CODA Charges Ahead with Electric Cars
CODA Charges Ahead with Electric Cars
No one said it would be easy for CODA Automotive, the California-based startup that makes all-electric cars and battery systems.
Two months ago, CODA delayed the introduction of its first car and said that its dynamic chief executive, Kevin Czinger, was stepping down. Even before then, pundits wondered whether the company could survive (here and here).
When, after all, was the last time a U.S.-based startup broke into the capital-intensive automobile industry?
But, while CODA has a tough road ahead, it turns out that some smart money is betting on the privately-held firm: Last week, CODA announced that it raised another $76 million and brought in two new venture investors, Harbinger Capital Partners and Riverstone Holdings. Previous investors include Hank Paulson, the former treasury secretary and CEO of Goldman Sachs; Thomas "Mack" McLarty, Bill Clinton's former chief of staff, whose family owns auto dealerships; and John Bryson, the former CEO of Edison International.
The company has now raised about $200 million, and hopes to raise another $50 million soon, says Steven "Mac" Heller, an investor, co-chairman of the board and now the company's interim CEO. Heller spoke today (on a panel with GE's Jeff Immelt) at the Brookings Institution, and we sat down afterward to talk about CODA.
Heller, who worked for 20 years as a top investment banker at Goldman Sachs, said the company plans to introduce its CODA sedan in California during the second half of 2011, by which time it should have a new CEO. "I'm not a candidate," he said flatly. Heller lives in Greenwich, Ct., while CODA is headquartered in Santa Monica, CA.
The company isn't dependent on sales to consumers, Heller explained. It has agreements to sell cars to Hertz and Enterprise, and also hopes to sell to fleets run by utility companies, governments and corporations. More important, CODA makes lithium-ion batteries, both for the automotive and utility-storage makers; it's in a joint venture with Lishen Power Battery, a Chinese firm owned in part by China National Offshore Oil Corporation (CNOOC). Last year, CODA applied for a U.S. Department of Energy loan to build a battery manufacturing plant in Columbus, Ohio.
Electric cars are all about the battery–that's where the costs are, and where the key design decisions must be made–and it's CODA's battery pack that will ultimately give the company a competitive edge, Heller told me.
The battery pack is the major reason why CODA's sedan, with a sticker price of $44,900, before a $7,500 federal rebate, costs more than the Nissan Leaf (MSRP $32,780) or the Chevy Volt (MSRP $42,280). But you get what you pay for, and so CODA's batteries should pack more punch. It carries a 34-kWh battery pack; the Leaf's is 24 kWh and the Volt's is 16 kWh. CODA also provides what's called "active thermal management" of its batteries, meaning they operate at an optimal (i.e., warm) temperature.
What that means, Heller says, is that CODA will have more range than the Leaf, and it will charge faster. It should also have more power and work better on cold days.
"It's a more highly-engineered car," he says.
CODA claims a range of 120 miles, while the Leaf's advertised range is 100 miles. Nissan achieved 73 miles on an EPA test, and that number will go on its sticker.
As for Chevy's Volt, it can go much farther on a single battery charge because of it also has a gasoline-engine "range extender," but CODA's advantage there may be–may be–that it burns no gas.
"Consumers talk to us about a desire to reduce our independence on foreign oil," Heller says. "It is a matter of patriotism for them. They worry about us shipping billions of dollars overseas for oil, and that money is not coming back."
"Our consumers tells us that they don't want to be part of the petroleum industry," he added. They want to buy an electric car from an electric car company."
The thing to remember is that we're at the very beginning of what could be a long transition to electric cars. Just as automakers offer a variety of choices, prices, styles and options when selling gas-powered cars, they are likely to do so with EVs and hybrids. Look at the vast gap between the Tesla Roadster (MSRP $109,000) and the Toyota Prius hybrid (MSRP $22,800.)
CODA sits in the middle, with hopes of selling 14,000 cars in its first year of production. It doesn't have to become the market leader to survive. To the contrary, if Nissan sells lots of Leafs and Chevy sells its Volts, the category will be become better established and more car buyers will take a look at CODA.
"We want to see EVs on the road," Heller says. "We believe that consumers are more than ready for an EV revolution."