Coda Automotive, a Los Angeles-based automaker that once planned to open a Columbus battery factory with 1,000 or more workers, filed for Chapter 11 bankruptcy yesterday. In its bankruptcy filing, the company said it plans to get out of the car business altogether and refocus on "the growing energy-storage market."
Coda Automotive, a Los Angeles-based automaker that once planned to open a Columbus battery factory with 1,000 or more workers, filed for Chapter 11 bankruptcy yesterday.
In its bankruptcy filing, the company said it plans to get out of the car business altogether and refocus on “the growing energy-storage market.”
Since the company was founded four years ago it had sold only 100 cars. A consortium of lenders led by Fortress Investment Group will seek to buy the company for $25 million through the bankruptcy process, maintain its energy-storage business and sell off the assets of the automotive side of the company.
“No one’s really surprised by this,” said Ed Kim, director of industry analysis at AutoPacific in Tustin, Calif. “It was an uphill battle from the start. The U.S. consumer has pretty exacting standards when it comes to the quality of a new car, the refinement and execution of a new car. From a product perspective, the Coda sedan wasn’t anywhere close to its chief competitor, namely the Nissan Leaf.”
Coda grew out of Miles Electric Vehicles, a maker of low-speed electric vehicles founded by Miles Rubin. The car was built in a partnership with a Chinese company.
“The idea of starting a fresh car company from scratch — whether it was Fisker, Tesla or Coda — it’s a tall order,” said Giorgio Rizzoni, director of the Center for Automotive Research at Ohio State University. “It’s not easy to do. So it’s not surprising that one of these brand-new companies might have gone into Chapter 11.”
Two years ago, Coda diversified its business and formed Coda Energy, which bases its products on the same core technology found in the company’s vehicles.
“After concluding a comprehensive review of our strategic options, the board of directors, management team and senior lending group have concluded that focusing on the company’s energy-storage business presents the best opportunity moving forward,” said CEO Phil Murtaugh in a statement.
The move into manufacturing an energy-storage system “is definitely the lower-hanging fruit and much more achievable,” Kim said. “It’s not a consumer-grade product. It’s essentially a commercial application.”
Coda’s plans for Columbus, announced in 2010, were for a battery plant that was once projected to employ 1,000 people or more. Its first all-electric vehicle rolled off a California assembly line in 2012. Coda raised more than $300 million in private funding during its brief history from high-profile names such as former Treasury Secretary Henry Paulson, as well as local investors Leslie H. Wexner, chairman of L Brands, formerly Limited Brands. Wexner was not available for comment about the filing, company officials said.
Coda Automotive announced with some fanfare three years ago that it planned a plant in Columbus to make batteries for electric vehicles. Then, in March 2012, the company quietly withdrew its application for a federal loan to build the plant.
Several local business and political leaders had high hopes for the project, including Mayor Michael B. Coleman, who had been a leading supporter of Coda.
The city had lost contact with the car company since the loan application was withdrawn.
“A few years back, we had been working on a partnership with Coda that didn’t work out,” Coleman spokesman Dan Williamson said. “But we had no expectations of Coda since that time.”
American Electric Power was the first company in the world to buy one of the cars for its corporate fleet. A spokeswoman said that AEP planned to meet with Coda to discuss maintenance “and any other issues” that might arise with the car.
Information from Reuters was included in this story.