Proterra, biggest EV bus maker in the US, files for bankruptcy protection

Proterra, the largest U.S. electric-bus maker, filed for Chapter 11 bankruptcy protection late Monday.

It’s a shocking turn for the nearly two-decade-old U.S. company, which has sought to compete against giant Chinese rival BYD and to partner with traditional bus-makers in the emerging North American and European electric bus markets.

Proterra stated it plans to continue business operations as it pursues a restructuring ​“to strengthen its financial position through a recapitalization or going-concern sale.” The company intends to work with the bankruptcy court and its creditors to ​“use existing capital to fund operations, including paying employee salaries and benefits, and compensating vendors and suppliers on a go-forward basis.”

Proterra, founded in 2004, has sold about 1,300 buses to more than 130 transit agencies in the U.S. and Canada. It also supplies drivetrains and batteries for other bus and transit manufacturers including Daimler’s Thomas Built Buses and Freightliner Custom Chassis divisions, Van Hool, Bustech and others.

The Burlingame, California–based company has raised about $682 million in venture capital from investors including Daimler, Generation Investment Management, Kleiner Perkins, Tao Capital Partners, Soros Fund Management, Cowen Sustainable Advisors and GM Ventures to build electric buses that gained a foothold in early North American deployments.

In 2021, it became one of the largest of a slew of EV-related companies to go public via a reverse merger with a special-purpose acquisition company (SPAC). The deal netted Proterra $640 million and valued the company at $1.6 billion. Following the public listing, Proterra announced plans to expand its South Carolina manufacturing facility and capitalize on the boost in federal EV funding from 2021’s Bipartisan Infrastructure Law and 2022’s Inflation Reduction Act.

And unlike many of the other EV SPACs that have struggled to attain manufacturing scale, ​“Proterra, to its credit, actually had very meaningful revenue,” said Pavel Molchanov, director and equity research analyst at Raymond James & Associates. In its most recent quarterly earnings statement in March, Proterra reported revenue of $80 million, with roughly two-thirds from its bus manufacturing.

But Proterra has failed to turn a profit on its core electric bus manufacturing operations, as well as the drivetrain, battery and EV charger businesses it launched over the past five years, he said. Proterra’s cost of goods sold for the first quarter was $86.1 million, even greater than its revenue, which ​“means that Proterra loses money on every bus it sells,” he said.

“You see this even among the big incumbent manufacturers,” Molchanov said. Ford Motor Co. made waves in March when it revealed losses from its EV operations of $900 million in 2021 and $2.1 billion in 2022 and forecast that it expects to lose $3 billion in 2023. Ford doesn’t expect to hit its target of an 8 percent profit margin on its EV business until 2026. It took Tesla until 2020 to turn a profit.

But Proterra lacks the deep pockets — or the high-margin internal combustion vehicle sales — of the other bus manufacturers in the EV field. Proterra marked a first-quarter 2023 net loss of $244 million, nearly five times higher than its $51 million loss in the quarter one year prior.

Since that Q1 earnings report in March, the company’s share price has tumbled to below $2 since March, a world away from its post-SPAC high of $26.38. Shares fell below $1 on news of its Chapter 11 filing.

“So the company is burning cash in operations,” Molchanov said. ​“And at some point, if you keep burning cash, you have to raise more money. And if the stock is trading at a dollar a share, as it was — today it’s worse — it’s hard to raise money.”

That has put the company ​“between a rock and a hard place,” he said. ​“The choice for the company was whether to file for bankruptcy and restructure, or needing to undertake an extremely painful and dilutive capital raise.”

Proterra listed at least $500 million in assets and about the equivalent amount in liabilities in its Chapter 11 petition in the U.S. Bankruptcy Court in Delaware. A company spokesperson did not immediately respond to requests for comment on Tuesday.

Molchanov also highlighted the enormous gap between Proterra and other North American electric school bus manufacturers such as Lion Electric and GreenPower Motor and the world’s biggest electric-bus maker and biggest EV maker overall, China’s BYD.

“BYD will probably sell 3 million electric vehicles this year,” he said — a mark of its dominance in a market that remains almost completely a Chinese phenomenon.* Nearly all the world’s electric buses are in China, the result of a major government push to convert fossil-fuel fleets and grow the domestic industry that’s brought BYD billions of dollars of incentives over the past half-decade.

According to the International Energy Agency, China accounted for 80 percent of global electric bus sales in 2022, and many of those sold beyond its borders are Chinese-made. North American and European bus-makers, by contrast, have ​“only a few thousand electric buses on the road,” Molchanov said.

Still, U.S. electric bus adoption — particularly for school buses — has started to blossom in recent years. The disruption of Proterra, a key player helping drive that growth, presents a hurdle that the market will have to overcome in order to continue its transition away from fossil fuels.

*Correction: This story originally stated that Pavel Molchanov expected BYD to sell 3 million electric buses this year, rather than 3 million total EVs. We regret the error.