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Massive Cuts at Coda Automotive

Maker trims 15% of workforce as sales lag.

by on Dec.12, 2012

Sink or swim time for Coda?

With sales lagging far behind initial expectations, Coda Automotive has slashed 15% of its U.S. workforce, though it insists it “remain(s) committed” to the nascent market for battery-electric vehicles.

Coda is just one of many manufacturers finding it tough going as American motorists warm up to battery-based technologies at a significantly slower pace than proponents had projected.  The California-based maker, in particular, has sold barely 100 of its Chinese-made battery-electric vehicles so far.

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“CODA has released approximately 50 employees or 15% of our workforce across all functions to streamline our operations and right-size the Company,” a statement issued by Senior Vice President Forrest Beanum confirmed. “The Company is taking this action to better position our business going forward. We remain committed to the continued development and distribution of our products.”

Headed by former General Motors China chief executive Phil Murtaugh, Coda imports partially assembled battery-electric vehicles from China and then completes construction at a facility in California.

It operates a handful of distribution centers in the Golden State, including a facility located in a suburban Los Angeles mall, designed to stress the differences between its product and conventional automobiles.

But since launching sales last March, demand has been marginal and showing little sign of gaining momentum. As of earlier this month, total sales were reportedly less than 100.

The maker’s situation has been worsened by an August recall triggered by problems with mandatory safety gear and by the Coda sedan’s poor performance in recent federal crash tests. It received only two out of a possible five stars in the tests performed by the National Highway Traffic Safety Administration, making it one of the poorest performers now on the market.

Critics, including TheDetroitBureau.com, have given the battery-electric vehicle, or BEV, kudos for its quick acceleration and noted it gets better range than many of the other electrics on the market. But the vehicle has also been faulted for its dated design and an inelegant interior that hardly justifies the vehicle’s $37,250 base price (prior to a $7,500 federal tax credit).

“Coda has not been able to gain traction with consumers or fleets,” said John Gartner, an analyst with Pike Research specializing in alternate automotive products. “Coda’s launch vehicle has not been viewed favorably as consumers have not been willing to compromise ‘just’ to have a vehicle with an electric drivetrain.”

Coda officials have been biding their time hoping to generate enough sales and revenue to carry the company over as it developed a newer and more modern product, but critics question whether the maker can survive long enough considering its so-far limited market success.

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