Proterra files bankruptcy

[strictures]

https://www.globenewswire.com/news-release/2023/08/07/2720194/0/en/Proterra-Announces-Strategic-Initiatives-to-Strengthen-Financial-Position-and-Sharpen-Technology-Focus.html

From the press release:

"The Company intends to continue to operate in the ordinary course of business as it moves through this process and plans to file the customary motions with the Bankruptcy Court to use existing capital to fund operations, including paying employee salaries and benefits, and compensating vendors and suppliers on a go-forward basis in accordance with Chapter 11 rules, all while ensuring business continuity for customers.

“Proterra is at the forefront of the innovations that are driving commercial vehicle electrification. We know we’re building industry-leading products that our customers want and need,” said Gareth Joyce, Proterra CEO. “The foundation we have built has set the stage for decarbonization across the commercial vehicle industry as a whole, and we recognize the great potential in all of our product offerings to enable this important transformation. This is why we are taking action to separate each product line through the Chapter 11 reorganization process to maximize their independent potential.”

“While our best-in-class EV and battery technologies have set an industry standard, we have faced various market and macroeconomic headwinds, that have impacted our ability to efficiently scale all of our opportunities simultaneously. As commercial vehicles accelerate towards electrification, we look forward to sharpening our focus as a leading EV battery technology supplier for the benefit of our many stakeholders,” said Joyce."

[Busjack]

Other than saying that the company intends to reorganize as a going concern (i.e. is not liquidating) I have never seen a bankruptcy announcement with so much puffery. For anyone with any interest in finance, this analyst's article describes all the complications, but, as expected, his recommendation to sell comes too late.

The bankruptcy filing indicates that Proterra  has 3 operating units: bus, batteries, and charging units, but its debt is common to all, and while there is investor interest in the battery and charger business, the reorganization is needed to split them from the bus business. The intent is to honor existing contracts.

[andrethebusman99]

Way I read it, Proterra will concentrate on the battery business, as the bus building business was not all that successful, with 1000 total built in 9 years.

[Busjack]

1 hour ago, andrethebusman99 said:

Way I read it, Proterra will concentrate on the battery business, as the bus building business was not all that successful, with 1000 total built in 9 years.

Only thing clear is that they want to split the businesses. They requested an auction for the businesses.

It's like when the Tribune went bankrupt, it split into a newspaper and a broadcasting business, and different companies took over each. They are still operating. It's also similar to when Central Grocers went bankrupt, including Strack and Van Til. In both the Proterra and Central Grocers cases, stalking-horse bidders were found, which set a minimum bid. In the case of Strack and Van Til, whatever company that owned Jewel was the stalking-horse bidder, but the Strack family outbid them.

As I noted above, the intent is to reorganize, not reject contracts and liquidate.

[rvwnsd]

Given Proterra has only sold 1,300 buses to 130 agencies, this makes sense. Now that both NFI and Gillig sell electric buses there's no reason for transit systems to buy from an inexperienced bus builder like Proterra. I wonder if ENC will try to buy Proterra, given they do not currently make electric buses.

PS: I know Nova also sells electric buses, but their pulling out of the US market makes them moot in the US.

[Busjack]

6 hours ago, rvwnsd said:

Given Proterra has only sold 1,300 buses to 130 agencies, this makes sense. Now that both NFI and Gillig sell electric buses there's no reason for transit systems to buy from an inexperienced bus builder like Proterra. I wonder if ENC will try to buy Proterra, given they do not currently make electric buses.

PS: I know Nova also sells electric buses, but their pulling out of the US market makes them moot in the US.

Again, why are you assuming Proterra is going out of business? Did you read the court filing?

You're also wrong about ENC.

THIMK before you post.

 

[artthouwill]

7 hours ago, rvwnsd said:

Given Proterra has only sold 1,300 buses to 130 agencies, this makes sense. Now that both NFI and Gillig sell electric buses there's no reason for transit systems to buy from an inexperienced bus builder like Proterra. I wonder if ENC will try to buy Proterra, given they do not currently make electric buses.

PS: I know Nova also sells electric buses, but their pulling out of the US market makes them moot in the US.

