Sono Motors: Financing Wobbles - Community to Decide

The Munich-based solar mobility start-up Sono Motors is fighting for the series production of the Sion and has now made a dramatic appeal to its community of supporters and pre-orderers. While significant operational and commercial milestones were achieved over the course of the year, such as promising partnerships in the solar business and the presentation of the Sion series validation vehicles, the financial markets experienced a downturn and many technology companies lost up to 90 percent of their market capitalization, explain the two founders Laurin Hahn and Jona Christians. The stock prices of mobility providers, in particular, were hit hard. This increasingly complicates financing the Sion program through equity, as raising the needed funds takes much longer than expected.

"We have not succeeded in explaining to investors why the Sion has the potential to be the world's first affordable solar electric car and that there is also a great demand for such a solution," the founders admit self-critically.

Many investors have advised focusing on the less capital-intensive B2B solar business, which is already generating revenue, and abandoning the Sion program. They understand the market situation and are willing to restructure the business model in the interest of long-term company success. Sono Motors recently presented solutions for the three key industries of buses, e-vans, and refrigerated vehicles at the IAA Transportation and showcased four B2B customer projects with CHEREAU, Kögel, Wingliner, and Mitsubishi Europe (MTTE). The company also showcased the Solar Bus Kit, a retrofit solution developed for the most common 12-meter bus types on the European market – including the Mercedes-Benz Citaro and the MAN Lion's City.

"Before we dare to discontinue the Sion development, we want to give our community of over 21,000 Sion reservists one last chance to keep the Sion program alive and partially close our funding gap," the young entrepreneurs finally appeal.

21,000 reservations from private individuals correspond to a sales potential of around 465 million euros. Combined with the additional roughly 22,000 pre-orders from fleet operators with a sales value of almost 600 million euros, this already corresponds to a potential net sales revenue of over 1 billion euros – provided that all reservations and pre-orders also lead to purchases, the managers argue. They now want to use this potential as a financing source and are launching another Sion reservation campaign for 3,500 units called #saveSion, which is to last 50 days. Initially, reservists receive a discount of up to 3,000 euros on the final price of their Sion. These deposits are only due in the event of the campaign's success. Additionally, supporters of the campaign receive a fixed waiting list number for their Sion.

"It would not be the first time that our community plays a crucial role in getting the Sion on the way to series production," the founders say.

Back in the crowdfunding campaign at the end of 2019, the community supported, even though the situation was very different back then: The Sion development was in a much earlier stage, the Sono Motors brand was significantly less known, and they had not yet built up their B2B solar technology business. Nevertheless, it was possible to collect more than 50 million euros in payment commitments from the community worldwide in just 50 days. Today, 23 companies worldwide are already using the innovative solar technology in a variety of vehicles such as buses, refrigerated trailers, and electric transporters.

Progress in Vehicle and Technology

Since the 2019 campaign, further progress has been made. They presented the Sion in production design, completed part of the series validation fleet, achieved solar charging outputs close to the planned energy yield, successfully tested bidirectional functions, and launched the sharing app live in app stores. Additionally, the price remains affordable at 25,000 euros net. They also point to the higher brand awareness. They are convinced they can succeed again.

"Since we have received hardly any government subsidies, we must continue to focus on our community and the capital markets. Since 2016, we have raised over 400 million euros net in financed and committed capital, an incredible sum by German standards. But only a sobering 0.25% of it came from the state," the founders criticize. 

And they add, for context, that it took only five years from the initial concept to the preparation of the pre-series, a typical timeframe in the OEM industry. However, the development of a car usually costs up to 1 billion euros; they have come this far with less than half the sum. The renewed campaign is seen as a solution for financing a large part of the Sion program without further diluting the stock and as the first part of an extensive financing strategy for the next twelve months, as the company indicated. This, of course, also includes the capital markets.

"We believe that this way we will be able to raise further funds and pay for the remaining machinery, tools, and production facilities to achieve planned pre-series production in 2023 and then start production in the first quarter of 2024," the founders further state.

If the campaign does not run successfully, they will indeed focus on the attractive B2B solar business, which is significantly less capital intensive. With the current and expected liquidity of around 55 million euros as well as further available resources, they believe they are able to successfully realign the company purely towards the solar business. It is therefore not about the future of Sono Motors, but 'only' about the future of the Sion.