It's now sink or swim time for Coda.
Most of its staff have already been dismissed and now start-up battery-car maker Coda Automotive is closing its flagship showroom, raising questions about whether Coda can hang on much longer without finding a new buyer or some big-buck investors.
Coda, which has been marketing a stripped-down electric vehicle imported from China, had already raised an estimated $200 million in capital raised from such high-profile investors as former U.S. Treasury Hank Paulson — some of whom may now be taking the company to court.
After a year on the market, sales have barely climbed into the 100s, despite the fledgling carmaker’s claims to deliver more range than almost any other electric vehicle on the U.S. market.
Ironically, according to reports from Los Angeles, where the maker is based, Coda’s store in the busy and exclusive Westfield Century City mall will soon be taken over by its competitor, Tesla Motors.
Coda has faced serious challenges almost from the moment it was first conceived, going public with plans to offer a 5-passenger battery sedan in late 2010 and then bringing it to market early last year. Unlike some of its key competitors such as Tesla or Nissan, who opted for specially designed battery vehicles such as the Model S and Leaf, respectively, Coda opted to take a conventional sedan and retrofit it with an electric drivetrain of its own design.
That resulted in some kudos and a lot of criticism. While the vehicle’s 33.8-kilowatt-hour battery pack delivered a range of almost 120 miles per charge and better acceleration than most of its key competitors, the rest of the Coda sedan was clearly out-of-date even before it went on sale.
The situation was worsened by an August recall triggered by problems with mandatory safety gear — and by the Coda sedan’s poor performance in recent federal crash tests. It received only two out of a possible five stars in the tests performed by the National Highway Traffic Safety Administration, making it one of the poorest performers now on the market.
Despite all that, Coda was still trying to get $44,900 for the base model of its battery sedan, making it more expensive than the options offered by better-known manufacturers such as the Nissan Leaf – which recently cut its own price in order to help boost lagging sales. In fact, the entire BEV, or battery-electric vehicle, market has been lagging proponents’ originally rosy expectations.
“Coda has not been able to gain traction with consumers or fleets,” said John Gartner, an analyst with Pike Research specializing in alternate automotive products. “Coda’s launch vehicle has not been viewed favorably as consumers have not been willing to compromise ‘just’ to have a vehicle with an electric drivetrain.”
Despite bringing in a team of automotive industry veterans, including Phil Murtaugh, the former head of General Motors’ wildly successful China venture, Coda hasn’t been able to increase that traction and, last December, confirmed to TheDetroitBureau.com it was cutting at least 15% of its workforce.
The pink slips continued to fly, according to a former executive who was released early this year, to the point, “There’s really no one left and I think those who’re still on the payroll are there to hold them find a buyer.”
It doesn’t help that Coda is also now facing legal action by investors such as Paulson and Les Wexner, the CEO of clothing retailer Limited Brands.
Last December, Senior Vice President Forrest Beanum said of the job cuts that, “The Company is taking this action to better position our business going forward. We remain committed to the continued development and distribution of our products.”
Attempts to reach a Coda spokesperson was unsuccessful. The maker apparently discharged their public relations team along with much of the rest of the company.
What’s next remains to be seen. There are few who believe the current Coda model can be salvaged. In a conversation last year, CEO Murtaugh revealed plans to begin importing a more advanced vehicle – but cautioned that was still several years away. He and other Coda officials suggested they were hoping to meanwhile find ways to drum up alternative lines of cash by marketing other Coda products, including its electric drive system.
Such hopes have so far failed to materialize. And sources close to the company warn that without some alternative plan – likely some new source of capital – charging in quickly, Coda could become the latest battery-car maker in the nascent market to pull the plug.