Electric Car Startup Aptera Shuts Down, Idealab Takes Hit of More than $20M

(Reuters) – Aptera, the California startup best known for developing a space age-looking, three-wheeled car, has closed its doors after failing to raise the funds needed to put its ultra-efficient vehicles on the road.

The company had received a conditional offer for a $150 million loan from the U.S. Department of Energy, but failed to secure the $80 million in private investment needed to close that financing, Chief Executive Paul Wilbur said on Friday.

“A couple of years ago the market was pretty gung-ho about new EV companies starting up,” Wilbur said in an interview, noting that production delays and ballooning capital requirements at car startups like Tesla Motors Inc. and Fisker Automotive have spooked many venture capitalists.

“There is a hesitancy now for investors to put large capital into almost any investment, but the automotive investment — it’s pretty difficult to find those investors.”

In particular, Aptera failed to find a lead investor to inject about $50 million into the company.

“We were looking for a big dog to lead the way,” Wilbur said.

Aptera’s investors include technology incubator Idealab, Google and NRG Energy Inc. Its primary backer was Idealab, which was the sole investor in Aptera’s first VC round in April 2007, a $20 million investment, according to Thomson Reuters (publisher of peHUB). Aptera raised another $4 million from Idealab, Google.org (Google’s philanthropic arm) and Esenjay Investments in July 2008, then it picked up a $2.23 million bridge loan from Idealab in July of this year, Thomson Reuters reports.

Five years ago, venture capitalists thought electric vehicles were promising. Venture Capital Journal (peHUB’s sister publication) reported in September 2007 that venture firms had invested $216 million in electric vehicles in the prior 16 months. (VCJ subscribers can read that story and see a detailed table of investments by clicking here.)

Aptera will not file for bankruptcy, Wilbur said, but rather will implement “an orderly liquidation.”

The company is in talks with several prospective buyers on selling some of its technologies, Wilbur said.

Carlsbad, California-based Aptera’s closing was announced in a press statement earlier on Friday. In the statement, Wilbur said the company had been in talks to reactivate a mothballed automotive plant in Moraine, Ohio, for production of its first commercial vehicle. The action would have created 1,400 jobs.

Though best known for its first planned vehicle, a three-wheeled car often likened to one from the 1960s cartoon “The Jetsons,” Aptera planned to use its Department of Energy loan to bring a four-wheeled, five-passenger electric sedan to market.

The vehicle aimed to deliver the equivalent of more than 190 miles per gallon and a 130 mile range at a cost of less than $30,000.

“We had all of our commercialization plans in place. We were a check away from going into production,” Wilbur said.

Like Tesla, Fisker and Coda Automotive, Aptera was one of a handful of young, West Coast-based companies making cars designed to save gasoline and reduce greenhouse gas emissions.

But American consumers have been slow to embrace electric and rechargeable vehicles, in part because of their additional cost. In recent weeks, the vehicles have taken another public relations hit after federal safety officials opened a probe into battery fires in General Motors Co.’s plug-in electric Chevrolet Volt.

By Nichola Groom, Reuters

(Additional reporting by Lawrence Aragon, peHUB)