EarthCruiser Closing Doors

[Howard70]

Having spent a fair amount of time hanging about the EarthCruiser USA operation during the last 10.5 years (I’ve owned two of the Fuso-based EXPs and I like the facility and all of the people involved) several things come to mind:

1. I never saw anyone living a lifestyle that could even remotely support the idea of “…taking the $$$ and running.”

2. I think that the increases in prices represent an increase in costs (facilities, materials, components, labor, etc.) and features (lithium-based energy storage versus AGM, true low-range capable 4x4 system versus the original Fuso 4x4 offering, etc). Most of the “feature creep” evolved as a direct response to requests by actual and potential customers.

3. I think there is an important distinction between what I can afford to pay for something and what that something costs to develop, produce and offer for sale. The fact that I can’t afford something does not mean that it is over-priced or that someone is making an unfair profit. It simply means I can’t or don’t want to spend that amount of money.

4. I have no idea why EC USA is closing. But I’m very sad to see it happen.

Howard Snell

 

[mog]

Having spent a fair amount of time hanging about the EarthCruiser USA operation during the last 10.5 years (I’ve owned two of the Fuso-based EXPs and I like the facility and all of the people involved) several things come to mind:

1. I never saw anyone living a lifestyle that could even remotely support the idea of “…taking the $$$ and running.”

2. I think that the increases in prices represent an increase in costs (facilities, materials, components, labor, etc.) and features (lithium-based energy storage versus AGM, true low-range capable 4x4 system versus the original Fuso 4x4 offering, etc). Most of the “feature creep” evolved as a direct response to requests by actual and potential customers.

3. I think there is an important distinction between what I can afford to pay for something and what that something costs to develop, produce and offer for sale. The fact that I can’t afford something does not mean that it is over-priced or that someone is making an unfair profit. It simply means I can’t or don’t want to spend that amount of money.

4. I have no idea why EC USA is closing. But I’m very sad to see it happen.

Howard Snell

For the Win

 

[Ozarker]

Having spent a fair amount of time hanging about the EarthCruiser USA operation during the last 10.5 years (I’ve owned two of the Fuso-based EXPs and I like the facility and all of the people involved) several things come to mind:

1. I never saw anyone living a lifestyle that could even remotely support the idea of “…taking the $$$ and running.”

2. I think that the increases in prices represent an increase in costs (facilities, materials, components, labor, etc.) and features (lithium-based energy storage versus AGM, true low-range capable 4x4 system versus the original Fuso 4x4 offering, etc). Most of the “feature creep” evolved as a direct response to requests by actual and potential customers.

3. I think there is an important distinction between what I can afford to pay for something and what that something costs to develop, produce and offer for sale. The fact that I can’t afford something does not mean that it is over-priced or that someone is making an unfair profit. It simply means I can’t or don’t want to spend that amount of money.

4. I have no idea why EC USA is closing. But I’m very sad to see it happen.

Howard Snell

great insight there Howard. After COVID and messing up the economy I would not suspect wrong doing as implied elsewhere, many businesses have crashed from events stirred by conditions beyond the control of small business owners.

I have no experience with EC as a company or their product, I'll take other's word for it that they had a premium vehicle.

Your observation concerning "feature creep" spot on and is common with newer manufacturing concerns, a bit of "mission creep" where a builder forgets the market niche that proves successful and attempts to grow quickly. Like building a home, a contractor can build a $1,000,000 spec home and build in 15-20% fee or build 3 homes at $400,000 (more for lot prices) take twice as long yielding the same profit if they are lucky. OR, in this case building one unit for $600,000 or 2 units at $300,000, time and profit margins say go bigger.

The company's initial mission was building a more affordable unit with less bling, they may have been encouraged to meet more wants and needs, simply building themselves out of the business model they began with.......just a hunch.

Employees were the first to know after owners, I'd say, by now, skilled craftsmen and fabricators probably have already found new jobs. I know of a business that closed and they had a turret punch operator, a few phone calls and he went to work within the week. I hope that's the case at EC.

I'll never buy a 60 foot catamaran yacht, might do a 40 footer, but, better yet a 32 foot cat-cruiser. That 60 footer isn't over priced, but it is priced for a limited market with fewer buyers and I'm not one of them.

As to other comments about keeping the closing under wraps, that is what any attorney, banker or business consultant would tell owners to do to wind down business so you can milk the cow until she is dry, then go to slaughter.

 

[rruff]

I never saw anyone living a lifestyle that could even remotely support the idea of “…taking the $$$ and running.”

What you would expect to see? Few people who own a small business flaunt their wealth when times are good. I didn't mean to imply they were stealing, but they had to be doing well during covid unless they made some very bad decisions... which I doubt given their experience. Everybody building overland vehicles during covid had to know this was a "boom and bust" situation that wouldn't last. As a well established company, they would have been in an excellent position to capitalize.

This article states that they peaked at 50 employees and are now down to 14. https://www.opb.org/article/2024/04/27/earthcruiser-closes-business/

I also don't believe that the price increase (almost 2x) had nearly as much to do with the cost of materials as the demand. If you are expanding and hiring people as fast as possible and still have a 2 year backlog, it would be silly to not increase the price (and profit). And when the bust phase is in full swing, reducing the price in order to be competitive again would not sit well with recent buyers.

