We’ve had a lot of positive coverage from Aptera in the past, and that’s something I hope to continue. But, we also need to cover the challenges the business is facing. He’s built several prototypes, secured a manufacturing space, and now seems to have both a solid design and a solid plan to make copies of the design – but having a good plan and executing that plan are two very different things.
Those who followed Aptera’s initial attempt to hit the market over a decade ago are probably wondering if there’s a glitch in the matrix (already seen). After all, we’ve seen this cat walk past it before. In 2011, the previous incarnation of Aptera collapsed after it was unable to secure a federal loan to put the car into production. She now faces a similar situation, and the company is looking for a similar loan to get what she needs to put her final design into production.
In the video above, Aptera Owner’s Club covers a new SEC filing that Aptera recently filed. It all started with the reveal of a new round of funding announced by the company, which could raise around $41 million. It’s unclear when this round of investment will take place, but it will likely be soon. The video touches on several other aspects of filing that are beyond the scope of this article, but if you want to invest in the business, it’s well worth watching.
One important thing that the video reveals is that the company is currently considered a “going concern”, or a stable company for the time being. But it is not guaranteed that the current status of the company will continue in the future, because it will need a lot of money to move from development to production.
How Aptera can get money
Aptera has several options for raising the $50 million. One is the next round of funding already mentioned, which would get most of it. Another option is to get government loans to cover production costs and then pay off the loans from the sales of the cars that were pre-ordered. Another option is various government grants, or (more likely) there could be a mix of the above.
As for the funding round, raising around $41 million seems uncertain for the guy who made the video. Given the unknowns of selling a 3-wheeler and the history of 2-seaters that aren’t supercars or limited-production racing machines, I agree that seems like a long time. But since none of us are financial experts, take this with a grain of salt (and definitely NOT as investment advice).
There is a possibility of selling shares below the original price if someone shows up with a lot of money and wants to invest. There’s no way of knowing if this will happen, but it would dilute the shares already sold and also make the rest of the shares worth next to nothing. I don’t know about you, but losing a little value is better than losing everything if the company goes bankrupt.
Another possible source of money would be to get government grants, and Aptera has reportedly made great strides there. His chances of getting a grant from the state of California for $22 million seem very good at this point, but that would only get the company halfway forward. The remaining $28 million would have to be found to move into production.
Finally, there are federal loans. The company has reportedly requested a loan of $100 million (or more), but no details about that loan and its viability are currently available. This is something history tells us to beware of, however. Going back to 2011, Aptera claimed to have all but secured the loan, but government officials said they had no guarantees, although they could raise matching funds. But, even with investors thinking they had some sort of collateral, they couldn’t raise the matching funds.
Who was telling the truth about any of this is not something I will personally take a position on (because believe it or not, government officials can and do lie), but I know I’m skeptical any claims Aptera or government officials make about this loan application unless there is something solid and in writing for all to see.
These questions have a lot of pessimism around them.
What Aptera has to do that it didn’t in 2011
Like today, the company had design, pre-orders, and good ideas for production in 2011. But there are still some important differences that could stave off disaster this time around.
The most important thing he has going for him is experience. The Aptera team has had failures before, and they should have learned a few tricks to avoid this. Given that experience and their confidence in the restart in 2019-present, they must know or at least be confident enough in their belief that they can avoid this outcome. No one wants to go through a dead end business twice like that.
The next important thing is the business environment. Electric cars aren’t as long as they were in 2011. Not only has Tesla shown they can be viable, but mainstream manufacturers are entering the field in a big way. So while the idea of a “sperm-like” 2-seater 3-wheeled car is still pretty far from the mainstream, the idea of the car being electric isn’t a huge, uncertain move. Add that the vehicle is more plug-independent, and you even have an advantage.
Finally, we see the company working with more experts in the field to come up with better plans (no doubt because they know they have to succeed where they failed before). Aptera works with companies like Munro and Associates and a number of other players to come up with a design that’s not just a good design, but one you can do a whole bunch of.
At this point, no one can honestly tell you that the business will succeed or fail. Lots of people make educated guesses (with varying levels of education), but I think it’s a good bet that if someone tells you they’re 100% sure of either results, he’s either really stupid or he’s trying to trick you into something.
The only thing we can really do here is give you what we know of the challenges and benefits 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 business in 2022 and 2023.
Featured image provided by Aptera.
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