Wood: What’s behind Lightning’s collapse?

Failure reflects clean-tech sector’s growing pains

Failure of Lightning eMotors Inc. in Loveland reflects broader growing pains for the clean-tech industry globally.

Lightning, which early in 2023 employed about 270 workers at the Forge campus in Loveland, did not oppose appointment of a receiver in Larimer County District Court in December, with its assets to be sold after it defaulted on loans, including $100 million worth of convertible notes held by Wilmington Trust NA.

Lightning converted internal-combustion-engine vehicles to electric for fleet operations such as shuttle buses, delivery vehicles, school buses and passenger vans. The company was founded more than a decade ago and was riding high after going public in 2021 in a merger with a special-purpose acquisition company — essentially a publicly traded shell company formed to raise capital for companies seeking an easier path to going public.

The deal at the time valued Lightning at $823 million.

Lightning emerged on the New York Stock Exchange, with a promise of heady growth.

But reality quickly set in. A variety of issues negatively affected the company’s ability to function, including supply-chain disruptions, and the company sought opportunities to raise funds in 2022 and 2023.

Lightning’s struggles negatively affected its stock price, with the NYSE threatening — and eventually acting — to delist the company because of its low stock price and inadequate capitalization. That delisting also harmed the company’s ability to raise additional capital.

Lightning’s central issue was its inability to obtain batteries that it required for its vehicle conversions. One of its major suppliers — Proterra Inc. — filed for bankruptcy protection, and Lightning sued another battery supplier — Romeo Systems Inc. — for allegedly violating a contract to provide batteries to Lightning.

Battery companies have struggled due to slowness in rollout of federal tax benefits, dampening investment. Supply of critical components and metals used in production of batteries exacerbated the problem.

Ramping up a still-nascent electric-vehicle industry requires enormous capital. For Lightning, gross revenue continued to climb in recent years, according to a legal filing, from $9.2 million in 2020 to $25 million in 2022, and $24.4 million through Sept. 30, 2023.

But negative net operating income soared, from negative $13.76 million in 2020 to $51.2 million in 2021, $73 million in 2022 and $91 million through September 2023.

Its cash position, which had improved from $460,000 in 2020 to $168.5 million in 2021, deteriorated quickly, falling to $56 million in 2022 and just $6 million as of Sept. 30, 2023.

Lightning is not the only EV company to struggle. Tesla North, a news website for the EV industry, in December listed a dozen EV companies potentially struggling with cash flow.

And a 2022 article on IndustryWeek, “Failures and Consolidation of Startup EV Companies on the Horizon,” predicted the trend, stating that “efficiency will be vital as EV companies look set for an extended period of consolidation and shakeout like the one combustion engine car manufacturers went through roughly a century ago. For those looking to last, it’s about staying in the game as long as possible and keeping available financial options.”

Lightning hoped to be among the survivors. Unfortunately for the company, it ran out of time — and money.

Christopher Wood can be reached at 303-630-1942 or cwood@bizwest.com.

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