Frankly, if I had a business like this and was thinking about retirement at all, this would be the perfect time...

 

[Ultimark]

One aspect that may have also helped their demise, is the price of their current base vehicle sourced from Isuzu.

While I don't know what price increase(s) the USA market has endured, I do know that the Isuzu NPS model in Australia, has had a 40% price increase from Isuzu just for the cab chassis ex factory. This 40% price increase has occurred from the time we purchased our cab chassis NPS in January 2020 to March 2023 when some friends purchased an Isuzu NPS cab chassis.

Mick.

 

[fotojoh]

Having spent a fair amount of time hanging about the EarthCruiser USA operation during the last 10.5 years (I’ve owned two of the Fuso-based EXPs and I like the facility and all of the people involved) several things come to mind:

1. I never saw anyone living a lifestyle that could even remotely support the idea of “…taking the $$$ and running.”

2. I think that the increases in prices represent an increase in costs (facilities, materials, components, labor, etc.) and features (lithium-based energy storage versus AGM, true low-range capable 4x4 system versus the original Fuso 4x4 offering, etc). Most of the “feature creep” evolved as a direct response to requests by actual and potential customers.

3. I think there is an important distinction between what I can afford to pay for something and what that something costs to develop, produce and offer for sale. The fact that I can’t afford something does not mean that it is over-priced or that someone is making an unfair profit. It simply means I can’t or don’t want to spend that amount of money.

4. I have no idea why EC USA is closing. But I’m very sad to see it happen.

Howard Snell

Thanks for the insight, Howard. Though not an EC owner, I’ve long admired them and almost pulled the trigger a couple times — to the point that my wife and I made a trip to Bend to check them out. I am a business owner and understand the trials of keeping an enterprise running and relevant. Sad.

 

[Ultimark]

Sadly, it would also appear that this part of the forum may need a new sponsor?

 

[rruff]

Were sales of the Terranova decent? I don't recall seeing any posted on this site. That one wasn't so expensive, ~$350k.

They also announced a new one last year that was built on an AWD Transit chassis.

Evado: https://earthcruiser.com/introducing-evado/

 

[gregmchugh]

Were sales of the Terranova decent? I don't recall seeing any posted on this site. That one wasn't so expensive, ~$350k.

They also announced a new one last year that was built on an AWD Transit chassis.

Evado: https://earthcruiser.com/introducing-evado/

They were also planning a version for the Sprinter cutaway

 

[86scotty]

I do believe he was quoting from their website, not affiliated with them, though some punctuation would certainly clear it up.

 

[tkj23qe1387]

Launching two new initiatives within the previous of year of winding down is quite irregular, especially considering the GM partnership.

These new initiatives will not generate meaningful cash in the short term. Instead, they are big CapEx drains. They even built and demoed the hummer ev slide in concept at numerous auto shows with GM. That must have incurred significant cash burn.

Therefore I just can’t imagine they were in crisis mode for a good part of the previous year. GM’s site visits would also have sniffed up something like this in no time.

If I were to speculate, at least two scenarios could cause a dramatic shutdown like what we see now:
* company failed to renew a term loan, revolver or similar operational financing instrument at bearable terms
* company’s core personnel could not continue with their role due to personal circumstances

 

[fotojoh]

One aspect that may have also helped their demise, is the price of their current base vehicle sourced from Isuzu.

While I don't know what price increase(s) the USA market has endured, I do know that the Isuzu NPS model in Australia, has had a 40% price increase from Isuzu just for the cab chassis ex factory. This 40% price increase has occurred from the time we purchased our cab chassis NPS in January 2020 to March 2023 when some friends purchased an Isuzu NPS cab chassis.

Mick.

That is a massive price increase for a major automaker in such a short period.

 

[DirtWhiskey]

Launching two new initiatives within the previous of year of winding down is quite irregular, especially considering the GM partnership.

These new initiatives will not generate meaningful cash in the short term. Instead, they are big CapEx drains. They even built and demoed the hummer ev slide in concept at numerous auto shows with GM. That must have incurred significant cash burn.

Therefore I just can’t imagine they were in crisis mode for a good part of the previous year. GM’s site visits would also have sniffed up something like this in no time.

If I were to speculate, at least two scenarios could cause a dramatic shutdown like what we see now:
* company failed to renew a term loan, revolver or similar operational financing instrument at bearable terms
* company’s core personnel could not continue with their role due to personal circumstances

"* company failed to renew a term loan, revolver or similar operational financing instrument at bearable terms"

Bingo. Welcome to the business ops doom loop in 2024. Balloons come due for reset. Labor and materials is up 30% in 3 years. Revolving lines are at 13 to 19%. SBA 7a is at 12%. Private money is upper teens. If somebody is lending sub 8 they are losing money. Wild times. Buckle up.

 

[Ozarker]

Odd, EC is a sponsor on EP so it's not like they never look at this site, yet not a mention, a word about anything, but, I'm sure their attorney told them to run and hide and let us fend off claims.

Speculations gone wild. The reason for any bankruptcy is financial as the bottom line. Even the death of an owner turns into a financial issue, after all, bankruptcy is to seek financial relief.

 

[rruff]

I see a lot of places just saying "closure", and bankruptcy is never mentioned. This is true of EC's announcement as well.