I experienced bus builder?  Proterra wariness of the first,, if not THE FIRST company to build electric buses.  The New Flters, Novas,  and Gilligs started building EVs in response to Proterra.  New Flyer did build hybrid buses, but Proterras were clean sheet bulds 

[jajuan]

On 8/10/2023 at 8:53 AM, Busjack said:

Again, why are you assuming Proterra is going out of business? Did you read the court filing?

You're also wrong about ENC.

THIMK before you post.

 

I was just going to say that I heard about ENC building both battery electric and fuel cell buses to fit varying needs and choices among US TAs in their moves to add zero emission buses to their fleets. 

On 8/10/2023 at 2:16 AM, rvwnsd said:

Given Proterra has only sold 1,300 buses to 130 agencies, this makes sense. Now that both NFI and Gillig sell electric buses there's no reason for transit systems to buy from an inexperienced bus builder like Proterra. I wonder if ENC will try to buy Proterra, given they do not currently make electric buses.

PS: I know Nova also sells electric buses, but their pulling out of the US market makes them moot in the US.

As @artthouwill points out, ENC is not inexperienced by any means when it was the first to build electric buses. It may not have had the name recognition of NF, Gillig, ENC, Nova which is now pulling out of the US, Orion or NABI (the last two now defunct after being bought out by NF and NF soon after making the Xcelsior its only active bus model) due to its central focus on zero emission buses but it was the company to start it all on that front. So it's definitely not inexperienced. If we're being honest and more open to what's been going on among the TAs, we'd acknowledge that TAs as a whole really weren't looking for electric buses all that much. The farthest they'd commit was hybrid buses and clean diesel buses because public sentiment only focused on cleaner air and bus and truck operators using vehicles with cleaner burning fuels. A number of TAs may have converted their diesel fleets to primarily hybrid fleets or taken on more or transitioned to CNG buses, but electric buses were still a small niche. As such order sizes among the TAs had been rather small compared even to those in more recent years. It wasn't until the public's focused moved from not just cleaning up the air but also operating with smaller carbon footprints that TAs really started looking towards electric buses as more than just niche items since hybrid and CNG buses both leave a carbon footprint and therefore both just as disqualifying as fully diesel buses on that front. When TAs began drawing up plans and making commitments to transition to all electric bus fleets by anywhere from 2030 to 2040, NF, Gillig, ENC and Nova saw the writing on the wall and started focusing more on creating, building and improving their own electric bus options. If they didn't, it would be Proterra and BYD eating up more of the market as electric buses have been becoming more of a thing after the shift in societal focus to decreasing carbon footprints.

[jajuan]

For me, based on @Busjack's explanation of what's happening and that the main focus is reorganizing, it would be interesting to see if the bus manufacturing side moves forward as a spun off company that stands on its own or gets spun off and operates as someone's subsidiary though keeping a distinct identity. 

[Busjack]

33 minutes ago, jajuan said:

...Orion or NABI (the last two now defunct after being bought out by NF and NF ... we'd acknowledge that TAs as a whole really weren't looking for electric buses all that much. The farthest they'd commit was hybrid buses and clean diesel buses because public sentiment only focused on cleaner air and bus and truck operators using vehicles with cleaner burning fuels. A number of TAs may have converted their diesel fleets to primarily hybrid fleets or taken on more or transitioned to CNG buses, but electric buses were still a small niche. ... since hybrid and CNG buses both leave a carbon footprint and therefore both just as disqualifying as fully diesel buses on that front. When TAs began drawing up plans and making commitments to transition to all electric bus fleets by anywhere from 2030 to 2040, NF, Gillig, ENC and Nova saw the writing on the wall and started focusing more on creating, building and improving their own electric bus options. If they didn't, it would be Proterra and BYD eating up more of the market as electric buses have been becoming more of a thing after the shift in societal focus to decreasing carbon footprints.

