Another Cash Crisis for an EV Auto Maker – This Time It’s Smith Electric, 40% Production Cut

5 years ago by Mike Buchanan 3

Smith Electric Vehicles Has Cut Production Estimates From 620 Down to 380

Not unlike Fisker, another EV automaker is currently have cash flow issues. Smith Electric Vehicles cut this year’s production number and also told the regulatory committee they are short on cash on hand as they try and complete a stock offering.

Last year, Smith Electric asked investors for around a $125 million investment via a stock offering last November, but it still has yet to be approved. As time ticks on and no cash in sight, operations have slowed and 2012 total projected vehicles build have been slashed.

Obama was a fan a few years back when he visited the plant in Kansas City

In a filing with the Security and Exchange Commission (SEC) last year, Smith Electric had a goal to produce 620 trucks, however based on a new filing; they are projecting to complete only 380 trucks, only around 60% of what was originally planned.

Since the stock offering is still up in the air, Smith Electric has applied for a $11.5 million loan using the companies equipment as collateral, according to a company filing that happened last week with the SEC. The money, according the Kansas City Star, will be used to ensure operations through September.

Although Smith Electric has only made 79 trucks through the end of June, with the additional cash the company is planning to ramp up production through the next half of the year.

“Our reduced expectation for 2012 vehicle production is primarily a result of current cash constraints impacting our ability to expand our supply chain,” the company said.

Wanxiang, who has purchased 80% of A123, supplier of the batteries in Smith Electric uses

Smith Electric has made hundreds of medium-duty EVs for such large fleet companies as FedEx Global and Frito-Lay, however they have lost around $128 million since 2009, when the company started production according to the Kansas City Star. For the first six months of this year, the company has lost $27.4 million.

Even though the losses seem bad, the company is staying positive. If the SEC filing/proposal is accepted and the company can raise the $125 million, they hope to outfit a new plant in New York State and reduce costs by 30%, which would help make the trucks more desirable compared to diesel varients. However, if the plan fails, they do have a contingency plan.

According to the Kansas City Star, Smith Electric currently has a major investor lined up; Wanxiang, the Chinese auto part company that bought 80% of A123 systems for $465 million. Wanxiang has already invested an undisclosed amount of money in Smith Electric, however all signs point to them as a possible savior.

To learn more about Smith Electric and its current cash crisis, take a look at the Kansas City Star.

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3 responses to "Another Cash Crisis for an EV Auto Maker – This Time It’s Smith Electric, 40% Production Cut"

  1. Jay Cole says:

    It does seem like this money is more of a bridge-finance to something better, as opposed to EV makers just asking for more money to keep the lights on for a little longer…but you never know.

    Smith Electric has some good customers, and a order book to produce of some size. It seems (like most auto makers) they under estimated how much money it takes to get wheels off the ground.

    Hopefully they can pull through, this segment (mid-size delivery/commercial), along with SUVs, trucks and vans, is really where electric propulsion (whether that be EREV or BEV) makes the most financial sense…and also where you are doing the most good environmentally.

  2. Delta says:

    What is better. That these EV companies and battery suppliers go bankrupt, or that they are bought out by China one by one. Example, Fisker or even Tesla.

  3. mskz06 says:

    It does’t matter how much the US gov tries to build an American economy that can last into the future, as long as the US banks/investors are only worried about short-term profits these industries of the future will be gobbled up in the “free market” by other countries. ps. I don’t mind as long as someone steps up and invests even if its China.