Swedish truck maker Volvo Group will pay $210 million for the battery-making and charging assets of bankrupt Proterra Inc.
Volvo Battery Solutions was selected as the winning bidder for the business and assets of Proterra Powered, one of two auctions for the electric bus, battery and energy company that filed for bankruptcy protection in August.
“We entered into the Chapter 11 process with a mission to maximize the potential of each of our product lines. Today, we have taken an important step towards that goal for our Proterra Powered business,” Gareth Joyce, Proterra CEO, said in a news release.
Bids for Proterra’s electric transit bus and energy businesses closed Oct. 26. A bankruptcy auction is planned for Monday. Proterra went into business in 2004 as a maker of electric transit buses and generated more than $200 million in revenue. The energy and charging business units came later.
A huge financial fall
Proterra expects the bankruptcy court to approve Volvo’s purchase on Nov. 28. It includes a development center for battery modules and packs in Burlingame, California, and an assembly factory in Greer, South Carolina.
Volvo expects the deal to close in the first quarter of 2024. The company said the purchase would be immaterial to Volvo Group’s financial performance.
That declaration shows how far Proterra has fallen since it went public via a reverse merger with special purpose acquisition company 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 worked from home. Proterra burned through its SPAC cash and additional borrowings quickly.
Proterra included a notice of going concern 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 a year from the filing. The company filed for Chapter 11 bankruptcy protection on Aug. 7.
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Proterra continues supplying customers with battery packs. That includes Volvo rival Daimler Truck North America’s Thomas Built Buses and Freightliner Custom Chassis Corp. It is unclear what will happen with those 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 utmost importance to retain,” Eliasson said.
When Nikola purchased the since-liquidated battery pack maker Romeo Power, the electric truck maker said it planned to keep the pack-making capacity for itself. Paccar Inc.’s Peterbilt had a five-year contract for battery packs with Romeo. Deals with startups Lion Electric and Lightning eMotors both fell apart.
Volvo rivals Daimler and Paccar formed a $2 billion-$3 billion joint venture with Cummins Inc. in September to make lithium iron phosphate batteries in the U.S. with technical guidance from a Chinese battery maker. The joint venture plans production in 2027.
“With this acquisition, Volvo Group will complement the current, and accelerate its future, battery-electric road map,” the company said in a news release.