Tuesday, June 25, 2024
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EV Charging Station Company Files for Bankruptcy Amid Failing Market

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EV Charging Station Company Files for Bankruptcy Amid Failing Market

EV Charging Station Company Files For Bankruptcy Amid Failing Market

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At some point in the past couple of years, people started to see electric motors as a potential gold mine. Companies sprung up following Tesla’s mainstream success, but these companies have been having a tough time lately as the competition among them for limited customers and plateauing sales figures is fierce.
One key EV infrastructure company called Charge Enterprises capitulated under pressure recently, filing for bankruptcy in the US Bankruptcy Court. The filing will be a blow to the industry in the US because Charge Enterprises manufactures EV charging stations, and the country is already in short supply of them.

Details of the Filing 

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Charge Enterprises filed for Chapter 11 bankruptcy in the District of Delaware on March 7 of this year.
The bankruptcy will transfer control of the business and its restructuring to a lender known as Arena Investors in a deal that awards them 100% ownership of the company.

How Much Charge Enterprise Is Worth 

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According to Bloomberg, Charge Enterprises has more than $114 million in assets with liabilities around $48 million.
The company has asked its creditors for feedback on the restructuring plan and hopes for approval from Arena Investors by April 24, 2024. If the deal happens, Charge Enterprises may be able to pay off its debt and return to producing EV-charging products.

Reason for the Bankruptcy

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According to Bloomberg, Charge Enterprises blamed its bankruptcy on its investment advisor, Korr Acquisitions Group, and Kenneth Orr, its former chairman.
Korr was in charge of holding $10 million that would help them pay off their debt, but when Charge Enterprises tried to access it, they learned it was unavailable.

It Is the Latest Bankruptcy Filing in the EV Industry

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This latest bankruptcy from Charge Enterprises is the fourth to occur in recent years, highlighting the struggle the EV industry is going through worldwide. Aside from Charge Enterprises, other EV companies that have filed for bankruptcy include EV producer Lordstown Motors, EV parts producer Proterra, and Electric Last Miles Solutions. They all filed for bankruptcy in 2022 because the struggling EV market has failed to attract customers on a wider scale.

More on Lordstown’s Bankruptcy

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Lordstown Motors, an Ohio EV producer, filed for Chapter 11 bankruptcy in 2023, selling its assets and restructuring its organization. On March 5, 2024, a debtor took control of the Chapter 11 plan.
Another issue the company has to deal with is an investigation by the SEC. According to a February SEC report, the company has been charged with misleading investors about its electric pickup truck.

The EV Market Is Struggling 

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EV sales have gradually leveled off in recent years despite efforts by the US government to market the technology to residents. Citizens simply aren’t buying enough EVs to support the industry and propagate widespread adoption even though the government has tried to make it easy.
There are several incentive programs at the federal and state levels to provide tax credits for people interested in buying EV vehicles, yet despite such incentives, the market remains in a downward spiral.

Not Enough Charging Stations

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One popular reason people give for not buying an EV is the scarcity of charging stations. A recent study by the Energy Policy Institute found that 77% of people listed the lack of charging stations as a reason why they were not looking to get an electric vehicle.
Without charging stations, people would have to charge their vehicles at their homes. This is inconvenient and it will drive up the cost of their electric bill every month.

EVs Are Problematic

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Another reason why people are not keen on getting  EVs is the number of problems they can develop compared to a standard gas vehicle.
A Consumer Report study in 2023 showed that electric vehicles have almost 80% more problems than gas-powered vehicles. They are also generally not as reliable, meaning some are worried about their EVs breaking down too often.

EVs Can Be Expensive

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What people ultimately spend on EVs versus gas-powered vehicles can vary greatly based on different factors. EVs typically have a higher price tag, but they can cost less over the long run if you consider the savings on cheaper fuel and maintenance costs.
Unfortunately, that pricey upfront cost turns customers off as they realize they would have to own the EV for several years before they start to see any financial benefits.

Companies Are Editing Production Goals

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Responding to disappointing electric vehicle sales, some producers, like Ford, have been reassessing their production goals. In December 2023, Ford revealed that it was cutting the production of its 2024 F-150 EV model down by half.
This is a tough decision for EV makers, who have had to invest a lot of time and money into developing them, only for sales of EVs to be so temperate.

EVs Problems Need to Be Addressed

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As more companies cut back on EV production and file bankruptcy due to financial distress, investors will become more reluctant to enter the industry.
Going forward, EV vehicle producers will need to find a way to address problems with EVs if they want people to abandon gas-powered vehicles.

Price Drops Not Helping

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One important issue is the price. Tesla lowered the price that customers would pay for a new EV, from $65,295 in September 2022 to $50,683 in 2023.
However, the price of an average EV is still 28% higher than the average gas vehicle.

Concerns About Safety

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Safety ranks high among customers’ concerns whether they want an EV or a gas-powered car. Vehicle buyers cite safety levels as an influencer on their purchasing decision, so manufacturers will have to be able to convince them EVs are durable and safe enough. 

The Opposite Is Happening in China

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While EV demand has been flatlining in the United States, the opposite has been happening in China. According to Reuters, China’s EV sales soared by 18% from January to February. In 2023, the market saw a 21% growth.
This is happening in spite of challenges like economic woes driving down domestic sales of these vehicles. It is clear the US might need to take notes if it will ever catch up to the progress of EVs in China, but even if it does, mass adoption is still a long way off.