Smith Electric Vehicles withdrew a $76 million initial public offering and said it will turn to private investors for cash needed to build its battery-powered trucks.
The Kansas City, Kan.-based company, struggling with big losses and a costly supply chain, launched an IPO Sept. 6, but had trouble connecting with Wall Street.
“We received significant interest from potential investors, however, we were unable to complete a transaction at a valuation or size that would be in the best interests of our company and its existing shareholders,” said SEV CEO Bryan Hansel.
“We have instead elected to pursue private financing opportunities to support the execution of our business plan,” Hansel said in a statement.
In February, SEV signed a letter of intent for a $25 million equity investment from Chinese automotive manufacturer Wanxiang Group.
SEV is the manufacturer of the Newton, a battery-powered medium-duty electric truck used by companies such as Frito-Lay, FedEx, Coca-Cola and Duane Reade. The company lost $52.5 million on $49.9 million in revenue in 2011, and had a $27.3 million net loss on $16.8 million in sales in the first half of 2012.
SEV is bracing for a loss in 2012. “We expect that we will continue to incur net losses through the second quarter of 2013,” the company said in its prospectus.
The company expects to produce 380 trucks in 2012 and as of June 30 had a backlog of 404 vehicles, up from 145 trucks in March. SEV cut its production plan earlier this year to focus on “existing customers, our limited cash, and significant near-term challenges.”
The most significant of those challenges “is the limited and underdeveloped supply chain for many of the key components used in commercial electric vehicles, including motors, control electronics units and batteries,” SEV said.
Supply chain problems have plagued SEV from the start, partly because there are only a few suppliers for some key components, leading to shortages of components such as chip sets and high voltage connectors, Hansel said in an interview last year.
The manufacturer said it is working on a strategy to cut supply chain costs, moving away from high-cost, low-volume suppliers and toward its own power and drivetrain technologies. SEV also is moving to lower-cost suppliers for ancillary components such as battery control and junction boxes.
Those steps are expected to cut materials costs for a Newton with an 80 kilowatt-hour battery 30 percent by the end of the second quarter of 2013.
SEV does have a core of committed customers that are coming back for more trucks, Hansel said. “One of our key indicators is reorders,” the CEO said after an electric commercial vehicle showcase Sept. 5 in Manhattan.
“We’ve seen a good consistent pattern of customers like Duane Reade, Frito Lay and Staples coming back.”