Swedish automaker Volvo may soon end up owning American Proterra’s battery business as it wins the bid for $210 million. In return, the potential takeover will enable Volvo to tap the business’ battery module and pack development hub and assembly plant in the United States.
Bidding
According to the press release, Proterra Inc. and Proterra Operating Company Inc. are currently undergoing a voluntary Chapter 11 bankruptcy process for the Proterra Powered business unit in the US.
Volvo’s bid of $210 million for the battery business unit overthrew all other bidders in the auction. However, it must be noted that the official transaction between the parties is yet to be approved by the US bankruptcy court.
Potential benefits
Volvo’s imminent acquisition of Proterra Powered will enable it to access the American business’ major assets, including battery modules and packs development hub in California and an assembly plant in South Carolina.
These facilities will significantly aid Volvo in accelerating the production of its electric vehicles as it seeks to compete in the highly competitive market.
“When Proterra filed for Chapter 11 bankruptcy, we predicted that it would make sense for a legacy OEM to acquire the business and integrate it into their own.
What is not clear is whether Proterra’s agreements with other OEMs will remain. For example, Komatsu Construction had an agreement in place for the supply of batteries; it is unknown at this point if that will continue.”
Alastair Hayfield, Interact Analysis‘ Senior Research Director
About Proterra Powered
According to Electrek, Proterra Powered is a business that converts medium- and heavy-duty commercial vehicles into battery-powered models.
In early 2023, the company merged its battery and bus production at its existing South Carolina factory amid its employee layoffs to cut costs. However, it has still failed to overcome the major supply chain and funding issues to increase production. In effect, the business had no choice but to voluntarily file for Chapter 11 bankruptcy in August 2023.
“We entered into the Chapter 11 process with a mission to maximize the potential of each of our product lines. Today, we have taken an important step toward that goal for our Proterra Powered business.”
Proterra CEO Gareth Joyce said in a press release
Volvo continues to advance its electrification efforts despite the challenges it faces during its transition. For context, the Swedish company aims to become an all-electric brand by 2030. Therefore, having access to American factories will significantly contribute to its achievement of the 2030 target. It will also enable the company to access certain incentives for electric vehicles under the IRA, including up to $7,500 tax credits for locally made models.
Volvo and Proterra expect to conclude the takeover process in early next year, adhering to merger regulations and other provisions.
