Uniti EV or bust

Swedish electric car company Uniti is close to raising the 500,000 euros it needs to stave off bankruptcy.

More than 100 people have so far pledged investments totaling about 200,000 euros, with the 500,000 in pledges needed to cover liabilities and keep the company running until at least June 2022.

So says Uniti chief executive Lewis Horne reflecting on the company’s situation which saw its last public communication more than a year ago.

“At the time I was really excited because I thought we had finally made a breakthrough,” he explains.

“But transitioning from a scrappy start-up with ambitious prototypes to becoming more of an actual automotive business proved to be super challenging, especially as the pandemic started to unfold.”

Late in 2019, Uniti completed the design specifications and A-surfaces for its Uniti One EV and planned to have its first production-intent prototype on the road by Q2 2020.

“Aligned with that milestone, we would start a capital raise in London,” Horne explains. “Unfortunately, 2020 started with news that our engineering partner couldn’t get our vehicle body parts from suppliers due to a virus in their hometown – Wuhan, China.

“Alternative parts made in the UK would be wildly more expensive and our very sensitive budget could not handle this.”

Wit the UK capital raise on pause, Uniti was reconstructed via the Swedish courts, which gave it the chance to turn things around.

It had been working on some other revenue producing activities but these relied on large numbers of people on public streets during a pandemic so didn’t happen.

“We scaled down our team, moved out of the office, and reduced our burn rate to the absolute minimum required to survive,” Horne says.

“Along the way, we learned the one key factor stopping us from gaining the funds needed to succeed – the huge amount of capital needed to build a car factory.

“Institutional investors were all concerned, and rightly so. The risks were just too high. Especially with such a unique product.”

Horne points out the Uniti team has not received a salary for months and that while he doesn’t know the time it will take to conclude the deal there is a chance it may not proceed at all.

“We identified potential partners in China that had already made huge investments in production and EV platforms. They had the supply chain but just didn’t have the EU sales and distribution, western software, or a European brand and design – all areas where we have proven strength. We could leverage their strengths in production, adapt their vehicle platforms to meet EU safety and quality standards, and then rapidly bring these vehicles to market. This would give us a stronger financial foundation with which to build our Uniti One.”

Horne explains lower production costs in China can help make Uniti’s EVs more affordable.

A production candidate was found and demonstrated to Uniti’s shareholders earlier this year.

Horne says an investor was found which would not only bring Uniti the capital it needed but could also solve production challenges.

“However, they asked that we don’t release the Uniti Zero production candidate as planned. Instead, our teams worked together on a more strategically aligned path forward.”

Things are now well advanced, although restrictions on capital outflows from China have led to the investor waiving an exclusivity clause to allow capital to come from other sources.

Horne says the investor’s proposed deal involves 675,000 euros in bridge funding, to pay off debts and keep the team going; four million euros to go into the first demonstration vehicles, 60m euros into a Uniti factory in China – a joint venture in which Uniti owns a minimum of 30% of the asset, and further funding for operations and marketing as part of the investor’s internal budget.