Coda Automotive shuts down as parent company refocuses on Coda Energy
Start-up electric car maker, Coda Automotive, has filed for bankruptcy on Wednesday. Parent company, Coda Holdings, will restructure the overall organization to abandon electric car production, and to focus on sister company Coda Energy, the maker of energy storage systems.
The Los Angeles based automaker has faced troubles since last summer. After high expectations, the company saw low sales, has closed their store, undergone layoffs and is facing lawsuits over unpaid bills.
Coda Holdings is the parent of both Coda Automotive and Coda Energy. The latter was formed a couple years ago when the company bought energy storage system maker EnergyCS. It was Coda Energy that designed the battery pack for the Coda electric car.
The key technology Coda Automotive brought to the game was the battery pack, battery management and thermal management systems. They have a joint venture with Tianjin Lishen, a Chinese battery manufacturer, to supply cells. The car and most other parts are sourced from parts makers, most of which come from China. Final assembly occurs at a facility in Benicia CA.
The energy storage systems market is growing, and more closely matches the company's core technology. Such systems are essentially large battery packs, and are envisioned to provide electrical grid stability services (frequency and voltage stabilization). Coda Energy has customers, is shipping products, and says they have a robust pipeline of new customers.
Coda had raised over $200 million in investment capital. For the restructuring, FCO MA CODA Holdings LLC, an affiliate of Fortress Investment Group, will be leading a consortium of lenders intending to provide debtor-in-possession (DIP) financing during the restructuring process, if the bankruptcy court agrees to their motion. That company is also seeking to be the stalking horse bidder to buy out the assets.
In addition to shutting down the automotive business, the Company will seek to monetize the value of those automotive business assets. Their plan to develop a low cost electric car with Great Wall Motors is, at best, on the auction block. Another plan, to supply cars for an electric taxi service to be run by Better Place in the San Francisco Bay Area, will also be affected not only by this move, but by the closure of Better Place's operations in North America.
In February, an SEC filing by electric drive train maker, UQM, disclosed that company had written off the debts they were owed by Coda Automotive, because they correctly predicted Coda would not survive. Coda's electric car has a UQM motor and controller, which Coda's engineers customize.
There was no word about warranty and service support for existing Coda electric car owners. Those sales were conducted through independent dealers, who are still in business.
"After concluding a comprehensive review of our strategic options, the Board of Directors, management team and senior lending group have concluded that focusing on the Company's energy storage business presents the best opportunity moving forward," said Phil Murtaugh, Chief Executive Officer, CODA Holdings, Inc. "We believe the restructuring process that we have entered into today will enable the Company to complete a sale and confirm a Plan that maximizes the value of its assets, serving the best interests of our stakeholders."