Navigant Research Blog

CODA Automotive Joins Ranks of Failed EV Makers

Dave Hurst — May 2, 2013

CODA Automotive has been a poster child for how challenging it is start a new car company in America.  Despite using “gliders” from Hafei and installing their own drivetrain, the company has struggled to get production vehicles launched, resulting in a 2-year delay from their first announcement of a launch in the fall of 2010 (it actually launched in May 2012).  The style and crashworthiness of the vehicles have been loudly questioned.

After the company endured low sales, significant layoffs, and supplier problems over the last several months, it comes as a surprise to few that CODA Automotive has formally declared bankruptcy.  CODA’s demise proves that, even if an automobile company is successful in raising funds (almost $600 million in CODA’s case), it ultimately can’t compete without actually selling large numbers of vehicles.  An automaker’s success, whether cleantech or old tech, is ultimately reliant on moving metal: the car has to be good –very good.  That’s the reason Hyundai and Subaru are growing while Dodge struggles to find its footing and Suzuki said goodbye.

CODA’s combination of tired styling, questionable safety, and little evidence of reliability made for a big challenge in attracting mainstream buyers.  Tesla has prospered because the company now has 3 years of history for exciting products in unique niches.  Fisker had the potential to follow Tesla’s playbook with a killer product, but slow production, quality challenges, supply chain problems, and lack of products in the pipeline have most likely doomed Fisker, as well.

The few owners of CODA vehicles are now stranded.  After shelling out $40,000, they now have a vehicle with little to no dealer and repair shop support.  Not only is this is a problem for these owners, but it also could dampen the spirits of potential buyers of innovative vehicles from other start-ups.  Many drivers are willing to take a risk on a piece of cool technology from a new company, but rarely does that technology cost almost as much as the average annual income in America.

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