Proterra files for Chapter 11 bankruptcy protection
The US electric bus and battery manufacturer Proterra has filed for Chapter 11 bankruptcy protection. It is effectively an insolvency proceeding in self-administration for reorganisation.
The company hopes to strengthen its financial position by recapitalising or selling business units. Proterra intends to continue its business operations during this process.
“While our best-in-class EV and battery technologies have set an industry standard, we have faced various market and macroeconomic headwinds, that have impacted our ability to efficiently scale all of our opportunities simultaneously,” says Proterra CEO Gareth Joyce. Proterra reported hardware shortages in the summer of 2022, citing parts availability as one of its biggest challenges.
Indeed, some companies in the emerging electric mobility sector failed to secure the necessary funding for further investment. In the battery sector, in particular, supply chain constraints have caused prices to go up. And it will be several years before the support programmes initiated by US President Joe Biden will take effect.
Chapter 11 insolvency proceedings in the USA are filed to allow a company to reorganise and protect it from legal actions by debtors until the reorganisation is complete. If a company is insolvent and sees no basis for successful continued operation, it terminates those operations according to the rules of Chapter 7. In the wake of the 2009 financial crisis, General Motors also filed for Chapter 11 bankruptcy proceedings.
Proterra went public in 2021 via SPAC merger to facilitate access to investor funds. At the time, the company was valued at 1.6 billion dollars, including debt. At the last close of trading before the Chapter 11 bankruptcy announcement, Proterra still had a market value of 362 million dollars.
Proterra just ramped up production at a new battery assembly plant in Greer, South Carolina, this January. The company operates another plant in California.
In both cases, cylindrical cells from LG Energy Solution are processed into battery packs used in Proterra’s electric buses and by third-party customers. Since business operations will continue now, the customer projects mentioned remain unaffected. But if no investor is found, they could be in the future. Battery systems from Proterra are purchased by companies such as the Shyft Group, Nikola, Vicinity Motor, Anadolu Isuzu, and Volta Trucks.
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