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Those surprised by Proterra Inc.’s Chapter 11 bankruptcy filing earlier this month probably should not have been. The signs of financial stress were all there. Lower-than-expected revenue. The high cost of sales. Even as the company’s cash burn slowed, lenders applied a vice grip in the form of restrictive loan covenants.
Proterra had tried without success last spring to find a buyer for its flagging electric transit bus business. Incentives to help customers offset the upfront cost of buying a bus didn’t help. Proterra was eating 8%-15% cost increases from suppliers. Heavy customization added costs across the three or so years between writing an order and delivering buses to a city.
Asset auctions coming this fall
In filing for protection from creditors — including a $175 million loan that prohibited Proterra from raising capital elsewhere — the company is seeking buyers for some or all of its three businesses. Parties interested in so-called Track A — Proterra Transit and Proterra Energy — can queue up beginning in October. A sale hearing is scheduled Oct. 26.
Track B — all company assets not sold in Track A including Proterra Powered and software-as-a-service business Valence — would be offered in a single sale in November.
Making transit buses doesn’t command big margins. Proterra builds about 60 electric buses a quarter. It delivered 42 in Q1. It is sitting on a $292 million inventory of parts, buses in process, finished units and service parts. That compares to about $170 million a year ago.
Some cities, like Austin, Texas, eagerly await buses they’ve ordered. Other municipalities are short on cash, meaning Proterra carries high receivables — $82 million at the end of June, down from $130 million a year ago. Enticing incentive payouts often get tangled in red tape.
OEMs or private equity may find a deal
Because bankruptcy wipes clean the ugly financials, private equity or an OEM that passed in the spring could be more interested now. But who? Probably not Daimler Truck North America, a Proterra investor. Its Thomas Built Buses and Freightliner Custom Chassis Corp. units get Proterra battery packs, but neither serves the transit bus space. Daimler Coaches imports the Mercedes-Benz Tourrider from Turkey. Coaches have little in common with transit buses.
Under the hood of a Thomas Built Jouley electric school bus powered by a Proterra battery. (Photo: Alan Adler/FreightWaves)
Volvo Group is ending its Nova Bus business in the U.S., selling off transit bus inventory and closing its Plattsburgh, New York, manufacturing plant by 2025.
Gillig, the leading U.S. manufacturer of heavy-duty transit buses, partners with Cummins Inc. and has delivered more than 100 electric transit buses.
Is Cummins in the game?
Does that make Cummins a logical bidder for the Proterra bus works? Maybe. Or maybe Cummins just tries to lure customers concerned that Proterra won’t be around.
Since rebranding its New Power division as Accelera, Cummins has been beefing up its nondiesel efforts, notably through fuel cells and hydrogen-producing electrolyzers. But there could be a fit with existing transit bus customers if Cummins can get a good price in auction.
Gillig buses are built in Livermore, California, making them eligible for Inflation Reduction Act and California incentives.
A Gillig electric transit bus made in cooperation with Cummins Inc. (Photo: Cummins)
Proterra’s 2nd battery line cleared to ship
With the bankruptcy court’s blessing, Proterra is conducting business as usual, using some of its $221 million in cash and short-term investments to keep making battery packs. It was cleared to begin shipping from a second production line at the new Powered 1 plant in Greer, South Carolina, this week.
Customers seem sanguine about receiving the Proterra batteries they’ve ordered. Lightning eMotors claims sufficient Proterra battery packs and is confident of getting what it ordered through 2024, CEO Tim Reeser told analysts this week.
Nikola, stung by its purchase a year ago of its primary pack maker Romeo Power, considered Proterra a backup supplier for its fuel cell electric vehicles. With Romeo being liquidated, Proterra is now the primary source for batteries on what has become Nikola’s main product.
“They’ve been a great battery supplier and we expect them to continue to be a great battery supplier. We expect they will come through this Chapter 11 process,” Nikola CEO Steve Girsky told me this week on Truck Tech. “We’ve gotten no indication that there’s any liquidity issues whatsoever there.
“We expect Proterra to supply all of our fuel cell trucks. That said, we constantly look for other sources down the line.”
Nikola’s former manufacturing partner, Iveco, will use Proterra batteries in both its battery-electric and fuel cell electric trucks, rebranded from Nikola following the end of their joint venture. With its sister powertrain division, FPT, could Iveco be a possible buyer for Proterra’s battery business?
Or maybe somebody we’ve never heard of emerges.
A pallet of Proterra battery packs at Nikola’s plant in Coolidge, Arizona. (Photo: Alan Adler/FreightWaves)
The British are coming: Tevva merges its way into North America
The merger of Canada’s ElectraMeccanica and U.K. electric truck startup Tevva looks like a new electric truck entry in North America.
British Columbia-based ElectraMeccanica ended production of its three-wheel electric SOLO vehicles after a recall and buyback of more than 400 of the vehicles from customers in February. It needed something new.
ElectraMeccanica sees Tevva’s 16,538-pound battery and fuel cell electric trucks as a good way to fill its 285,000-square-foot plant coming online in 2025 in Mesa, Arizona. Tevva will hold most of the equity in the merged company — 76.5%. ElectraMeccanica, which has about $89 million on its books, will hold the rest.
The deal needs the approval of ElectraMeccanica and Tevva shareholders and other signoffs.
The Tevva electric truck is expected to be on North American roads in a few years. (Photo: Tevva)
Briefly noted …
Cummins is touting the first hydrogen fuel cell-powered train in North America.
Lordstown Motors makes an exception to its bankruptcy reorganization, agreeing to pay $40 million to Karma Automotive to settle allegations of misappropriation of trade secrets and intellectual property.
Hexagon Purus has signed a long-term agreement with an unidentified North American OEM to integrate battery electric vocational trucks in North America.
FirstElement Fuel Inc. received a $7.7 million grant from the California Energy Commission to increase its Santa Ana, California, hydrogen manufacturing facility output by more than 10 times.
Mack Trucks says its Roanoke Valley Operations plant is running on zero CO2 emissions.
Level 2 and Level 4 autonomous trucking developer Plus appointed Steven Spinner as chief financial officer.
That’s it for this week. Thanks for reading. Click here to get Truck Tech via email on Fridays. And keep up with the latest Truck Tech TV conversations on the FreightWaves YouTube channel on Wednesdays at 4 p.m. Next week’s scheduled guest is Stefan Heck, founder and CEO of AI-based truck safety software developer Nauto.
The post Who wants a piece or two of Proterra? appeared first on FreightWaves.
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