Carvana's Seeking a Way Out of Its Billions in Debt

The terms of the transaction, to be launched later on Wednesday, offer between 63 cents and 81 cents on the dollar to holders of five tranches of outstanding bonds maturing between 2025 and 2030.

The bondholders would have a second priority claim, behind lender Ally Financial, on vehicle inventory and intellectual property including Carvana’s brand. The bonds would mature in 2028 and carry a cash interest rate of 9 per cent per annum, versus 5 per cent and 10 per cent for the existing bonds. The company could also elect to pay up to 12 per cent interest under a “payment in kind” arrangement.

The Financial Times has previously reported that at least six prominent credit investment firms have joined forces to negotiate with Carvana. According to a person familiar with the situation, there has not been much interaction between the company and its bondholders.

One prominent member of the group, Apollo Global Management, which had bought $800mn in bonds issued by Carvana in 2022 at par, would take a significant loss should it decide to participate in the restructuring.

Participation is voluntary and Carvana says that for the deal to close, at least $500mn of new debt will have to be issued. The kind of restructuring the company is proposing can often serve as a prelude to the renegotiation terms or an entirely different agreement.

The seven-day poll completed on Monday found 34% of all respondents would consider an EV, while 31% said no. Among Democrats 50% said they would consider an EV, while 26% of Republicans and 27% of independents said they would consider.

There are now more than 80 EV models for sale in the United States. EVs represented nearly 6% of all U.S. sales in 2022, with EV sales up by more than 60% last year. [...]

The poll found 56% of respondents would be willing to pay no more than $49,999 for an EV. In August, the Biden administration won a significant expansion of $7,500 electric vehicle tax credits and other battery and EV manufacturing incentives to shift the industry toward electric models but EVs are still often significantly above $50,000.

The poll also found that 35% wanted an EV that offered 500 or more miles of electric driving range per full charge, a distance few EVs offer today. Another 37% wanted a minimum of 300 miles.

EVs made up just 0.5% of domestic auto sales last year, according to Mexico’s Auto Industry Association AMIA, far below the U.S. percentage of 5.8%, according to research firm Motor Intelligence. If hybrids are added, Mexico reaches 4.7%.

“There are still a number of issues that need resolving in Mexico before there’s a massive influx of electric cars,” said Mario Hernandez, KPMG’s lead manufacturing partner in Mexico.

Hernandez said drawbacks included a lack of subsidies for buyers, high costs for installing charging devices at homes and a shortage of public charging stations, vital for longer journeys. Unlike other countries, Mexico has not yet agreed on a plan to phase out gasoline-powered vehicles, he added.

Nearly 1.1 million new cars in total were sold in Mexico last year. Just 5,600 of those were EVs, much less than the 8,400 sold in Latin America’s biggest car market, Brazil.

Yet output of EVs in Mexico was seen surging to 142,000 cars this year from 78,000 in 2022, Mexico’s auto parts industry group INA estimated before Tesla announced its new plant.

Sodium-ion batteries can leverage the same manufacturing processes as the lithium-ion industry, meaning the former could benefit from advances that the latter had made over the last decade. The use of similar materials and components — from electrolytes and separators, to aluminum current collectors — means this emerging technology also could benefit from the existing economies of scale.

Sodium-ion batteries are more expensive than lithium-ion today because of low volumes and underdeveloped supply chains. But BloombergNEF sees potential for material savings and energy-density improvements that would provide a viable pathway for sodium-ion cells to cost half what lithium iron phosphate cost today.

That would be a big deal. Lithium iron phosphate, or LFP, is the most common lithium-ion battery chemistry presently, due to a growing preference by automakers for its lower cost and significant energy-density improvements over the last decade.

The major challenge for sodium-ion cells are their lower energy density — cars packing these cells today would have to use heavier batteries for the same amount of kilowatt-hour capacity. The cells in the Sehol E10X use sodium-iron-manganese-copper cathodes and have an energy density of 140 watt-hour per kilogram, which reduces to 120Wh/kg at the battery-pack level. This is 25% lower than current LFP battery packs.

The new BEV vehicle will be the successor to the Opel Grandland compact SUV currently produced in Eisenach, the automaker said in a statement.

It will be based on the ‘STLA Medium’ platform, one of the four platforms that will underpin all Stellantis’ new models starting from next year.

“Adding a BEV to Eisenach’s output supports Opel’s bold commitment to a fully electric product lineup by 2028 in Europe,” Stellantis said.

Current production at the facility also includes plug-in hybrid versions of the Opel Grandland.

Stellantis, the world’s third-largest automotive group by sales, wants 100% of its European passenger car sales and 50% of its U.S. passenger car and light-duty truck sales to be battery electric vehicles by 2030. Its other brands include Peugeot, Fiat, Alfa Romeo and Jeep.

On March 22, 1983, the Pentagon awards a production contract worth more than $1 billion to AM General Corporation to develop 55,000 High Mobility Multipurpose Wheeled Vehicles (HMMWV). Nicknamed the Humvee and designed to transport troops and cargo, the wide, rugged vehicles entered the spotlight when they were used by the American military during the 1989 invasion of Panama and the Persian Gulf War in the early 1990s.

In 1992, a civilian version of the Humvee, known as the Hummer, went on sale. The hulking, attention-grabbing road warrior tipped the scales at some 8,000 pounds and got less than 10 miles per gallon. It was an early hit with Hollywood celebrities such as Arnold Schwarzenegger, who went on to own a fleet of Hummers. In December 1999, when the economy was strong and gas prices were relatively low, General Motors purchased the rights from AM General to market and distribute the Hummer. In 2002, the Hummer H2, a smaller (some 6,000 pounds), less expensive version of the original model, debuted.