Volvo Buys Bankrupt Proterra For $210 Million At Auction
Swedish truck manufacturer Volvo announced on Friday that it successfully secured the battery business of Proterra in the United States through a winning bid of $210 million at an auction. The auction was conducted as part of Proterra’s ongoing Chapter 11 bankruptcy protection proceedings in the U.S.
In an official statement, Volvo outlined its intention to finalize the acquisition, pending approval from the bankruptcy court, early next year. With the addition of Proterra’s battery business unit, Volvo Group, headquartered in Gothenburg, Sweden, is poised to acquire a development center for battery modules and packs in California, along with an assembly facility in South Carolina.
The current focus of Proterra Powered, the business unit in question, is the conversion of medium- and heavy-duty commercial vehicles into electric vehicles (EVs). Volvo Group, renowned for its production of trucks, buses, and construction equipment, sees this acquisition as strategically beneficial.
The transaction is contingent upon approval by the U.S. bankruptcy court, with the closing anticipated in early 2024.
Proterra, earlier this year, consolidated battery and bus production at its South Carolina facility and implemented job cuts as part of cost-cutting measures. However, challenges in the supply chain, financial constraints, and the funding required for scaling ultimately led to Proterra filing for Chapter 11 bankruptcy in August, as reported by Electrek.
Gareth Joyce, CEO of Proterra, commented in a statement, “We entered into the Chapter 11 process with a mission to maximize the potential of each of our product lines. Today, we have taken an important step toward that goal for our Proterra Powered business.”
Alastair Hayfield, Senior Research Director at market intelligence firm Interact Analysis, expressed in an email, “When Proterra filed for Chapter 11 bankruptcy, we predicted that it would make sense for a legacy OEM to acquire the business and integrate it into their own. What is not clear is whether Proterra’s agreements with other OEMs will remain. For example, Komatsu Construction had an agreement in place for the supply of batteries; it is unknown at this point if that will continue.”
This development will expedite Volvo Group’s battery-electric road map, representing a significant opportunity to expand the scale of commercial electric vehicles and more. Additionally, it is poised to benefit Volvo Group concerning the “American-made” battery requirement outlined in the Inflation Reduction Act for tax credits.
Based in Burlingame, California, Proterra filed for Chapter 11 protection in the District of Delaware, where it is incorporated. The goal of this move is to secure the company’s financial stability through reorganization or potential divestiture of certain business units.
Information for this briefing was found via Reuters, Electrek, and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
