Electric car maker Coda files for bankruptcy after selling just 100 of its all-electric sedans, another example of battery-powered vehicles’ failure to break into the mass market

Electric car maker Coda files for bankruptcy

3:18am EDT

By Nichola Groom

May 1 – Green car startup Coda Holdings Inc filed for Chapter 11 bankruptcy protection on Wednesday after selling just 100 of its all-electric sedans, another example of battery-powered vehicles’ failure to break into the mass market. The filing with U.S. Bankruptcy Court in Delaware will allow the Los Angeles company to exit the auto sector and refocus on energy storage, a far less capital-intensive business. The company uses the same technology it used in cars to build systems for utilities and building operators to store power.A group of lenders led by Fortress Investment Group LLC (FIG.N: QuoteProfileResearchStock Buzz) plan to extend debtor-in-possession financing and will seek to acquire the company for $25 million through the bankruptcy process, Coda said in a statement.

Coda launched its five-passenger electric car in California a year ago, delivering a range of 125 miles on a single charge. The $37,250 vehicle was criticized for its no-frills styling, and its short history also included a recall due to faulty airbags.

Consumers have been slow to gravitate toward electric vehicles (EVs) as a result of their high cost, and fears about their driving range.

Just three years ago Coda was one of an emerging crop of California startups including Fisker Automotive and Tesla Motors Inc (TSLA.O: QuoteProfileResearchStock Buzz) seeking to build emission-free electric cars to appeal to mass-market consumers.

Investors poured money into the sector, and Coda raised $300 million in equity from backers including Aeris Capital, Limited Brands Chief Executive Les Wexner, and former U.S. Treasury Secretary Henry Paulson. The company, however, in 2012 withdrew its request for $334 million in federal loans like the ones Fisker and Tesla received.

As the allure of EVs faded, Coda struggled to secure new private funding. Last year, Coda sought to raise $150 million but clinched just $22 million, according to a filing with the U.S. Securities and Exchange Commission.

Tesla has put thousands of cars on the road, but Fisker is considering a bankruptcy filing. Fisker’s lithium-ion battery maker, A123 Systems Inc, filed for bankruptcy late last year.

General Motors (GM.N: QuoteProfileResearchStock Buzz) and Nissan Motor Co (7201.T: QuoteProfile,ResearchStock Buzz) also invested heavily in electric vehicles, but sales have lagged hopes.

Coda has about 40 active employees and expects to recall 50 furloughed workers. Emerald Capital Advisors is advising Coda on its restructuring, and Houlihan Lokey is its investment banker.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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