Electric-truck maker Smith Electric burns through cash
Smith Electric's troubles reflect the larger growing pains across the U.S. electric vehicle market that, together, throw into question the viability of attempts to create an American auto industry without the internal combustion engine.
Smith Electric, according to revised paperwork filed with the Securities and Exchange Commission:
- Is losing money and doesn't expect to make a profit before the before 2013.
- Has borrowed $11.5 million to keep operating through September.
- Has reduced its production targets for the year to 380 from 620.
Smith Electric is looking to raise up to $125 million by going public, which would cover debt and give the company the breathing room it needs to keep operating and add to its capacity.
But there are some stark warnings for those tempted to invest in the maker of midsize electric trucks, the biggest one being uncertainty over whether the company can actually sell its trucks in sufficient quantities to reach profitability.
Slow sales are a problem across the electric vehicle industry, from parts suppliers to manufacturers of electric cars and trucks.
Tesla (Nasdaq: TSLA), the most well-known of the independent manufacturers, has managed to secure 12,000 orders for its new Model S sedan, and also has a deal with Toyota to supply the drive train for the Japanese giant's RAV-4 all-electric sports utility vehicle.
But Tesla hasn't turned a profit yet, and other manufacturers have traveled a rocky road.
General Motors (NYSE: GM) has suspended production on the Chevrolet Volt from September 17 through October 15. The company set a record of selling more than 2,500 Volts in August. But GM doesn't expect to hit its original projection of selling 45,000 of the vehicles this year.
Fisker Automotive, another upstart electric vehicle maker, is looking to raise $150 million and has shuffled its top management, naming its second chief executive of 2012 in Tony Posawatz, who led GM's Volt effort.
A123 Systems (Nasdaq: AONE), which makes batteries for Smith Electric, among other electric vehicle companies, had been teetering on the brink of bankruptcy earlier this year before cutting a deal for loans up to $450 million with Chinese auto parts giant Wanxiang Group Corp. A123's stock was trading at 19 cents per share today, down 9.43 percent.
Smith Electric, with its blue-chip clientele, could still accelerate. But the environment for electric vehicles is pretty smoggy.
