'We were blindsided': Edmonton seeking $82M in damages from U.S. company over electric buses

The city is seeking more than $82 million in damages from vehicle manufacturer Proterra in regards to a contract for electric buses.

Edmonton purchased 60 battery operated buses from California-based Proterra between February 2019 and August 2021.

On Aug. 7, 2023, Proterra filed for Chapter 11 bankruptcy protection, a form of bankruptcy proceedings that allow the business to continue operating while it works with creditors.

In the original purchase contract for the buses, Proterra committed to numerous warranty obligations and claimed the buses would achieve a certain operating range.

In the claim against Proterra filed Feb. 2, the city says the buses have never once achieved the operating range laid out in the contract, and there have been significant defects with the buses.

"Contrary to the contract specification that the buses would be suitably designed to perform in Edmonton’s climate conditions and would have an operating range of 328 kilometres, or 268 kilometres in extreme cold, the range has consistently been much shorter," the claim says.

"On average, the bus range has been approximately 165 kilometres in the winter and, at best, 250 kilometres in warmer weather."

Mechanical issues such as gearbox failures, steering box failures, and cracking of the composite body structures have also kept most of the buses off the road.

Edmonton's first battery-electric bus rolled into service on Tuesday. Aug. 4, 2020. (Jay Rosove/CTV News Edmonton)

"As a result of the hardware issues, more than half of the buses are regularly out of service. At most, the city has 28 of the 60 Buses on the road at any given time."

The claim says Proterra was working with the city to fix the issues when the company filed for bankruptcy.

On Jan. 8, Proterra sold its transit assets to Phoenix Motor Inc.

Days later, Proterra filed a motion seeking to reject certain executory contracts, including the Edmonton contract.

Without the contract, the city says it won't be able to rely on the company to fulfil its upcoming obligations.

The city was initially seeking $1.4 million for maintenance work and other parts.

Edmonton is now asking for $82,044,511.05 for breach of contract and negligence.

It's one of nearly 1,300 claims against Proterra from various cities, companies, and individuals.

"We're just deeply disappointed and frustrated. We were blindsided by this," Edmonton Transit Service branch manager Carrie Hotton-MacDonald told CTV News Edmonton on Tuesday. "We've been working adamantly to protect our financial and legal interests in order to get the best possible outcome that we can on behalf of Edmonton taxpayers."

MacDonald says the city's claim jumped from $1.4 million to $82 million after Edmonton's contract was not transferred to Phoenix Motor Inc. during the sale.

"We were proceeding under the assumption and condition that our contract was being assumed by the company that was purchasing the business from Proterra," Hotton-MacDonald said.

"Much to our surprise, and the surprise of others whose contracts were not selected, they are in breach of contract."

A picture of one of the city's first new "test" electric buses was posted to Reddit in September 2019. The buses aren't expected to go into service until mid-2020. (Reddit)

At least one city councillor isn't sure how much of that money will be recouped.

"Being an unsecured creditor, I know we're way behind any secured creditors. So I think anything that we can get out of it will be a bonus," Ward Sspomitapi Coun. Jo-Anne Wright said Tuesday.

Wright says the situation won't deter the city from exploring new technologies.

"If we didn't try with the electric buses, we wouldn't have known. And as new technologies become available, I do think that we have to be open to trying those new technologies."

It's a sentiment shared by Ward O-day'min Coun. Anne Stevenson.

"I think the worst outcome would be that we don't take risks in the future, that we don't explore new technologies that could have huge benefits for Edmontonians," Stevenson said.

"I think for me it's really looking at different ways that we can mitigate financial risks when we are trying something new."

Hotton-MacDonald says ETS has ensured there are no service disruptions as a result of the issues with the buses.

In December the city approved money for 20 new buses. All of those will be diesel.

With files from CTV News Edmonton's Jeremy Thompson