The agreement materializes just a few months after the American manufacturer of batteries and electric buses opted to file for Chapter 11 bankruptcy protection in the United States. Financial difficulties and the lack of financing necessary to sustain the development and production of its electric vehicles and components caused Proterra to begin making staff cuts and adjustments to its operations in early 2023. The combination of challenges in the supply chain, limited demand, and the need for considerable financial investment led to the decision to file for bankruptcy.
Proterra’s history dates back 19 years. The company had several lines of business: its vehicles, such as the ZX5 Max electric bus, and motors and batteries used to power trucks from other manufacturers such as Shyft Group, Nikola, Vicinity Motor, Anadolu Isuzu and Volta Trucks. The latter is also bankrupt, dragged down by this complicated situation of its main supplier.
What is Volvo going to do with its new battery company?
Despite having filed for bankruptcy and requesting aid and protection from US government programs intended for cases like these, the firm remained hopeful that an external investor could acquire the company and revive it. Now, Volvo has announced the acquisition of Proterra’s battery business for $210 million.
Proterra went public in 2021 through a merger with a special purpose acquisition company (SPAC), making it easier to access investor funds. At the time, the company’s valuation reached $1.6 billion, including debt. Just before the bankruptcy announcement, Proterra’s market value stood at $362 million.
The acquisition will be completed in early 2024, although the transaction is subject to various approvals, including that of the Insolvency Court. If given the go-ahead, Volvo will take over the battery pack and module development center located in California, as well as Proterra’s battery assembly plant in South Carolina, opening in January 2023. It remains to be seen. determine how Volvo will integrate the Proterra business into its group structure.
In January, Proterra expanded its production capacity with the opening of a new battery assembly plant in Greer, South Carolina. The company already operates another facility in California. Both plants use cylindrical cells supplied by LG Energy Solution to create the battery packs used in both Proterra’s electric buses and third-party vehicles.