First EV Startup Plans to Liquidate

First EV Startup Plans to Liquidate

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by Gill D on June 13, 2022

ELMS is the first electric vehicle manufacturer founded by SPACs (Special Purpose Acquisition Companies) to fail. Electric Last Mile Solutions (ELMS) has announced its intention to file for Chapter 7 bankruptcy protection, almost a year after the electric vehicle startup went public and just four months after both its CEO and chairman departed.

Following the resignations of Jim Taylor, the Company's former CEO, and Jason Luo, the Company's founder and former Executive Chairman, in February 2022, the Company named Board member Shauna McIntyre as temporary CEO and President, in part because of her extensive automotive experience.

Shauna McIntyre

 

Under Ms. McIntyre's guidance, the ELMS Board of Directors and the new leadership team undertook a complete evaluation of the company's products and commercialization plans, fostered a safety culture, and focused the workforce on creating quality vehicles. This involved evaluating the Company's anticipated product offers, production strategies, and certification processes, as well as the viability of fulfilling previously stated goals.

ELMS was forced to withdraw financial guidance and declare the Company's historical financial statements inaccurate based on the findings of the same Board-initiated investigation that led to the resignations of Mr. Taylor and Mr. Luo. The combination of these occurrences, combined with a looming SEC probe that began this year, made finding a new auditor and attracting more finance extremely difficult.

Despite this, the Company continued to pursue fresh sources of capital aggressively, while also working closely with consultants to review and strengthen its liquidity position. Following a comprehensive review with the assistance of the Company's outside advisors and upon the recommendation of the Company's management, the Board determined that filing for Chapter 7 relief is in the best interests of the Company and its stockholders, stakeholders, creditors, and other interested parties.

Ms. McIntyre said, "I'm very disappointed by this outcome because our ELMS team demonstrated incredible determination to get our electric vans ready to meet the critical need for clean, connected vehicles that reduce carbon emissions from ground transportation. Unfortunately, there were too many obstacles for us to overcome in the short amount of time available to us. I could not be prouder of what our team has been able to accomplish under very challenging circumstances. This is a viable and essential technology, and I am confident that many of our talented employees will play a future role in this energy transition effort."

Warning Signs 

ELMS warned in May that unless it can secure extra financing, it will run out of funds in June, at least one month sooner than expected. Higher costs in a variety of areas, including employee retention and payments to suppliers, are reflected in the most recent predictions. Earlier this year, the company stated that it had sufficient cash on hand to fund operations through July or September. The corporation is under investigation by the Securities and Exchange Commission, and it has been without an auditor since February.

Electric Last Mile (ELMS) was targeting one of the hottest EV markets just over a year ago: commercial fleets. ELMS, based in the Detroit suburbs and primarily focused on the business area, expects to launch the first Class 1 EV later this year at a price range of $25,000 after federal tax incentives, whereas most new EV startups are years away from production. ELMS has an experienced management team, is on track to deliver this year, and has received over 45,000 non-binding pre-orders. It was an EV company to watch.

ELMS' product portfolio strategy focuses on commercial delivery vehicles ranging from Class 1 to Class 3 commercial vehicles, which collectively account for the majority of the last mile market. Vehicles with a maximum gross vehicle weight of 10,001 to 14,000 pounds are classified as Class 3; cars with a maximum gross vehicle weight of 6,001 to 10,000 pounds are classified as Class 2; and vehicles with a maximum gross vehicle weight of 6,000 pounds are classified as Class 1.

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