Faced with an explosion in costs, Hopium revises its ambitions downwards

Just three months after unveiling its Machina Vision hydrogen sedan at the World Cup with great fanfare, French start-up Hopium is struggling financially in its development phase.

The first years of a start-up’s life are usually hectic. And hops is the most recent example. According to an article published by Les Echos on Wednesday, the maker of hydrogen-powered cars is facing rising costs that would have quadrupled within a year.

“In the first half, the net loss reached 9.5 million, with available cash having fallen on June 20 to just 20,000 euros, against 4.9 million a year earlier”, adds the economic daily. Which specifies that October, November and December wages were paid late. Some suppliers were also not paid.

Internally, these financial difficulties are justified by the economic context that is troubling Hopium as well as most car manufacturers around the world. “There are resources and components whose prices are rising and which are impacting our purchases, says a start-up manager. We are still a fuel cell vehicle (Editor’s Note: Fuel Cell), but we have the same problems that all car manufacturers face in electronic components and certain raw materials.”

“We cannot forget that this is a project that was launched during Covid, the conflict in Ukraine. It is a particular economic context and there are start-ups that are breaking their necks”, he summarizes.

Consequences on the workforce

These exogenous factors interrupt a roadmap established long ago by the company founded by former driver Olivier Lombard. “Expenses accumulate and accelerate because it is a project that develops and becomes more complex, explains a Hopium representative. At this stage of development, we are facing a financial crisis and have to readjust our plans.”

Specifically, this readjustment involves a review of the short and medium term strategy with a reorientation towards the development of technology, that is, the fuel cell, even if “the vehicle remains in the field of vision”. “This will have an impact on the route dedicated to recruitment and the workforce”, admits the company, which does not confirm the figures referred to by Les Echos of 60 leaving the company’s 130 employees, while 74 employees were recruited in the first half of 2022.

Multiple funding levers activated

Earlier this week, the start-up also announced the drawing of a second tranche of 200 bonds convertible into shares with a nominal value of 10,000 euros each, under the agreement signed with the company Atlas Special Opportunities. In a statement, Hopium indicates that the funds thus raised are intended “to primarily finance R&D expenses for the development of the technological platform, including the high-power fuel cell”. Above all, it evokes the exploration of other sources of financing “including through recourse to the market”.

“We are going through phases of exponential acceleration and it is this taking of risks that has allowed us to innovate, giving teams the means to go all the way through reflection and R&D to develop one of the most efficient sets of fuel cells, underlines the company. But there is a flip side and that risk also has financial consequences and that’s why the teams have reorganized.”

It is in this search for financial stabilization that Hopium has just registered the arrivals of Sylvain Laurent, who came from Dassault Systèmes, and Philippe Baudillon to the respective positions of CEO and Deputy CEO. For his part, Olivier Lombard becomes Deputy General Manager responsible for the product, six months after having handed over the post of head of the board of directors to former Minister of Transport Jean-Baptiste Djebbari.

And the big project with Crédit Agricole?

If Hopium was one of the big stars of the last Paris Motor Show, it is also because it ended the week of fairs announcing an important partnership with CA Consumer Finance, a subsidiary specialized in consumer credit of Crédit Agricole. Key to this collaboration is the delivery of 10,000 Machina sedans for an order worth €1.2 billion.

The vehicles in question were supposed to be produced from 2025 at a future factory located near Vernon in Normandy. At the moment, economic difficulties do not jeopardize this collaboration and Hopium recalls that the number of 10,000 Machina is in fact a maximum objective.

“This announcement was yet another way of showing that Crédit Agricole believes in the development of hydrogen powered vehicles and that it was ready to support us, specifies a manager. For the time being, that intention is not in question”.

Status quo confirmed by CA Consumer Finance, which refuses to comment on its partner’s financial situation: “We renew our support for this innovative French project of hydrogen mobility”.

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