BREAKING NEWS: GreenPower Motor Is Being Sued By One of Its Largest Customers And Might Have To Pay Back Millions In California Government Incentives
One of Green Power Motor’s (GP) largest customers, Green Commuter, is suing GP for failing to deliver vehicles yet still charging Green Commuter the lease payments. Therefore, not only did GP lose one of its biggest customers, it also must pay legal fees and likely will owe millions to Green Commuter.
GP also could be in hot water with California’s HVIP (Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project). The lawsuit states that GP took cash from HVIP to pay for vehicles that GP didn’t deliver and also for vehicles that GP repossessed from Green Commuter. Likely, GP will have to give back the cash it received from HVIP from those vehicles, and it could hurt its standing in the government program if GP gets sued by HVIP.
Furthermore, GP is currently broke and needs to raise money to keep the lights on. This lawsuit is unfortunate for shareholders as it will make it harder for GP to find investors to invest at a favorable price.
Lawsuit Summary
See full lawsuit here.
EV Star Agreement
On 4/12/19, GP agreed to sell Green Commuter 100 electronically powered EV Star Vehicles. This amount was later amended to 96 vehicles. It was a lease-to-own deal, where Green Commuter was to lease these vehicles for three years and then purchase them.
GP was to receive funding from California’s HVIP in the form of 96 vouchers at approximately $90K each. Additionally, GP was to receive $10K per vehicle under the Disadvantaged Community Incentive. These vouchers were to be applied against the $143K purchase price of each EV.
However, the problem arised when GP failed to deliver to Green Commuter 10 of the 96 vehicles, leaving Green Commuter with only 86 EVs from the deal. Allegedly, Green Commuter made payments of approximately $71K towards the 10 EVs that were never delivered.
Then GP and its leasing company, San Joaquin Leasing, repossessed 18 of the 86 EVs from Green Commuter in April 2023, stating that Green Commuter didn’t make the lease payments.
Green Commuter stated that it was current on its account and it had owed no monies to GP, therefore, the repossessions were unjustified.
The case states that some of the repossessed vehicles were being used by Green Commuter customers on a daily basis, and some of the customers had invested their own money to customize the vehicles with special equipment.
Cargo EV Star Vans Agreement
On 8/31/22, GP contracted with Green Commuter to allow Green Commuter to order, upon demand, up to 21 Cargo EV Star vans. GP was to be compensated for the purchase of these EVs by HVIP vouchers.
Green Commuter already had 6 purchase orders to provide a total of 29 Cargo EV Star vans to six 3rd party companies.
Allegedly, GP has failed and refused to deliver any of the 29 ordered Cargo EVs to Green Commuter.
Potential Problems And Clawback With Government Program HVIP
As stated in the lawsuit:
“Upon information and belief, Greenpower received ninety-six Vouchers for the benefit of the plaintiff.”
What the above sentence means is that GP received 96 vouchers at $90K apiece but now doesn’t deserve all 96 because of GP’s failure to deliver and repossession of some vehicles.
Additionally, the lawsuit states:
“Upon information and belief, Greenpower received ninety-six of the $10,000 Disadvantaged Community Incentive vouchers for the benefit of the plaintiff.”
Like the HVIP vouchers, not all of the Disadvantaged Community Incentive vouchers are deserved anymore.
With the 18 repossessions and 10 failures to deliver, it appears that GP needs to return:
28 x ($90K + $10K) = $2.8M to HVIP.
And that isn’t even including any vouchers that GP may have received for their Cargo EV Star vans, which isn’t mentioned in the lawsuit. As stated, GP has failed to deliver any Cargo EVs to Green Commuter and therefore doesn’t deserve to receive any Vouchers.
It also doesn’t include other vehicles that Green Commuter will return to GP in the future. As it appears that Green Commuter will cease doing any business with GP.
On top of all this, because of Green Commuter’s bad experience dealing with GP could dissuade other prospective customers to do business with GP, and instead go with one of their competitors. Such as Lightening eMotors (ZEV) is a favorable alternative.