• Not horribly relevant here, but through a couple of transactions, Orion became owned by Daimler, which decided that the U.S. market wasn't worth it; not much different than MAN and Nova/Volvo (twice). Considering that MTA was a big customer of Orion and Nova/Prevost, if they couldn't make it here with that customer...
• CNG is a strange animal. I remember in the 1970s that natural gas was supposedly so scarce that it wasn't supposed to be used for barbecue grills and electric power generation; then it was the "clean" solution until when Pace said the Wheeling garage would be all CNG; then that was put on hold indefinitely for a few CNGs and the rest electric. Now there is even talk about banning gas stoves.  I still don't know why the are still flaring the methane from the various Mount Trashmores instead of recovering it.
• I agree with you on the other companies offering battery and fuel cell buses, but the impetus seems less public demand (other than the activists) but the FTA requirement that TAs develop a transition plan, which resulted in Charging Forward and Project Zero. From my previous posts, I don't believe that the feeds are putting enough money into the conversion, making the manufacturing less lucrative.
• IMO, the real stink is caused by diesel trucks, but Lion Electric seems to be the only company that has a comprehensive approach to that.

[jajuan]

Here's an article from StreetsBlog USA in light of Proterra filing for bankruptcy speaking on the challenges it faced and still faces getting US TAs transitioned from diesel buses to electric ones. By extension as implied in the article context, these same challenges are there for NF, Gillig, and ENC, the top diesel manufacturers remaining in the US market that have their own electric models.

[Busjack]

8 hours ago, jajuan said:

Here's an article from StreetsBlog USA in light of Proterra filing for bankruptcy speaking on the challenges it faced and still faces getting US TAs transitioned from diesel buses to electric ones. By extension as implied in the article context, these same challenges are there for NF, Gillig, and ENC, the top diesel manufacturers remaining in the US market that have their own electric models.

The article is fair, doesn't assume liquidation and dissipation of assets, and mentions 1 point 1 have: Funding. The one thing it doesn't mention is the [at least Pace's] claim that the components to assemble them are not available.

On your NFI point, although it is pushing CHARGE on all of its subsidiaries' sites, it too would be in trouble if its annual production went from 2500 to, say, 500. (Latest Press Release says for Q2 "931 equivalent units ("EUs") delivered, with 25% being battery- and fuel cell-electric buses ("ZEBs").") Just about anything other than a 40 foot or smaller diesel bus counts as 2 EU. As I also mentioned, Rev Group (ENC) hasn't announced much lately, and Pace looks like it won't exercise something like 180 options (only  67 of 165 30 footers and 46 of 135 CNGs). Other TAs have said they have left options on the table.
 

[rvwnsd]

On 8/10/2023 at 6:53 AM, Busjack said:

Again, why are you assuming Proterra is going out of business? Did you read the court filing?

You're also wrong about ENC.

THIMK before you post.

 

"THIMK?" Really?  The irony, the irony.

Let's break down my post:

On 8/10/2023 at 12:16 AM, rvwnsd said:

Given Proterra has only sold 1,300 buses to 130 agencies, this makes sense.

Nothing here about going out of business. The "this" that "makes sense" is the Chapter 11 bankruptcy filing. 

On 8/10/2023 at 12:16 AM, rvwnsd said:

Now that both NFI and Gillig sell electric buses there's no reason for transit systems to buy from an inexperienced bus builder like Proterra.

Nothing here about going out of business. 

On 8/10/2023 at 12:16 AM, rvwnsd said:

I wonder if ENC will try to buy Proterra, given they do not currently make electric buses.

 

Nothing here about going out of business. It's a statement about a competitor (ENC) buying Proterra out of bankruptcy. 

On 8/10/2023 at 12:16 AM, rvwnsd said:

PS: I know Nova also sells electric buses, but their pulling out of the US market makes them moot in the US.

Nothing here about Proterra going out of business. This is a comment on Nova's irrelevance in the US market. 

So, where do you see an assumption that Proterra will go out of business, @Busjack? 

[Busjack]

14 hours ago, rvwnsd said:

• ...Given Proterra has only sold 1,300 buses to 130 agencies, this makes sense.

...It's a statement about a competitor (ENC) buying Proterra out of bankruptcy. 

Nothing here about Proterra going out of business. This is a comment on Nova's irrelevance in the US market. 

So, where do you see an assumption that Proterra will go out of business, @Busjack? 

It's clearly inferrable from what you said.

