Coda for Coda: Can It Survive Its CEO Resignation and an EV Production Delay?
LOS ANGELES -- The dust is starting to clear following the explosive announcement that Kevin Czinger, the charismatic, hard-driving CEO of Coda Automotive, was stepping down on the eve of the launch of the car. The Coda is being delayed, and the best-foot-forward announcement at this year's very green Los Angeles Auto Show raises as many questions as it answers about the fledgling automaker's future.
Coda charged of the gate, raising $24 million from investors who included colleagues of Czinger and company co-chairman Steven "Mac" Heller at Goldman Sachs. Czinger and Heller brought in former Treasury Secretary Hank Paulson, as well as former Clinton chief of staff Thomas "Mack" McLarty and John Bryson, former CEO of Edison International.
It was impressive, especially because the charismatic Czinger had no experience in the auto business, and the Coda was a Chinese car massaged in the U.S. with electric components. Coda evolved a California-only introductory strategy and an Internet-based marketing plan. But marketing chief Mike Jackson also left the company shortly before Czinger did.
The car's announced price, $43,900, shook some observers because it is more than the very high-profile Chevy Volt ($41,000), and considerably more than the relatively comparable Nissan Leaf ($32,790). Coda's selling point, Czinger had said, is a larger battery pack and an advanced temperature management system.
In charge, temporarily, is Heller, who stood by Czinger at a Coda reception at the Los Angeles show. Czinger was silent, but there were many questions swirling around him. Why did he leave right before the car was scheduled for launch? Heller was upbeat and somewhat vague during the public session, but he offered more concrete detail in an interview afterwards.
"We will start delivering cars in the second half of 2011, probably the third quarter," he said. Why the delay? "We wanted to make sure we made the necessary tweaks and minor adjustments," he said. "We're eager to get to the market, but we have to be triple sure that we could deliver the quality our customers expect and deserve. This kind of delay is not unusual for new car introductions, and this was a decision jointly made by our board and management team."
According to Heller, Czinger will stay on as a senior advisor, and is stepping aside to allow the board to find an experienced auto hand who knows manufacturing and marketing. But the timing isn't great, and it's linked to months of delay for a car that was supposed to be on the market before the end of the year.
Heller said the Coda's marketing effort won't be affected by Jackson's departure, because he left a team in place. Here, Heller discusses the Coda on video:
Heller insisted that there will be no change in the Coda's price, or in its design and "consumer experience." Coda did have some good news to announce, including a growing alliance with the rental car industry. The company announced that Enterprise Rent-a-Car is buying 100 cars, and it hinted that other rental car agreements are coming.
Coda has hurdles in front of it. It hasn't completed crash testing yet, and it will have to market its car against experienced automakers such as Chevrolet and Nissan, which are backed with name recognition and large marketing budgets. Coda's test stand car was bright yellow, a color I hadn't seen on one of the company's cars before. "Yellow is the color of optimism," Heller said.
Nobody said starting an independent car company was easy. The Coda car drives well, and its longer range and well-thought-out battery system are a plus. But it's expensive, and without the extensive national dealer network that OEM automakers count on. The delay is probably a good thing, because it will offer senior management a breather, and a chance to think strategically about how to get Coda off the ground.
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Photo: Jim Motavalli