🪫 This $2B EV giant failed overnight

How Tritium collapsed from a successful startup story in Australia (IPO to Insolvency)

Author

Admond Lee
October 27, 2024

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Today’s issue is about how Tritium collapsed from a successful EV startup story in Australia. Let’s get to it! 🚀

Today at a Glance:

  • ☠️ 1 Failed Startup → Tritium

  • ⚠️ 2 Mistakes → Over-reliance on IPO for cash flow

  • 🧠 3 Lessons Learned → Prioritise operational efficiency & quality control

  • 🔗 The Runway Insights → How to promote your startup with $0

  • 💰 Southeast Asia Funding Radar → Upgrad secures $60M from Temasek at $2.25B valuation

☠️ 1 Failed Startup: Tritium

🚀 The Rise of Tritium

Founded in Brisbane, Australia, in 2001 by David Finn, James Kennedy, and Paul Sernia, Tritium designs and manufactures proprietary hardware and software to create advanced and reliable DC fast chargers for electric vehicles. Their mission was clear — to make EV charging faster and more accessible, addressing a critical barrier to widespread EV adoption.

⚡️ Fun Fact

Tritium started as an engineering consulting firm in 2001. But in 2013, it pivoted into the electric vehicle (EV) fast-charging industry given a global push toward electric vehicles, releasing its first DC fast charger.

  • The Problem — 🪫 The EV adoption is low due to longer charging times and lack of accessibility to reliable EC chargers.

  • The Solution — 🔋 Tritium designs and manufactures compact, reliable, and advanced DC fast chargers for electric vehicles.

    • Compared to other chargers on the market that were still AC-based (slow charging), Tritium’s proprietary DB charging solutions allow for rapid charging, significantly boosting EV adoption.

    • 😍 Shorter charging time means EV owners could power up their vehicles quickly, alleviating the range anxiety that often deterred potential buyers from making the switch to electric.

    • Because of that, Tritium quickly positioned itself as an industry leader, filling a vital need for fast and efficient EV charging infrastructure.

Tritium went IPO on the NASDAQ 🚀

🌍 As the demand for electric vehicles surged, the EV market exploded, and so did Tritium's traction. By 2020, the company had deployed over 4,500 charging stations across 33 countries, claiming around 50% market share in Norway.

By 2021, it was a global player, installing over 13,000 chargers across 47 countries and securing deals with giants like BP, Ionity, and Shell — capturing a staggering 30% of the DC fast charger market in the United States.

🔔 Finally, Tritium went public on the NASDAQ in January 2022 through a SPAC merger, achieving a valuation of nearly $2 billion. Tritium was celebrated not just as an Australian success story but as a global leader in EV infrastructure, with ambitions to expand its manufacturing capabilities in the U.S. to meet rising demand.

📉 The Fall of Tritium

However, achieving an IPO doesn’t mean a company can last forever. In fact, Tritium’s IPO is the beginning of its nightmare.

The Nasdaq listing hadn’t brought the influx of capital needed to sustain Tritium’s rapid expansion, and by 2023, issues began surfacing, leading to delisting warnings and insolvency.

📌 Here’s what happened to Tritium:

🚀 The Journey Towards IPO

  • 2001 — Tritium was founded by David Finn, James Kennedy, and Paul Sernia in Brisbane, Australia.

  • 2013 — The first DC fast charger was launched.

  • 2020 — ⚡️ The company achieved significant traction with over 4,500 charging stations deployed across 33 countries.

    • Installed over 13,000 chargers across 47 countries, capturing a staggering 30% of the DC fast charger market in the United States.

  • 2017 — Launched its first international office in Torrance, CA just outside of Los Angeles.

  • 2018 — Opened an office in Amsterdam to serve the European market.  

  • 2021 — Launched a state-of-the-art testing facility at its Brisbane headquarters to test and develop ultrafast DC fast chargers.

  • Jan 2022 — 🔔 Tritium went public on Nasdaq, reaching a valuation of nearly $2 billion.

  • Feb 2022 — Tritium’s CEO (Jane Hunter) was invited to speak about EV chargers at the White House together with President Joe Biden.

