. Fisker stock was up a staggering 45% for the week as of Friday noon ET, according to data provided by S&P Global Market Intelligence.

So what

Earlier in the year, Fisker said it expected homologation tests for its all-electric SUV, Ocean, to complete in March, followed by regulatory approval that should pave the way for commercial sales of its first EV.

Fisker Ocean SUV.

Image source: Fisker.

This week, Fisker announced that the European regulators have certified Ocean for sale. The company now expects to kick off sales in Europe on May 5 with the first delivery of its limited-edition SUV, Ocean One. By the end of September, Fisker expects to deliver all Ocean One SUVs -- it has 5,000 orders -- and start deliveries of Ocean Extreme.

Both One and Extreme are the highest-priced Ocean trims, listed at $68,999 each. Fisker also expects to start deliveries of lower-trim level vehicles by September.

With Fisker now confirming it is on track to begin deliveries, the stock unsurprisingly skyrocketed after the update.

Fisker started producing its SUVs in November 2022 and had secured nearly 65,000 reservations in total as of Feb. 24, which could potentially bring in revenue worth $3 billion. Also, Fisker already has its production plans in place, unlike some other EV start-ups, and expects to produce more than 40,000 units this year.

Most importantly, Fisker is targeting a gross margin of 8% to 12% for 2023 and expects to generate positive earnings before interest, tax, depreciation, and amortization (EBITDA) this year. There's a reason why the start-up is confident of pulling off this feat in its first full year of production: Fisker doesn't produce vehicles but has contract manufacturing agreements with established companies like Magna Steyr, a subsidiary of auto parts giant Magna International.

Now what

Fisker's asset-light, low-cost business model and the compelling price points of its EVs have garnered a lot of attention from investors in EVs. The company's latest update has only added fuel to the fire, and the EV stock will likely continue to be on investors' radar as they await the company's first-quarter earnings release on May 9.