“Proterra’s most prominent role was as an electric bus manufacturer, and therefore that portion of the business is what we need to be most focused on as the bankruptcy process unfolds,” he said.
The future of Proterra’s Transit business is also “relevant for maintenance of the hundreds of buses that are already on the road,” Molchanov added. “Millions of people across the U.S. and Canada have used — quite possibly without knowing it — a Proterra bus, for example, at airports and university campuses.”
Outside of its manufacturing business, the company also supplied drivetrains and batteries for other bus and transit manufacturers via its Proterra Powered business, set to be acquired by Volvo. Its customers have included Daimler’s Thomas Built Buses and Freightliner Custom Chassis divisions, Van Hool, Bustech and others. Those business lines, which made up about one-third of Proterra’s revenue, had been an increasing target of the company’s spending in recent years, including a $76 million investment in its battery factory in Greer, South Carolina.
Proterra Powered “has a specialized product, and there is a useful role in the industry for smaller, more focused players such as this,” Molchanov said.
Mike Roeth, executive director of the North American Council for Freight Efficiency, a nonprofit research group, echoed this perspective. Many heavy-duty vehicle manufacturers outsource engine and drivetrain production to third-party providers, he noted. That business model has played a role in electric medium-duty vans and trucks, and it could offer opportunities for Volvo to expand into a growing number of medium- and heavy-duty electric vehicles as well.
“They’re either buying them to be their technology provider or their battery supplier, or to do what I’m suggesting: become a powertrain provider and sell it to someone else,” he said.
The rocky road for EV bus-makers
Over its lifetime, Proterra 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. It went public via a reverse merger with a special-purpose acquisition company (SPAC) in 2021, bringing in $640 million more from investors and valuing the company at $1.6 billion.
But despite its early traction and sizable funding, Proterra continued to lose money on its product sales and services, as revealed by recent earnings statements. That’s not unusual for electric-vehicle manufacturers looking to recoup the cost of new manufacturing facilities while selling into what remains a tiny share of overall vehicle sales. But unlike global automakers such as Ford and General Motors — or China’s BYD, the world’s biggest maker of electric cars and buses and a chief competitor in the electric transit bus space — Proterra lacked the deep pockets to absorb those losses.
Proterra listed assets of $819 million and debts of $609 million in its Chapter 11 petition in the U.S. Bankruptcy Court in Delaware. The company had been attempting to sell its unprofitable bus-making division for some time and announced plans in January to shut down its Southern California bus and battery production facility and concentrate manufacturing in South Carolina.
Going forward, federal policies enacted by last year’s Inflation Reduction Act will help U.S. electric-vehicle, drivetrain and battery makers better compete. The historic climate law created tax credits for medium- and heavy-duty EVs and EV chargers, $2 billion in grants to retool factories to manufacture clean vehicles and $20 billion in lending authority for the Department of Energy’s Advanced Technology Vehicles Manufacturing Loan Program.
The 2021 Bipartisan Infrastructure Law also boosted the sector by directing $5 billion to electrifying school buses, nearly $1 billion to reduce emissions at airports and billions of dollars in grants to deploy EV charging equipment.
But U.S. EV bus-makers, the new owners of Proterra’s assets included, must contend with China’s and BYD’s dominance in the space, Molchanov noted. China accounted for 80 percent of global electric-bus sales in 2022, according to the International Energy Agency; BYD has sold more than 50,000 electric buses globally and more than 1,000 in the U.S.
The road to competing with BYD and others might be more promising now, thanks to the new federal funding — but it still won’t be easy.