EV Bus Company Files Chapter 11
Proterra, the electric bus company celebrated by President Joe Biden, unexpectedly filed for bankruptcy Monday, attributing its financial struggles to “various market and macroeconomic headwinds.”
The California-based company filed a voluntary Chapter 11 reorganization under the U.S. Bankruptcy Code in the District of Delaware, with the intention of “strengthening its financial position” and enabling each product line “to maximize their independent potential.”
At the time of filing, Proterra has already secured about $200 million in debtor-in-possession (DIP) financing and a $55 million investment from a new investor, in addition to the existing agreement for $20 million in existing financing. Proterra said it would continue to operate as usual with employee salaries and benefits, and compensation to vendors and suppliers, during the process.
"We recognize the great potential in all of our product offerings to enable this important transformation," Proterra CEO Gareth Joyce said in a statement.
The development is all the more unexpected given the company’s regular endorsement by the Biden Administration. On April 20, 2021, the president hosted a virtual White House event to point the spotlight on Proterra’s business. During the event, Proterra executives took him on a virtual tour of the company’s South Carolina manufacturing facility for assembling the park’s buses.
"I want you all to know I used to be a bus driver," Biden remarked at the conclusion of the event.
Biden has since touted his support for billions of dollars in federal funding to accelerate the adoption of zero-emission transit buses and school buses during the tour. He has set a goal for all buses made in America to be zero-emissions by 2030.
The same month, President Biden appointed Joyce to serve on the White House Export Council, the principal national advisory committee on international trade.
Energy Secretary Jennifer Granholm has also faced criticism for her ownership stake in Proterra. While she sold her shares in the company after facing public disdain, Michael Chamberlain, the director of Protect the Public’s Trust, said, “the American public still deserves answers to why this perceived conflict lasted as long as it did."
The filing for bankruptcy also means that Proterra’s decision to go public in early March 2021 “could prove to be a bust for investors,” said Morningstar analyst Jamison Jennings.
While Proterra’s Chapter 11 exit plans are not clear yet, analysts are expecting the company’s future to become more focused on its individual product lines.
"As commercial vehicles accelerate toward electrification, we look forward to sharpening our focus as a leading EV battery technology supplier for the benefit of our many stakeholders," Joyce said in a statement.