📉 From IPO to Delisting

  • Aug 2023 — 🤯 Stock prices declined sharply from around $300 to approximately $40.

    • Tritium struggled to stay profitable, and its first-generation 50kW chargers were reported to have reliability issues that hurt its reputation.

    • Struggled to raise enough cash to cover its expenses, especially as the overheads from building a new factory in the US continued to rise.

  • Sep 2023 — Despite achieving revenue of $185M for the 2023 financial year, based on PwC’s independent auditor’s report, Tritium’s annual report (published in September) showed that Tritium had:

    • Net loss — $120.3M

    • Cash outflows — $151.2M

    • Net liability — $134M

  • Oct 2023 — ⚠️ (1st Delisting Warning) Received a noncompliance notice from NASDAQ due to its stock price falling below $1 for over 30 days in Aug.

    • The share price plummeted from around $10 at its peak to just $0.22.

    • Tritium sought a $90M bailout from the Queensland government amid mounting losses — but failed.

    • Hunter (Tritium’s CEO) also held unsuccessful discussions for capital injection, including Queensland Investment Corporation, Clean Energy Finance Contribution, and the Albanese government.

    • In short, the financial collapse and desperation were real.

  • Nov 2023 — 🏭 Announced the closure of its original Brisbane factory and moved all manufacturing to Tennessee, resulting in 400 job losses.

    • The reason? They faced with mounting losses and an inability to sustain operations.

  • Dec 2023 — Got a $8M bridging loan to keep the business afloat, but the shares kept going down.

  • Feb 2024 — ⚠️ (2nd Delisting Warning) Nasdaq hit Tritium with a 2nd delisting notice for shares falling below $0.10.

  • Apr 2024 — 💸 Tritium files for voluntary administration as it declares itself insolvent (running out of capital) after 6 potential buyers backed out.

    • At this point, its market value had dwindled to less than $4M.

    • The company was unable to attract further investment due to mounting debts and management struggles.

    • Most of Tritium’s subsidiaries were either insolvent or close to being insolvent.

    • KPMG has been appointed voluntary administrators for several Tritium subsidiaries, while McGrath Nicol has been appointed to help find buyers for the business.

🌤️ New Chapter for Tritium

  • 9 Aug 2024 — Exicom announced its acquisition of Tritium out of receivership for $37M, marking a new chapter for the company and potentially stabilising its operations.

    • Exicom said that the buyout will help fuel its research and development to drive innovation in the EV space and serve different use cases globally. 

    • With the acquisition, Exicom will help secure both Tritium’s manufacturing facility in Tennessee and its engineering centre in Brisbane.

📈📉 From a successful startup story in Australia to the collapse of Tritium, Tritium’s story highlights the complex challenges in scaling high-capital, hardware-driven ventures, especially in the competitive EV sector.

🙏🏻 Once heralded at the White House as a global leader in the EV industry, the brutal reality crushed their dream.

Today, Tritium’s vision may continue under new leadership as it seeks to contribute to a sustainable future in mobility.

Want to learn more about Tritium’s downfall?

⚠️ 2 Mistakes

Mistake 1: Over-reliance on IPO for cash flow

🎟️ Tritium banked too much on the IPO as a golden ticket for funding. When the IPO didn’t bring the anticipated capital, they were left scrambling to fund their ambitious expansion, leading to a cash crunch and a mountain of debt.

While Tritium’s rapid expansion across the U.S. and Europe was impressive, it came at a high cost. The construction of new facilities, along with expanding production capabilities, drained resources without generating enough immediate revenue.

By the time they knew it, the costs were eating their margins up with a high burn rate.

Mistake 2: Poor management

🏭🏭 Even though the United States is the largest EV market for Tritium, Tritium’s management was reluctant to move their manufacturing operations entirely to the US. Instead, they opened a new manufacturing plant in the US while maintaining its factory in Brisbane, Australia, leading to unnecessarily high costs for the company.

🏭 In November 2023, Tritium finally announced the closure of its original Brisbane factory and moved all manufacturing to Tennessee. But it was too late.

Even worse, after the financial collapse, investors didn’t get much updates from Tritium’s CEO and its management. They were so frustrated that eventually they sold off their Tritium’s shares at a huge loss and moved on.

