Proterra, an electric bus maker that has been lauded by President President Biden for its U.S. manufacturing operations, has become at least the third electric-vehicle business to file for bankruptcy in roughly the past year.
The publicly traded business will use the breathing spell from creditors to free itself from contracts that had become unprofitable, Chief Executive Gareth Joyce said in a declaration filed Tuesday in the U.S. Bankruptcy Court in Wilmington, Del. Proterra also plans to look for an investor or sell its businesses.
The Burlingame, Calif.-based company said it had been trying, unsuccessfully, to sell its original flagship business line, the transit division, which designs and makes buses for public transit agencies, airports and other customers. But macroeconomic changes such as inflation and supply-chain issues have made many of the transit unit’s customer and vendor contracts unprofitable, according to the court filings.
Financial problems in its transit division have made it more difficult to invest resources in its two other business lines, which make batteries and charging infrastructure. The company’s first-quarter revenue was $79.5 million, with most being generated by the bus business, regulatory filings show.
“There is limited ability to pass along higher costs to customers once contracts are signed,” Joyce said.
The business was founded in 2004 and sold its first electric transit bus in North America in 2009. It had gone public in 2021 after merging with ArcLight Clean Transition Corp., a special-purpose acquisition company. That same year, Biden took a virtual tour of Proterra.
Jennifer Granholm, U.S. energy secretary, was formerly on Proterra’s board of directors. President Biden also named Proterra CEO Joyce to his export council.
Proterra, which has assets of $819 million and debts of $609 million, is preceded in bankruptcy by Lordstown Motors, which former President Donald Trump lauded as a savior for a closed General Motors factory in Ohio.
Electric vehicle startup Electric Last Mile also in June 2022 filed for chapter 7 bankruptcy within months of its top two executives quitting and the company confirming an investigation by the U.S. Securities and Exchange Commission.
Higher interest rates have pressured the industry and have made it harder to sell new vehicles.
Proterra’s chapter 11 petition names Franklin Resources, Vanguard Group and BlackRock as among the holders of at least 5% of the voting securities.
The company has plants in California and South Carolina and is in the process of closing its City of Industry, Calif., battery plant.
Proterra currently has 942 employees, of which 77 are unionized. The company said it would continue to operate normally during the bankruptcy.
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