Another big name in the electric bus and battery manufacturing industry, Proterra Inc., has filed for Chapter 11 bankruptcy protection. The Burlingame, California-based company aims to reorganize its business units while continuing operations. Proterra boasts of its original line of electric buses, battery packs, and electric infrastructure. In this blog post, we will discuss what led to the bankruptcy filing, what the company aims to do going forward, and its impact on the electric vehicle industry.
Proterra’s bankruptcy filing is not surprising, given its financial struggles in recent years. In March, the company filed a notice of going concern with the Securities and Exchange Commission, signaling doubts about its ability to remain in business for a year. During the first quarter of 2021, Proterra had $296 million in cash and equivalents, which it plans to use to fund operations and pay employee salaries and benefits. It also intends to freeze back payments as allowed by Chapter 11 rules.
Proterra filed its petition voluntarily in the District of Delaware, where it is incorporated. The company hopes to find ways to strengthen its financial position, such as through recapitalization or selling some of its business units. Some experts suggest that the company may sell its electric battery business, which could fetch a high price.
The bankruptcy filing has put Proterra’s future in question, but the company remains optimistic. During its Q1 earnings call, Proterra projected revenue of $450 million to $500 million in the second half of 2023 based on a minimum backlog of $1 billion in orders. The company plans to continue its operations while sorting out its business units and exploring new options.
Proterra, the 19-year-old company known for its electric bus business and foray into battery making, has been a disappointment to Wall Street. The company recently made headlines by taking the faster route to going public through a special purpose acquisition company (SPAC), which not only brought attention to its newer business units but also secured a substantial $640 million.
To combat financial challenges, Proterra made strategic moves including consolidating its bus and battery operations in Greer, South Carolina, resulting in the cutting of 300 jobs in January. In addition, the company faced loan defaults in March, but managed to secure an extension until 2028, despite agreeing to higher interest rates of 12% annually in cash and stock.
Certain covenants, such as the requirement to maintain a minimum of $125 million in cash reserves each quarter, were waived by the lenders. It is worth noting that Proterra’s auditor’s statement on a notice of going concern was overlooked by the lenders.
From James Carter on LinkedIn:
SPAC problem child #2 goes under
“We have faced various market and macroeconomic headwinds that have impacted our ability to efficiently scale,” Proterra Inc CEO
This I didn’t see coming.
I’ve been following Proterra for a while, and no doubt there’s been challenges.
Their buses haven’t been a picture of reliability and there’s been a lot of senior management turn over.
However, the battery business appeared to be doing well, with contracts to some well known companies.
Yet all was obviously not well.
It’s a shame, I was expecting much more. Maybe they can restructure and pull out of this, maybe not.
Oh and then there’s the billions of incentives for buses the feds are shoveling on the hoods of buses.
Proterra’s bankruptcy filing is not just a setback for the company, but it could also impact the wider electric vehicle industry. This is especially true for companies that supply Proterra with parts, as they may face payment delays or losses. However, the bankruptcy filing should not be viewed as a sign that the electric bus industry is struggling. In fact, the demand for electric buses is growing around the world, driven by the need to reduce greenhouse gas emissions and air pollution.
The bankruptcy filing of Proterra Inc. is a significant development for the electric vehicle industry. The move highlights the challenges facing electric vehicle manufacturers, especially those with limited financial resources and stiff competition. However, it is important to note that Proterra’s bankruptcy filing does not mean the electric bus industry is in trouble. The demand for electric buses is growing globally, and many companies are investing heavily in the sector. As Proterra reorganizes its business units and works towards a brighter future, it should serve as a reminder that the electric vehicle industry has a bright and promising future.