You tell us:

• Why should ENC buy its business unless the assets are for sale because it is going out of business, especially since ENC is, contrary to your incorrect assumption, assembling both BE and FC buses? The "irony" was intentional.
• From "only 1300 buses" you said "The "this" that "makes sense" is the Chapter 11 bankruptcy filing." Did you read the bankruptcy filing? No. Did you read anything about the proposed restructuring plan? No. Do you know anything about Proterra's capital and debt structure? No. Do you know anything about bankruptcy law? No. Do I know about bankruptcy law? Lots.
• Did you read the other comments that if NFI, Gillig, and ENC had to rely on FCBs and BEBs, they would be in worse shape? How many BEBs has ENC assembled?

 

Petulantly repeating "Nothing here about Proterra going out of business." 4 times is just a semantic game, and shows that you have no understanding of the situation. 

I answered your question.

Update: Technically speaking, the current corporate entities are going out of business, with the businesses to be auctioned free and clear of existing liens. But that doesn't mean that the businesses will cease as going concerns. Highlighting this is Debtors' Motion, which says:

Quote

10. The Debtors rely on timely and frequent delivery of goods and services in order to manufacture and service their products. Accordingly, it is essential that the Debtors maintain their relationship with, and maintain the ability to honor, prepetition payment obligations to the Vendor Claimants (the “Vendor Obligations”) in order to prevent any unexpected or inopportune interruption to the Debtors’ operations during these chapter 11 cases. The services and goods that the Vendor Claimants supply to the Debtors are vital to the Debtors’ business and any loss of access to, or delay in the delivery of, such goods and services would materially harm the Debtors’ business and operations. Authorization to pay the Vendor Claimants in the ordinary course of business is necessary in order to minimize disruption to the Debtors’ operations, ensure uninterrupted operation of the Debtors’ business, and allow for a seamless transition through these chapter 11 cases, for the benefit of all parties in interest.

Also, the CEO's declaration says why the company faced financial difficulty, which had nothing to do wth having shipped 1000 buses:

Quote

Despite its technology and position in the market, Proterra Transit has experienced headwinds to its business that also affect the other players in the commercial electric transit business sector. Proterra Transit works with some of the largest, most sophisticated transit agencies in North America. These transit agencies demand highly customized buses that align with the other buses in their respective fleets. Therefore, the manufacturing process requires much customization, which makes scaling the business difficult and requires an extensive amount of working capital.

The electric transit industry has been further challenged by the inflationary macroeconomic environment. ...The inflationary environment proved challenging for Proterra Transit as there is limited ability to pass along higher costs to customers once contracts are signed. Contracts are typically signed 12 to 18 months prior to bus manufacturing. Therefore, contracts signed in 2021 proved to be priced below where the manufacturing costs were ultimately realized in 2022.

Additionally, the Debtors faced another macro environment challenge as supply chain disruptions slowed and weighed on the Debtors’ production efforts. ...

nly through these Chapter 11 Cases could the Debtors address their burdensome Proterra Transit contracts, and their associated liabilities, and the related impediments posed by the Debtors’ corporate structure and existing limitations on borrowing.

 

[jajuan]

On 8/16/2023 at 9:27 AM, Busjack said:

The article is fair, doesn't assume liquidation and dissipation of assets, and mentions 1 point 1 have: Funding. The one thing it doesn't mention is the [at least Pace's] claim that the components to assemble them are not available.

On your NFI point, although it is pushing CHARGE on all of its subsidiaries' sites, it too would be in trouble if its annual production went from 2500 to, say, 500. (Latest Press Release says for Q2 "931 equivalent units ("EUs") delivered, with 25% being battery- and fuel cell-electric buses ("ZEBs").") Just about anything other than a 40 foot or smaller diesel bus counts as 2 EU. As I also mentioned, Rev Group (ENC) hasn't announced much lately, and Pace looks like it won't exercise something like 180 options (only  67 of 165 30 footers and 46 of 135 CNGs). Other TAs have said they have left options on the table.
 

That's why the article caught my eye. It was fair in how it looked at things with Proterra, and it made objective points of what Proterra and by inference the other relevant builders of battery electric (the more relevant form of zero emission buses in CTA's case) and fuel cell buses face under current market conditions of 2023 onward.

