3 BIG learnings from Volta Trucks bankruptcy and rescue. "The challenges faced by Volta Trucks, from funding struggles to issues with its battery supplier, underscore the volatile landscape of the electric vehicle industry." I, for one, was pretty disappointed when Volta Trucks announced bankruptcy a couple months at a pivotal moment, as the truck is excellent. However, I'm glad it has been rescued. Obviously, the strategy will take a different form, and it's worth thinking about what the lessons are here. Here's 3 big learnings. 1) Grew headcount and spent capital too quickly. From when I first met the Volta Trucks people until August, head count had grown >10x. This wasn't a step by step lean and careful expansion strategy, which meant no buffer when something big went pear 🍐 shaped - like their battery supplier going bankrupt. Caution is always the better part of valour. 2) Single sourcing a vital component from another startup is risky Everyone knows that the battery is THE most important part of an EV, and if the battery supplier goes belly up, you're in for a world of hurt, which is exactly what happened here. Better off dual sourcing, with at least one supplier being a well established, long term player. Even if paying a premium, it brings piece of mind and is good insurance. 3) Great product is worth rescuing from a bad business strategy Luxor Capital LLC, who were key investors, and rescuers, obviously saw the truck's market potential. However, they let the company go bankrupt, rather than rescue it beforehand. Given the huge disruption that it brings, it strongly suggests that they believed the company needed a reset, even if the product is fantastic. But, Luxor DID rescue it, suggesting strong core value was still there. Obviously, Luxor was loathe to lose their initial investment, which would have been a motivator to continue. Do you agree with this read on the situation? What do you think that the future brings for them? Let me know your thoughts in the comments below #automotive #batteries #climatechange #electricvehicles #innovation #growth #sustainability
Thomas Zeinzinger
10mo
If Luxor had a strong hand in the investment, then they had a chance to improve their position by going through bankruptcy. This can help to get rid of early investors.
Simon Davis 🚛🌍⚡️
10mo
Dual sourcing batteries is v. hard. Most EVs have unique, tightly integrated batteries.., and the cost of running 2 battery suppliers would be high from a manpower POV before you consider the impact on battery economies of scale. Half the volume, twice the tooling bill etc etc I'm not sure it's viable (has anyone done this?) At OX Delivers we take a different approach. We're building our platform like you build software by using an object orientated architecture. This basically means we're flexible to swap between different suppliers. So we carry the benefits of dual sourcing, without the overhead.
David Ricketts
10mo
Increasing the headcount is fine when proportional to the order book, but it depends on what levels you are hiring at. Does the company actually need more management, or are you adding reassuringly impressive names and faces to encourage more investors? There are times when you just need to add people to impress upon prospective customers that this new tech is going to be there when they have questions or issues. Pre-Covid you could have faked it by renting a bigger office with lots of desks and claiming people work remotely. These days that's less a badge of innovation. The single-source battery looks like a weak spot but in a startup you aren't always going to have the order volumes to get the product development you need from a supplier, so committing to one supplier until your demand outstrips their supply makes sense. But like spouses, choose wisely because you never know when either might collapse. I'd give Luxor Capital the benefit of the doubt on snapping up Volta Trucks' assets in bankruptcy, unless they have previous form on scalping other early investors/founders with plays like this. I don't see how much they were into with Volta Trucks, but sometimes it just takes more cash to get to market.
Colin Matthews
10mo
Unfortunately you are all missing the most obvious issue with Volta. They designed a truck that had a total EU market potential of about 300 trucks a per annum. The vehicle was considerably longer and heavier than the equivalent diesel truck and did not have the advantage of an extra 1te weight for a BEV in that category. Having a very niche product is not a good business unless you are making high end sports cars…. Tesla starting off making a lotus based sports car, very quickly transitioned to mainstream for volume reasons. I am not sure what IP Volta actually own, but I very much doubt that this truck will come to Market and the assets will be sold off to an OEM.
1. Costs out stripping funding is nothing to do with EV’s itdd sad the basics of running a business. I assume the new investors will need to question the existing management team’s credibility 2. Dual sourcing batteries in an EV application is like dual sourcing engines in an ICE application. No one does it and it’s a very naive suggestion. 3. Risk vs Funding vs Scalability is the challenge for all new market entrants who don’t have the backing of an established OEM
K Srikanth
10mo
Luxor meticulously played their cards.
The last point really hits home with something that I keep coming back to - great assets will be picked up by the survivors of the EV transformation. I believe (predict>) that as EV Startups go bankrupt (more to come for sure), their key assets (including their brand, IP and/or production) will be purchased by the survivors (Tesla and the Incumbent Automakers). This will lead to stronger organizations without draining the buyer's funding.
Andrei Alexandru F.
10mo
So they saved the company, but lots of employees are already working in other OEMs.... Other then the intelectual property, what did they save?
JUAN MORAN
10mo
5) Consultative Selling (targeting global companies eager to invest on their products (if competitive). It would have been great having constructive dialogues between Volta Trucks and DHL Group.
Fully Charged Show & Everything Electric Show Presenter & Producer | Clean Technology | Automotive | Comms & Strategy | Ex- Arrival & Jaguar Land Rover
10moKarandeep Singh Bhogal and I are mulling this over in the car and wonder whether dual sourcing of cells is absolutely worth doing in order to mitigate risk. However, in order to avoid dual tooling etc that Simon Davis 🚛🌍⚡️ describes, perhaps it’s worth bringing pack assembly in-house and absorbing that capex in order to have the freedom for plug and play dual, or even triple sourcing of cells. I believe Volta outsourced the pack, leaving a massive, risky single source of failure.