Aptera Needs $50M For Production. Is The Company In Trouble?
In the past, we’ve had a lot of positive coverage of Aptera, and that’s something I hope to be able to continue. But, we must also cover the challenges the company faces. It has built several prototypes, secured a manufacturing space, and seems to now have both a solid design and a solid plan for making copies of the design — but having a great plan and executing that plan are two very different things.
Those who followed Aptera’s original attempt to go to market more than a decade ago are probably wondering if there’s a glitch in the Matrix (déjà vu). After all, we’ve seen this particular cat walk by before. Back in 2011, Aptera’s previous incarnation went belly up after it couldn’t secure a federal loan to put the car into production. Now it is facing a similar situation, and the company is looking for a similar loan to get what it needs to take its final design into production.
In the above video, Aptera Owner’s Club covers a new SEC filing that Aptera recently made. It started with revelation of a new round of funding the company announced that could pull in around $41 million. It isn’t known when that round of investment will occur, but it will probably be soon. The video goes into several other aspects of the filing that are beyond the scope of this article, but if you’re interested in investing with the company, it’s worth watching the whole thing.
One important thing the video finds is that the company is currently considered a “going concern,” or a company that’s stable for the moment. But the company’s present status isn’t guaranteed to continue into the future, as it is going to need significant money to go from development to production.
How Aptera Can Get The Money
Aptera has several options to get the $50M together. One is the next round of funding already mentioned, which would pull most of it in. Another option is to get government loans to cover the costs of going to production, and then pay the loans back from the sales of the cars that have been pre-ordered. Another option is various government grants, or (more likely) there could be some mix of the above.
When it comes to the funding round, raising around $41M seems iffy to the guy who made the video. Given the unknowns of selling a 3-wheeled car and the history of 2-seater cars that aren’t limited production supercars or racing machines, I’d agree that it seems like a long shot. But since neither of us are financial experts, take that with a grain of salt (and definitely NOT as investment advice).
There’s a possibility of selling shares for below the original price if someone shows up with big money and wants to invest. There’s no way to know whether that will happen, but it would dilute stocks already sold, and would also make the rest of the shares be worth barely anything at all. I don’t know about you, but losing some value is better than losing everything should the company go belly up.
Another possible source of money would be getting government grants, and Aptera has reportedly made some great progress there. Its chances of getting a grant from the State of California for $22 million seem to be very good at this point, but that would only get the company part way there. It would need to come up with the other $28 million to go to production.
Finally, there’s federal loans. The company has reportedly applied for a $100 million (or more) loan, but no details on that loan and its viability are currently available. This is something that history tells us to be wary of, though. Going back to 2011, Aptera claimed to have all but secured the loan, but government officials said they had no guarantees, even if they could raise matching funds. But, even with investors thinking they had some sort of guarantee, they couldn’t raise the matching funds.
Who was telling the truth about all this isn’t something I’ll personally take a position on (because, believe it or not, government officials can and do lie), but I do know to be skeptical of any claims either Aptera or government officials make about this loan application unless there’s something solid and in writing for all to see.
These questions have a lot of doom and gloom hanging around them.
What Aptera Has Going For It That It Didn’t In 2011
Like today, the company had a design, preorders, and great ideas for production in 2011. But, there are still important differences that could keep disaster away this time.
The most important thing it has going for it is experience. The Aptera team has been through failure before, and they should have learned a few things about avoiding that. Given that experience, and their confidence in starting up again in 2019-present, they must know or at least be fairly confident in their belief that they can avoid that outcome. Nobody wants to go through a dead end business twice like that.
The next important thing is the business environment. Electric cars aren’t the long shot they were in 2011. Not only has Tesla shown that they can be viable, but mainstream manufacturers are entering the field in big ways. So, while the idea of a “sperm-shaped” 3-wheeled 2-seater car is still pretty far from the mainstream, the idea of the car being electric isn’t a huge iffy move. Add that the vehicle has more independence from plugging in, and you’ve even got an advantage.
Finally, we’re seeing that the company is working with more experts in the field to come up with better plans (undoubtedly because they know they need to succeed where they failed before). Aptera is working with companies like Munro and Associates and a number of other players to come up with a design that isn’t just a good design, but one you can make a whole bunch of.
The Bottom Line
At this point, nobody can honestly tell you that the company is going to make production or fail. Lots of people are making educated guesses (with varying amounts of education involved), but I think it’s a pretty good bet that if someone is telling you they’re 100% sure of either outcome, they’re either really dumb or they’re trying to fool you into something.
The only thing we can really do here is give you what we know of the challenges and the upsides and let readers make their own decisions. I’m personally optimistic, but I’m also aware that there are some pretty big challenges ahead for the company in 2022 and 2023.
Featured image provided by Aptera.
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