Swedish truck maker Volvo Group will pay $210 million to build and charge bankrupt Proterra Inc.’s batteries.
Volvo Battery Solutions has been selected as the winning bidder for the business and assets of Proterra Powered, one of two auctions for the electric bus, battery and power company that filed for bankruptcy in August.
“We entered the Chapter 11 process with a mission to maximize the potential of each of our product lines. Today, we have taken a significant step towards this goal for our Proterra Powered business,” said Gareth Joyce, CEO of Proterra. news.
Bids for Proterra’s electric buses and energy businesses closed on October 26. A bankruptcy auction is scheduled for Monday. Proterra began operations in 2004 as a manufacturer of electric shuttle buses and generated over $200 million in revenue. Business power and charging units came later.
Great economic decline
Proterra expects the bankruptcy court to approve the Volvo purchase on Nov. 28. It includes a development center for battery modules and packs in Burlingame, California and an assembly plant in Greer, South Carolina.
Volvo expects the deal to close in the first quarter of 2024. The company said the purchase would not be material to Volvo Group’s financial performance.
That statement shows how far Proterra has fallen since it went public through a reverse merger with special-purpose buyout firm ArcLight Clean Transition Corp. in June 2021 at an enterprise value of $1.6 billion. Proterra received $640 million in SPAC proceeds.
The pandemic created massive supply chain disruptions for the company and slowed transit bus orders because so many people were working from home. Proterra quickly burned through its SPAC cash and additional borrowings.
Proterra included a going concern notice with the Securities and Exchange Commission in March as part of its 2022 10-K filing. Such a filing calls into question whether a company would be in business one year from the filing. The company filed for Chapter 11 bankruptcy protection on August 7.
Secure jobs, but awkward client contract discussions may follow
Proterra continues to supply customers with battery packs. That includes rival Volvo Daimler Truck North America Thomas Built Buses and Freightliner Custom Chassis Corp. It is not clear what will happen to these contracts. Proterra also makes battery packs for Nikola Corp.’s fuel cell electric trucks.
“At this stage it is too early to comment on any current or future business,” Volvo Group spokesman Claes Eliasson said in an email Friday morning. “We intend to operate the business as a going concern.”
Volvo plans no immediate changes to Proterra Powered, which means trained employees are “of the utmost importance to retain,” Eliasson said.
The landscape is changing
When Nikola bought the since-liquidated battery pack maker Romeo Power, the electric truck maker said it planned to keep the packaging capacity for itself. Peterbilt by Paccar Inc. had a five-year battery pack contract with Romeo. Deals with startups Lion Electric and Lightning eMotors both fell through.
Volvo rivals Daimler and Paccar have formed a $2-3 billion joint venture with Cummins Inc. in September to manufacture lithium iron phosphate batteries in the US with technical guidance from a Chinese battery maker. The joint venture plans production in 2027.
“With this acquisition, the Volvo Group will complement its current and accelerate its future battery electric roadmap,” the company said in a news.
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