Coda EV’s Failure Becoming L.A. Council’s Solyndra

By · February 28, 2013

Coda HQ Ceremony in L.A.

At the Nov. 2011 opening of Coda's L.A. headquarters: From left to right, California Councilman Herb Wesson; Coda’s Executive Chairman Mac Heller; Los Angeles City Council President Eric Garcetti; Los Angeles Mayor Antonio Villaraigosa; Forrest Beanum, Coda VP of Government Relations and External Communications; California Governor Jerry Brown; Congresswoman Karen Bass; and Phil Murtaugh, CEO of Coda. (Photo: Coda Automotive)

The slow demise of Coda Automotive, the sputtering electric car company, has produced relatively little collateral damage—that is, except for disgruntled laid off employees, nearly $2 million in unpaid dollars to suppliers, and an embarrassing loss for the investors who put more than $300 million into the company. That’s all internal stuff, and low key compared to the potential backlash from what the L.A. Weekly reported in a blog yesterday: that City Council president Eric Garcetti enticed Coda Automotive “to move its headquarters from Santa Monica by dangling $1 million in city redevelopment money.” Reporter Gene Massaus also explained that Garcetti received $8,000 in contributions from CODA executives and their spouses.

The L.A. Weekly blog reminds us that on Nov. 10, 2011, Gov. Jerry Brown came to Los Angeles to help open Coda’s new headquarters. The company claimed it would bring 650 high-tech jobs to L.A. "To the naysayers, we're saying yes to solar, yes to Coda," Brown said. "We're saying yes to a Los Angeles that's on the move."

L.A. Mayor Antonio Villaraigosa was also in attendance. “We are proud to welcome Coda to Los Angeles, the city that creates and innovates,” he said. “We see Coda's move as a boost to our growing clean technology industry in L.A. and we are thrilled they chose to locate in our City.”

Writing on the Wall, For a Long Time

The company fell way short of its goal of 650 employees, reaching only about 270 before it began laying off workers in December. Coda will not confirm, but has not refuted reports that the company has sold fewer than 100 units since its all-electric sedan, primarily sourced from China, went on sale.

Coda's retail location at Westfield Century Mall shut its doors last month. But trouble for Coda was already brewing when the mall location opened in April 2011, a full seven months before Gov. Brown and Mayor Villaraigosa attended the event at Coda’s HQ.

Did any of the dignitaries or local politicians that supported Coda’s move to Los Angeles by using public money read the Los Angeles Times’s coverage of the mall location opening?

The Times was harsh in its assessment, indicating that Coda faced significant obstacles, including lack of an automotive track record, a sales and service network, and consumer brand awareness, according to Daniel Gorrell of AutoStratagem, an industry research and consulting firm. "People are going to buy new technology from a company they trust, and that suggests that it will be very hard for companies such as Coda to sell many vehicles," Gorrell told the L.A. Times. Other analysts expressed similar skepticism.

Looming Questions

Garcetti is now campaigning for mayor on a pledge to bring 20,000 green jobs to Los Angeles, so the Coda debacle might raise some very difficult questions for the candidate. Will Garcetti have to explain his long association with Coda's backers?

Other key questions posed by L.A. Observed’s Mark Lacter: “Why was the $1 million given out without an application from the company or any written analysis from the city? Why did the council unanimously sign off on the payment without debate…? And why was there no provision for repayment in the event that the company did not survive, which is looking more and more likely?

Of course, the bad publicity is not good for EVs in general. But hopefully it represents a passing phase of the electric car market characterized by knee-jerk support of anything electric, with money and good will being thrown at nearly any company wanting to produce zero-emissions vehicle. The EV market has already moved on—to a more realistic period, as trusted major automotive brands are selling plug-in cars in modest but growing numbers.

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