Portable battery startup Moxion is bankrupt. What happened?

On July 26, the portable battery company Moxion Power announced it would be closing its doors, effective immediately. After furloughing most of its 400 employees a week earlier, CEO Paul Huelskamp emailed them with the news.

“I’m writing to you this morning with a heavy heart,” he wrote in an email seen by SFGate. “We have not found a path that will allow us to continue operations as Moxion Power.”

According to a LinkedIn post from a former manufacturing engineering manager at Moxion, the company successfully delivered over 400 of its first generation of units in 2023, and planned to begin production — “albeit slowly” — of its second generation unit by the end of 2024. However, he wrote, the company faced “funding and investor challenges, combined with rapid growth.”

A year ago, it seemed that Moxion had managed to cross the Valley of Death. In September 2022, the company secured a $100 million Series B round and had a big name investor-customer in Sunbelt Rentals, which rents out equipment for construction and other projects. 

Since the announcement of its bankruptcy, though, insiders say that Moxion’s growth was mismanaged. It scaled up production before resolving technical problems and leaned too heavily on major early customers rather than finding the right product-market fit. 

“The lesson for me was ‘grow slow, grow small,’” said one senior manager with knowledge of the thinking of the company’s leadership, who was laid off recently. “If the timing works out well, and if you are lucky, you will make it big. Otherwise, you are not the exception.” 

This week, Moxion filed for Chapter 7 liquidation, estimating its total liabilities to be $100 million and $500 million. Its biggest creditor, Silicon Valley Bank, has the secured biggest claim of more than $33 million. The filing indicates that the company now has just $201,980 in a checking account.

It’s a dramatic collapse for a company that was “the company you want to work for” for those in the Bay Area cleantech and energy circles as recently as last year, said the laid-off senior manager.

Growth at all costs

One key factor in Moxion’s demise was that the company grew too big — and so quickly that it skipped over some key product development steps.

“The company anticipated the market demand too early, without much validation,” the senior manager told Latitude Media.

The Moxion product is a portable battery, boasting 75 kilowatts of power and over 600 kilowatt-hours of energy. It was meant to replace diesel generators for live events, disaster response, construction, and defense applications. With that thesis, the company attracted a wide collection of investors, including Energy Impact Partners and Tamarack Global — which led its Series A and B rounds, respectively — as well as companies including Sunbelt, Amazon, and Microsoft.

The company went on a hiring spree that caused it to outgrow its original office space and sign a lease for a 100,000-square-foot expansion in Richmond, California, in January. Last summer, it held a launch ceremony for a new manufacturing plant with 7 gigawatt-hours of capacity, attended by California Gov. Gavin Newsom.

But the anticipation of huge demand, in the former employee’s eyes, meant that that growth — and especially the hiring of several hundred people, many of whom left companies like Tesla, Proterra, and Uber — was premature. 

The former employee said that leadership believed that if Sunbelt — one of the country’s biggest equipment rental companies — trusted Moxion enough to both invest and place a multi-million-dollar order, the product was ready to scale. He summarized that sentiment as “they know [the market] much better than we do, so let’s just trust them and just go and start building.”

That overconfidence and fast ramp-up led to “silly little mistakes” and technical problems, such as neglecting to build bidirectional charging into the product, the senior manager said, which effectively meant that the battery couldn’t charge and discharge at the same time. That resulted in a lower utilization by customers, who were used to the more straightforward generator experience. (Sunbelt, Moxion’s largest customer by far, declined to comment for this story.) 

And, because the company grew so fast, making updates to fix problems with the hardware was both expensive and logistically difficult.

In February, Bloomberg Law reported that Moxion was aiming to raise a potential equity round of $200 million, at a $1.5 billion valuation. But that attempt came amid 2024’s shakeout in the climate tech market, during which startups have found it challenging to track down the capital needed to scale further.

At the end, Moxion sent a notice to its staff saying that it had been trying to scrape together more money from investors, but when those talks fell through, it had an “unexpected and last-minute” shortfall — making it impossible to pay any severance for the last workers remaining. (One has now filed a lawsuit against the company.)

Product-market fit

But there are some who saw real promise in Moxion’s product, and are mourning its demise.

Neel Vasavada is the founder and CEO of Overdrive Energy Solutions, which is using portable batteries to decarbonize the live event space. The tiny startup is in the position of being simultaneously a Moxion customer — over the course of eight months, it rented 41 units — and a competitor. (Moxion dabbled in the live events space, powering its first festival in the CEO’s small town of Mill Valley in May.)

“Pretty much all of our clients have been happy, and have been increasing their use of these systems,” Vasavada said. “And it’s been profitable — even though we had to rent them.”

From what Vasavada has heard, though, many of Moxion’s other customers had problems. He believes the events market would have been a better fit for Moxion, even if it’s smaller than the firmly entrenched generator rental market.

“The reason why I believe Moxion failed is because they thought that they could sell products to diesel generator rental companies, and find a lot of success,” Vasavada said. He added that many of those companies do rent out some batteries, but “none of them are deploying these battery systems in any meaningful volumes.”

Meanwhile, a growing number of concerts and other live events are aiming to decarbonize, as are companies like Amazon Studios, which invested in Moxion for batteries to power film and television production.

The market for portable renewable power — and even for Moxion’s battery specifically — is still very much there. Vasavada has heard that there are up to 300 Moxion units that don’t yet have an owner, and he is eager to use them in his own business because they simply worked better than the other portable battery options. But in light of the company’s shut-down, “I can’t even get my grubby hands on a unit,” he said. “It’s maddening.” 

That confidence is shared by the company’s former senior manager, who is still hoping someone picks up Moxion’s technology and finds the right market fit.

“I'm still a believer in this technology and product, if somebody is able to make it better with much more frugality and much more market validation.” he said. “So we'll see."