May 1 - Green car startup Coda Holdings Inc filed for Chapter 11 bankruptcy protection on Wednesday after selling just 100 of its all-electric sedans, another example of battery-powered vehicles' failure to break into the mass market.
The filing with U.S. Bankruptcy Court in Delaware will allow the Los Angeles company to exit the auto sector and refocus on energy storage, a far less capital-intensive business. The company uses the same technology it used in cars to build systems for utilities and building operators to store power.
A group of lenders led by Fortress Investment Group LLC (FIG.N) plan to extend debtor-in-possession financing and will seek to acquire the company for $25 million through the bankruptcy process, Coda said in a statement.
Coda launched its five-passenger electric car in California a year ago, delivering a range of 125 miles on a single charge. The $37,250 vehicle was criticized for its no-frills styling, and its short history also included a recall due to faulty airbags.
Consumers have been slow to gravitate toward electric vehicles (EVs) as a result of their high cost, and fears about their driving range.
Just three years ago Coda was one of an emerging crop of California startups including Fisker Automotive and Tesla Motors Inc (TSLA.O) seeking to build emission-free electric cars to appeal to mass-market consumers.
Investors poured money into the sector, and Coda raised $300 million in equity from backers including Aeris Capital, Limited Brands Chief Executive Les Wexner, and former U.S. Treasury Secretary Henry Paulson. The company, however, in 2012 withdrew its request for $334 million in federal loans like the ones Fisker and Tesla received.
As the allure of EVs faded, Coda struggled to secure new private funding. Last year, Coda sought to raise $150 million but clinched just $22 million, according to a filing with the U.S. Securities and Exchange Commission.
Tesla has put thousands of cars on the road, but Fisker is considering a bankruptcy filing. Fisker's lithium-ion battery maker, A123 Systems Inc, filed for bankruptcy late last year.
Coda has about 40 active employees and expects to recall 50 furloughed workers. Emerald Capital Advisors is advising Coda on its restructuring, and Houlihan Lokey is its investment banker.
Reporting By Nichola Groom in Los Angeles; Editing by Daniel Magnowski