[Busjack]

There was an intelligent conversation about the Proterra situation at the Pace Board meeting, starting about here, especially in Chairman Kwasneski's remarks.

[Busjack]

The Chairman's introductory remarks at the Oct. Pace Board meeting were to the effect that much of the APTA meeting was concerned with the electric bus supply situation, including unknowns about the Proterra bankruptcy and supply chain issues, in that the assemblers don't manufacture the components and some suppliers are out of business or have production issues as a result of Covid. APTA established a task force, headed by Dorval Carter.

[artthouwill]

53 minutes ago, Busjack said:

The Chairman's introductory remarks at the Oct. Pace Board meeting were to the effect that much of the APTA meeting was concerned with the electric bus supply situation, including unknowns about the Proterra bankruptcy and supply chain issues, in that the assemblers don't manufacture the components and some suppliers are out of business or have production issues as a result of Covid. APTA established a task force, headed by Dorval Carter.

Perhaps  this is the problem with CTA keeping Proterras on the streets.   If they are having issues with procuring replacement parts due to supply chain issues, that's a valid reason for the buses not running.

[Busjack]

1 hour ago, artthouwill said:

Perhaps  this is the problem with CTA keeping Proterras on the streets.   If they are having issues with procuring replacement parts due to supply chain issues, that's a valid reason for the buses not running.

Can't tell. Discussion was about assembly, but Metzger did say later that she wasn't interested in the buses if there wasn't a buyer in place to honor the warranties. They also mentioned supply chain issues with conventional buses.

[artthouwill]

51 minutes ago, Busjack said:

Can't tell. Discussion was about assembly, but Metzger did say later that she wasn't interested in the buses if there wasn't a buyer in place to honor the warranties.

She definitely did say that.  She also said that besides Proterra being in limbo and Nova ceasing assembly in the U.S., there were only Eldorado,  Gillug,and New Flyer to choose from for building electric buses.  Of course none of them have the capacity to build electrics to meet the demand of the market.

I wonder if Nova decided to pull out of the U S. too soon.   They might have been able to get some traction for its electrics, although they probably would have faced some of the same challenges as the others.  

 

[Busjack]

1 hour ago, artthouwill said:

I wonder if Nova decided to pull out of the U S. too soon.   They might have been able to get some traction for its electrics, although they probably would have faced some of the same challenges as the others.  

 

As I noted earlier in connection with Nova pulling out of the U.S., I'll relink to press releases that NovaBus has contracts for up to 541 electric buses for Toronto (124 firm), and 1229 e-buses for Quebec (339 firm). Compare that to 5 buses for WMATA and 5 for MTA. Volvo knew where the commitments were, and it wasn't in the U.S.

For that matter, Metzger said the scrounging around included NF, but NF got a contract for up to 565 e-buses from Toronto (202 firm).

Metzger saying she was looking for options sounds to me like Pace doesn't want to commit to a procurement unless it gets  a federal grant. While CTA issued a procurement for the 45 buses, it only exercised options when it got specific grants, and it looks like the piddling orders from other major U.S. TAs are similar.

[Busjack]

Announcement that Phoenix Motorcars is the apparent successful bidder for Proterra Transit, subject to court approval. Apparently, Phoenix makes electric paratransits, school buses, and other medium duty electric vehicles. Phoenix announcement.

[Busjack]

On 11/14/2023 at 2:27 PM, Busjack said:

Announcement that Phoenix Motorcars is the apparent successful bidder for Proterra Transit, subject to court approval. Apparently, Phoenix makes electric paratransits, school buses, and other medium duty electric vehicles. Phoenix announcement.

Legal news (probably not accessible without subscription, but here is the reference) that the confirmation of the sale of Proterra Transit was delayed because customers objected that the buyer does not have the ability to perform.

[Busjack]

Austin, TX article on some of the problems.

[artthouwill]

1 hour ago, Busjack said:

Austin, TX article on some of the problems.

I suppose one can brag about zero emissions and quieter engines and not burning diesel fuel when the buses don't run at all.  There is a good reason for bus manufacturers to keep building diesel buses.