In another bitter blow for the U.S. government and the U.S. electric motoring industry, Coda Holdings has today filed for chapter 11 bankruptcy protection. The company has a number of divisions although is perhaps best known over the last few years as the U.S. assembler for an array of Chinese made electric vehicles. It seems that disastrous sales and seeing the company sell just 100 of its new all electric Sedan have been behind today's move.
The filing was made with the U.S. bankruptcy court in Delaware and effectively gives the company short-term protection from creditors and an opportunity to reorganise its finances. There is intense speculation that the company will return to its core energy storage business which uses much of the technology it transferred into its electric car operation.
Potential buyout on the way
There is also speculation of a potential debt in possession financing arrangement, which will effectively see the company bought out for $25 million during the bankruptcy process. A group of lenders are lining up behind Fortress Investment Group LLC and we await further details of this potential development.
Quote from ElectricForum.com : "Check out this link to the Tesla website which allows you to search for the nearest Tesla outlet to your area. There is every chance that you might be able to organise a test drive."
The fact is that the company was caught somewhere in the middle ground offering a vehicle with 125 miles journey capacity on a single charge at a cost of around US$37,000. The cost of the vehicle was towards the top end, the journey capacity was towards the top end, but the company was criticised for a no-frills approach to the styling of the vehicle. There was also a recall because of faulty airbags which obviously did the company no favours.
Is the US electric vehicle industry dead?
There was disappointment with the news from Coda Holdings which comes hot on the heels of further financial trouble at Fisker Automotive. Indeed, if you look back in history, Coda Holdings managed to raise $300 million on the back of the electric car wave just a few years ago. It comes from a stable which included the likes of Fisker Automotive and Tesla Motors which have seen very different performances over the last few years.
The truth is that many electric car companies in America, and indeed across the world, were living on a financial shoestring, with highly capital intensive technology arms eating away at their finances. The idea was that this new technology would hit the automotive market quicker, see a greater take-up and ultimately begin to pay for itself almost immediately. However, unfortunately this has proven not to be the case and it looks as though major changes are afoot at Coda Holdings and Fisker Automotive.
It will be interesting to see how the U.S. government reacts to this latest negative development in the automobile industry. This is an area of business in which the U.S. government has invested massive amounts of taxpayer money and to date there has been little in the way of return. The Obama government has issued a number of very optimistic forecasts for the future and unfortunately many of them seem to be well short of the mark.