Both parties are hoping to complete the acquisition in early 2024. The transaction is still subject to several approvals, including that of the insolvency court. If it gets the green light, Volvo will take over the development centre for battery modules and packs in California and Proterra’s battery assembly plant in South Carolina, which opened in January 2023. The agreed purchase price is 210 million dollars. It remains to be seen how Volvo will integrate the Proterra business into its group structure.
Proterra filed for Chapter 11 bankruptcy protection in the US in August, which is effectively a self-administered bankruptcy proceeding for restructuring. The company’s announcement at the time spoke of a “strategic initiative to strengthen [its] financial position and sharpen [its] technology focus.”
“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,” said Proterra CEO Gareth Joyce at the time. Proterra had already reported hardware bottlenecks in the summer of 2022 and named the availability of parts as one of the biggest challenges.
Chapter 11 insolvency proceedings in the USA are filed to allow a company to reorganise and protect it from legal actions by debtors until the reorganisation is complete. If a company is insolvent and sees no basis for successful continued operation, it terminates those operations according to the rules of Chapter 7. In the wake of the 2009 financial crisis, General Motors also filed for Chapter 11 bankruptcy proceedings.
Proterra went public in 2021 via SPAC merger to facilitate access to investor funds. At the time, the company was valued at 1.6 billion dollars, including debt. At the last close of trading before the Chapter 11 bankruptcy announcement, Proterra still had a market value of 362 million dollars.
Proterra just ramped up production at a new battery assembly plant in Greer, South Carolina, this January. The company operates another plant in California. In both cases, cylindrical cells from LG Energy Solution are processed into battery packs used in Proterra’s electric buses and by third-party customers. Since business operations will continue now, the customer projects mentioned remain unaffected. But if no investor is found, they could be in the future. Battery systems from Proterra are purchased by companies such as the Shyft Group, Nikola, Vicinity Motor, Anadolu Isuzu, and Volta Trucks.