Report: Sono Motors Threatens Bankruptcy Without Going Public
Sono Motors recently reached 16,000 pre-orders for its Sion solar electric car. After several delays, the model is scheduled to launch in 2023 officially. Before that, in addition to the finished development of the Sion, there are other major challenges to be overcome – especially series production and the financial resources required for this. Both are not yet secured.
The start-up needs several hundred million euros to get the Sion into series production. After several rounds of crowdfunding, the people of Munich want to get the money through an IPO in the USA. The successful market launch and thus the future of Sono Motors is anything but assured.
The admission prospectus for the US technology exchange Nasdaq speaks a clear language; without proceeds from the not yet officially launched IPO, “the group would become insolvent this December or shortly after that,” it says on page 88 and in other places of the good 200 -page document. Sono Motors did not want to comment on this and other statements in the prospectus concerning strict rules of silence in the context of the IPO.
About two years ago, Sono Motors was on the verge of extinction. The company, founded in 2016, saved itself through short-term organized crowdfunding, which was very successful with 50 million euros. If the planned listing on the stock exchange succeeds and brings in the necessary capital, Sono Motors must overcome another major hurdle: series production.
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No Production Agreement Yet
The Sion is to roll off the assembly line at the contract manufacturer NEVS in Sweden, but there is no production agreement for this yet. The latter was only recently announced; before that, the collaboration with NEVS announced by Sono Motors in 2019 was considered secure. In addition, NEVS is currently looking for a new owner, as its parent company, Evergrande from China, has massive money problems.
It is unclear whether or to whom NEVS will be sold and whether the production agreement with Sono Motors will remain, the Munich-based company explains in their prospectus. One could be forced to look for another manufacturing partner, the company admits. Talks are already being held with two alternative contract manufacturers from Europe. How the change of manufacturing partner would affect the company’s schedule, and finances is unclear.
Sono Motors plans to sell up to 11.5 million shares on the stock exchange at prices between $ 14 and 16 each for its further financing. This results in a maximum issue volume of 184 million dollars. After deducting fees, Sono Motors itself calculates a cash inflow of a maximum of 156 million dollars, i.e., the equivalent of a maximum of 135 million euros. However, until the start of production, a total of at least 354 million euros would be needed, according to the US stock market prospectus.
So far, Sono Motors has spoken publicly of at least 200 million euros that are still needed for the series production of the Sion. According to RND, with the numbers mentioned in the prospectus, the start-up, which values itself at around one billion euros, would still be missing at least 220 million euros after the IPO. According to the report, the company puts the losses it has incurred since it was founded at 109 million euros. Half of this was incurred in the previous year.
Sono Motors continues to look positively to the future and points to its committed community. The reservations of over 16,000 customers with down payments totaling almost 41 million euros can be canceled at any time, the company admits in the prospectus. It also remains to be seen how many pre-orders will be added. The Sion is advertised as an innovative, everyday electric car that offers solar cells in the body for more range and sustainability and car-sharing functions, and bidirectional charging at an affordable price. But established manufacturers bring more and more electric cars and moderate prices to the market, while Sono engine’s price of Sion this month increased again.