The electric vehicle industry faced financial distress in 2024 as a result of rising operating costs from inflation and increased interest rates over the last two years.
The most significant victim was EV maker Fisker Group Inc. which on June 17 filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware and liquidated its assets.
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Fisker had begun deliveries of its Ocean battery-electric crossover SUV in 2023 to compete with Tesla, but by February 2024 the vehicles and the company began having various problems, which led to its bankruptcy.
Related: Another popular pizza chain files for Chapter 11 bankruptcy
The company funded its liquidation and wind-down from $46.5 million in proceeds from the sale of its fleet of 3,300 vehicles to American Lease. The company's Chapter 11 plan of liquidation was approved by a court order on Oct. 16 and was effective on Oct. 17.
More recently, Northvolt AB, which makes electric vehicle batteries for several carmakers, including BMW, Audi, Porsche, Volvo, Polestar, and Swedish truck maker Scania, filed for Chapter 11 bankruptcy protection on Nov. 21 seeking a going-concern recapitalization or sale of its assets as it faces an acute liquidity crisis.
Northvolt's capital structures and business plan were built on the assumption that the EV industry would continue a pattern of consistent growth.
The European EV market had grown at a record pace, fueled by strong government support, increasingly strict emissions regulations, and growing consumer interest in sustainable transportation.
The prosperity ended as EV sales slumped in 2023 due to economic uncertainties and operational challenges, which impacted battery manufacturers worldwide as customers canceled contracts, reduced orders, and renegotiated terms.
Via Motors
Via Motors files for Chapter 11 bankruptcy after closing
Economic struggles have forced another EV maker into bankruptcy, as the parent company of struggling electric vehicle maker Via Motors Inc. on Dec. 4 filed for Chapter 11 bankruptcy after closing down all of its EV manufacturing operations except for its high-power wireless inductive charging solutions.
Related: Popular vodka brand files for Chapter 11 bankruptcy
Ideanomics Inc., which filed its petition in the U.S. Bankruptcy Court for the District of Delaware, also on Dec. 5 filed a motion seeking approval of an asset purchase agreement with its secured debt lender Tillou Management & Consulting to serve as a stalking horse bidder for the company's assets with a credit bid of its debt, including debtor-in-possession financing.
More bankruptcy news:
- Struggling gas station chain liquidates in Chapter 7 bankruptcy
- Major healthcare provider files for Chapter 11 bankruptcy
- Distressed oil company files for Chapter 11 bankruptcy
Ideanomics seeks over $30 million in DIP financing
Tillou has agreed to provide Ideanomics with $30.4 million in debtor-in-possession financing, which includes $11.6 million in new money and a rollup of $18.8 million of prepetition secured debt, which the lender will use as a credit bid in a Section 363 bankruptcy auction. The bid will include assumed liabilities, any cash encumbrances, and the adviser success fee.
The New York-based debtor listed over $553.4 million in total assets and over $57.8 million in total debts in its petition, including about $12.6 million in unsecured debt.
Ideanomics' largest unsecured creditors include Morgan Stanley Domestic Holdings, owed $10.1 million; MHCC Dealer Liability, owed $9.1 million; Arnold & Porter Kaye Scholer, owed $5 million; and Jing-Jin Electric North, owed $3.98 million.
The company, which was founded in Beijing in 2004, focused on premium content video-on-demand services from 2010 to 2018, when it was led by Chairman Shane McMahon, son of WWE founder Vince McMahon, according to a declaration by Chief Restructuring Officer Alpesh A. Amin.
Ideanomics moved its headquarters to New York in 2018 and began focusing on the Chinese electric vehicle industry in converting fleet vehicles from internal combustion engines to electric. The company wound down its FinTech business in 2022-2023.
The company from 2021 to 2023 spent $320 million on acquisitions, including electric commercial truck maker Via Motors in January 2023, 70% of Italian electric motorcycle maker Energica in March 2022, and Solectrac, an assembler and distributor of electric-powered tractors, in June 2021.
The debtor ran out of cash to continue operating Via Motors in 2024 and shut down the business. The electric commercial vehicle maker sold a line of EVs that included box trucks, walk-in vans, service trucks, skate trucks, walk-through shuttle buses, and step vans.
The company also closed Soletrac in June 2024, and on Oct. 14, 2024, Energica entered Italian bankruptcy judicial liquidation.
Ideanomics' only remaining operating affiliate is Wireless Advanced Vehicle Electrification, a provider of high-power wireless inductive charging solutions.
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