Court records show that startup Coda Automative, already wrestling with layoffs and very slow sales of its first electric car, has been fending off a number of lawsuits for not paying its bills on time.
Vendors, including car engineering and development company RLE International (as well as an affiliate contract work company RTECH), vehicle development services company EDAG, and vehicle testing company FEV, have all filed lawsuits against Coda within the last six or so months, alleging that Coda owes them money for services.
When RLE filed its lawsuit in late October it said Coda owed RLE $356,500; when EDAG filed its lawsuit last June it said Coda owed them $608,770; and when FEV filed its lawsuit in December it said Coda owed them $268,200. RTECH, an affiliate of RLE, also has a lawsuit against Coda for failing to pay for contract workers, which it filed December 2012.
The parties agreed to dismiss three of the cases. In the RTECH lawsuit, the dismissal occurred after Coda filed papers stating that the contract in question forced RTECH to resolve the issue through arbitration. It’s possible this is why the other two cases settled. The FEV case is ongoing.
While Coda lawyers seem to be dealing with these suits, it’s the latest bad sign for the electric car maker, which in December laid off staff. While press reports at the time said the layoffs were massive, Coda tried to soften the blow and said it had laid off 50 employees, or 15 percent of staff.
The problem is that the company hasn’t been selling its cars. Some reports have put the number of Coda sedans sold at less than 100 since it went on sale in March 2012. That launch was actually delayed, from late 2010, then to late 2011, and then early 2012. The company also had a recall of the cars it had sold in August due to a mis-installed side curtain air bag.
The car itself isn’t that competitive in a market where you can buy a Tesla Model S, a Nissan LEAF or a Chevy Volt. As auto reporter Jim Motavelli described it:
The strategy of buying a bargain Chinese car sounded good at the time, but it’s plain that making the Coda competitive was a Herculean task, despite a larger battery, battery management and more range than the Nissan Leaf. One big problem is that Chinese styling is 20 to 30 years behind the West, and attempts to dress up the Coda didn’t do much to disguise the 1985 Toyota Corolla design. The car looks dated.
We’ll see what happens to Coda. Fisker Automotive, another struggling electric car startup, is heads down trying to sell itself to Chinese auto companies. Coda already has deep partnerships with Chinese firms — the company has a joint venture with China battery maker Lishen, called Lio (oil spelled backward), and a deal with auto maker Great Wall Motors Company to co-develop a low cost electric car. Given these relationships Coda probably has a better chance than others to find a Chinese acquirer.