Lightyear Is Launching Back Out Of Bankruptcy
The last year has been tough for solar-electric car companies. There are many valid reasons to be skeptical of onboard solar panels powering electric vehicles, and when investors don’t believe in something, they don’t invest in it. Without investment money, getting a vehicle to production can be impossible. And this was all on top of COVID-related problems, which have affected everything from supply chains to labor.
These problems seem to have been hitting solar and three-wheeled car companies around the same time, but every company is trying hard to climb back out of the hole.
Sono Motors ran a #SaveSion crowdfunding campaign when the investors didn’t invest. The company didn’t hit its fundraising goal, but seeing customers pay in full for a vehicle this early in the process may have been enough to bring investors back to the table.
Aptera found itself short of production money, too. With somewhere around $40-50 million needed, the company managed to get approved for a grant of over $20 million from the State of California, and its Accelerate Aptera investment drive has brought in more than $4 million.
Now, we’re seeing signs that Lightyear may have found a way out of its financial problems. Last month, we heard news that the company had entered bankruptcy, and that production of the Lightyear 2 vehicle was in doubt. But, bankruptcy doesn’t always mean going out of business. Often bankruptcy protections give a faltering company room to restructure and sell assets, negotiate obligations, and do other things to get on a better trajectory than the unrecoverable one they were on.
A recent press release says that this is what’s happening in their case. Instead of hauling around baggage that went for failed attempts at super expensive Lightyear One and Lightyear Zero vehicles, the new company emerging from the ashes of the old Lightyear will be a trimmed down version of the company that focuses strictly on the affordable Lightyear 2.
“This is great news. All involved worked relentlessly to secure the continuation of our mission.” said Lightyear cofounder Lex Hoefsloot. “We kept the interests of all stakeholders at heart during this process. We realize that the impact on our employees, investors, clients and suppliers is significant, but we tried to find the best way forward for everyone.”
Lightyear seemed to know that readers and media outlets would want to know how it managed to pull this off. In the release, it was highlighted that the Intellectual Property (IP) would serve as collateral for all stakeholders in the newly formed company. Invest-NL, which is spearheading the group of previous IP pledge holders, has agreed to facilitate this arrangement for the new entity.
So, in other words, investors felt confident enough to help the new company get off the ground because they knew they’d be able to walk away with intellectual property in the event it failed again.
“Thanks to the efforts of many, we are glad that Lightyear can continue its mission. The past year Invest-NL has invested significantly in Lightyear, because we believe in the potential of its technology,” said Rinke Zonneveld, CEO of Invest-NL. “The challenge remains significant, but the company also has great opportunities. Together with all involved we want to make a success of Lightyear.”
Why Keep Covering Lightyear?
A fellow writer here recently said that we shouldn’t cover companies that seem to be on the brink, but it’s important to keep in mind that in journalism you don’t get to pick the winners and the losers. It’s our job to inform people the best we can about what’s going on and let adults make their own decisions.
There’s definitely a lot of risk here, but it’s still an interesting cleantech story and we want our readers to know what’s going on so they can put other stories in context. It would definitely be a mistake to assume that Lightyear is solid just because we wrote about it, so definitely don’t do that!
Potential Issues
There are still a number of reasons to be very concerned about the future of Lightyear. Emerging from bankruptcy still somewhat intact doesn’t mean you emerge unscathed.
There are potential downsides to using intellectual property (IP) as collateral. One major concern is that if the company defaults on its loan or debt obligations, the lender may have the right to seize and sell off the IP assets, which could be detrimental to the company’s future operations. So, this is a one-shot deal that the company couldn’t repeat if it ran into trouble later.
Additionally, using IP as collateral may limit a company’s ability to license or sell its IP rights in the future. Solar vehicles are pretty crude in their present form and can’t get much range added per day, but future improvements in solar cells could greatly change this situation. Having the rights to early technology advances could be a great source of funding later, and that option for revenue is more cloudy now.
We do know that part of the company’s plan was to offer solar for other vehicles, so getting the IP back out of layaway or getting permission from investors to license it out will be important.
What Lightyear Might Still Have Going For It
The full specifications of the Lightyear 2 have not yet been released. So, speculation about the car itself would be premature. That having been said, we do know that the vehicle is targeted toward a much lower price point than the Lightyear 1/0 was.
The nearly $300,000 price of the Lightyear 0 made it a pretty tough sell. Yes, it’s going to be highly efficient and powered mostly by the sun in the right conditions, but we’re talking about making an efficient car more than double the price of a Model S Plaid, and most people just weren’t going to find that extra efficiency appealing enough to pay that much more.
The Lightyear 2 is supposed to come in below $40,000, which makes it a reasonable budget car that would attract people looking for extra efficiency to save money and the environment. If the company can finalize a design that comes in cheap enough to build and sell for that price, it will have a much easier time.
Another thing the Lightyear 2 might have going for it is relative normalcy. I’m a hypermiler and find the efficiency of something like the Aptera intriguing and worthwhile, but many people won’t want to sacrifice the back seats to get there. The Sono Sion (assuming it gets to production) also has a more practical layout, so it’s not the only more normal solar car, but it probably struck a better balance for many people.
Featured image by Lightyear.
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