Proterra

What did it do?

Proterra designed and built battery-electric city buses, supplied battery and powertrain systems to other heavy-vehicle makers, and offered charging solutions to fleets. It was founded in Colorado in 2004 by Dale Hill and moved its headquarters to Burlingame, California, in 2015. In 2021 it began trading on Nasdaq through a SPAC merger.

Why did it shut down?

The reasons the company gave for its bankruptcy included supply-chain disruption, the delayed deliveries it caused and contractual penalties. Building heavily customised vehicles for each transit agency pushed costs up, and inflation ate into margins over production cycles of 12 to 18 months. Quality problems also hurt its reputation, such as SEPTA in Philadelphia pulling 25 buses from service because of chassis defects. Proterra filed for Chapter 11 on 7 August 2023. In November 2023 the company's three business lines were sold separately.

The story

In November 2023, in the course of bankruptcy proceedings, one of America's electric bus pioneers was split into three. Volvo Group won the auction for Proterra Powered, the unit making battery and powertrain systems, with a bid of $210 million. Bus manufacturing went to Phoenix Motorcars and the charging systems business to Cowen Equity. A company almost twenty years old was broken up.

Proterra was founded in 2004 in Golden, Colorado, by Dale Hill. Hill had previously founded TransTeq, which built hybrid buses in Denver; Proterra moved away from compressed natural gas technology towards battery-electric buses supported by federal alternative-fuel programmes. Between 2010 and 2011 the company moved its manufacturing and management to Greenville, South Carolina; in 2014 it appointed Ryan Popple, who had come from Tesla, as CEO, and in 2015 it moved its headquarters to Burlingame, California. In 2021 it merged with a SPAC called ArcLight Clean Transition and began trading on Nasdaq.

The company also expanded beyond buses: it developed an electric school bus with Thomas Built Buses and signed a deal with Lightning eMotors to supply batteries for up to 10,000 vehicles over 2022–2025. In 2022 it delivered 199 new buses and battery systems for 1,229 vehicles. It also offered customers a leasing programme that let them spread the cost of the battery over time instead of paying upfront. On the ground, however, there were problems: 25 buses bought in 2016 by SEPTA, Philadelphia's transit authority, were pulled from service in February 2020 because of chassis defects, and the authority's management began to question the future of its electric vehicle purchases.

On 7 August 2023 Proterra filed for Chapter 11. The reasons included supply-chain disruption, the delivery delays it caused and penalties arising from supplier contracts. Building heavily customised vehicles for each transit agency was driving costs up, and inflation was eating into margins over production cycles of 12 to 18 months. In auctions in November the company was broken up; Phoenix Motorcars began building former Proterra models under its own brand from 2024.

Proterra's story shows that having the right technology and a growing market does not save a business model whose manufacturing economics are broken. And it became clear only at the bankruptcy table that the company's most valuable part was not its buses but its batteries.

Lessons for founders

• In public tenders, building a separately customised product for every customer makes costs unpredictable; offer a standard platform with a limited set of options.
• Add price-adjustment clauses for inflation and supply delays to long-lead-time contracts.
• Strengthen your most valuable technology as a separate business line early on; in Proterra's bankruptcy, the highest bid went not to the buses but to the battery business.

Sources

1. Proterra (bus manufacturer) (Wikipedia)
2. EV firm Proterra files for Chapter 11 bankruptcy (Reuters, 2023-08-07)
3. What led to EV darling Proterra's bankruptcy (TechCrunch, 2023-08-09)
4. Volvo Group wins bid for bankrupt Proterra battery assets (FreightWaves, 2023-11-10)
5. https://www.wikidata.org/wiki/Q18011784
6. Wikipedia (English)

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