🧠 3 Lessons Learned

Lesson 1: Don’t put all your eggs in the IPO basket

Banking on one major event to pull in all the capital is a risky move that often leads to desperation — and this is what happened to Tritium.

🌟 Key Takeaways:

  • 💰 Plan for continuous fundraising

    • Don’t view an IPO or any one big funding event as a cure-all.

    • Even after going public, companies like Tesla continue to raise capital through secondary offerings and debt instruments when needed, ensuring a steady cash flow for scaling initiatives.

    • When Tritium’s CEO went to fundraise from Queensland and Albanese governments after their stock price collapsed, the move was deemed to be desperate and might be too late for capital injection due to low investors’ confidence.

Lesson 2: Prioritise operational efficiency & quality control

Tritium expanded rapidly, opening a new U.S. manufacturing plant without phasing out its original Brisbane factory. This dual-operation strategy may have seemed ambitious but ended up just doubling costs without doubling revenue.

In high-burn, capital-heavy industries, expansion needs to be lean and strategically timed to match your financial reality.

🌟 Key Takeaways:

  • 🚀 Don’t expand faster than your revenue can support

    • When you’re expanding, ask yourself, “Do we have the stable cash flow to support this?“

    • And remember, each new location, manufacturing plant, or product line comes with hidden costs.

    • By expanding too fast, Tritium drained cash in ways that didn’t pay off, like maintaining two factories at once — one of which they eventually had to close, costing hundreds of jobs and undermining investor confidence.

  • 🏭 Phase your expansion

    • Focus on expanding one location at a time, building stable cash flow there before moving on to the next market or facility.

    • Even better, instead of going full scale right away, consider a pilot expansion in a new market.

    • This way, you’ll gain insights into operating costs, customer demand, and logistical challenges without committing too many resources upfront.

    • The last thing you want is to make bet-the-company bets (a concept shared by Jeff Bezos) and if it backfires, it could potentially kill your company.

Lesson 3: Prioritise clear and transparent communication with investors

🙅🏻‍♂️ When things went south financially for Tritium:

  • There was a severe lack of communication from the leadership team.

  • Tritium’s CEO and management weren’t updating investors on the company’s financial troubles or on the plans (if any) to turn things around.

  • This silence left investors feeling abandoned, frustrated, and in the dark about what was going on internally, pushing many to dump their shares at a loss.

🌟 Key Takeaways:

  • 🤝🏻 When shit happens, don’t go quiet.

    • In moments of crisis, you don’t go quiet; instead, you get vocal.

    • Consistent, open communication builds trust, keeps investors on your side, and can even motivate them to support you through rough patches.

    • With clearer communication, investors might have been more inclined to stay, understanding the challenges and perhaps even offering support or advice.

  • 🧠 How to tell investors bad news

    • When sharing bad news, it’s important to provide context and solutions.

    • Share a roadmap of how you plan to address the problem, including actionable steps you’re implementing to stabilise or improve the situation.

    • Even if the outcome is uncertain, investors appreciate knowing you have a plan and are proactively managing the situation.

🔗 The Runway Insights

  • How to promote your startup with $0 (Link)

  • How to hire the first sales person for your SaaS (Link)

  • How to handle the exit strategy question in VC meetings (Link)

  • Why Design Matters: Lessons from Stripe, Lyft and Airbnb (Link)

  • ConvertKit Growth Story: How Nathan Barry bootstrapped to $36.4M Recurring Revenue (Link)

💰 Southeast Asia Funding Radar

  • Upgrad secures $60M from Temasek at $2.25B valuation (Link)

  • Mynt, a GCash’s parent company, bags $319M from Mitsubishi (Link)

  • Tookitaki raises funding from True Global Ventures to fight financial crime (Link)

  • Horizon Robotics raises $696m in HK’s 2nd largest IPO (Link)

  • ConnectingDNA bags $550K to accelerate DNA-based wellness solutions (Link)

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That’s all for today

Thanks for reading. I hope you enjoyed today's issue. More than that, I hope you’ve learned some actionable tips to build and grow your business.

You can always write to me by simply replying to this newsletter and we can chat.

See you again next week.

- Admond

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