It’s been a tough time for Cake Motorcycles recently.

In January 2024, we reported a National Highway Traffic Safety Administration safety recall on some Cake Kalk dual sport motorcycles with battery cells that could potentially catch fire. At the time the recall was reported, Cake’s documentation mentioned that its plan was to have alternative batteries out there to affected prospects later down the road in 2024.

While we will not say for positive that plan will not work out, we can say that issues look decidedly murkier than they may have final month.

On February 1, 2024, a number of Swedish enterprise information retailers reported that Cake Motorcycles is within the technique of submitting for chapter. RideApart has reached out to Cake Motorcycles for remark and can replace this piece with any response we obtain.

Cake x Vattenfall: Cleanest Dirt Bike Ever undertaking, which the 2 firms started collectively pursuing in 2022.

What Went Wrong?

Multiple elements added up directly, in response to what Cake CEO Stefan Ytterborn instructed the Swedish monetary newspaper Dagens Industri. The most up-to-date blow got here within the type of failed negotiations for Cake’s most up-to-date spherical of funding, which apparently fell by means of utterly on January 31, 2024.

Fellow Swedish enterprise publication Breakit reported on January 24, 2024 that Cake’s monetary state of affairs was so dire that it could not pay salaries for its roughly 139 workers.

“It is not one but several circumstances that have caused us to end up in this situation. Climate issues are no longer in focus, we are in a recession. It’s about us, but it’s also about the venture capital ecosystem. At the moment it is completely dead, there are no takers in the later phase Cake is in,” Ytterborn instructed DI.

One of these elements, in response to Ytterborn, was the belief which you can’t count on folks to pay 40,000 Swedish Krona (that is about $3,811 USD at present conversion charges) for one thing on-line that they have not ridden. The firm’s preliminary direct-to-consumer web site gross sales plan, he mentioned, could be extra probably to attract buyer curiosity if they’d higher alternatives for check rides. 

By 2023, there have been a better variety of client (not enterprise fleet) gross sales, thanks partially to creating the bikes extra accessible for check rides of their current markets. Still, the corporate bought round 6,000 bikes final yr in complete. It estimates that it will not obtain profitability till it could possibly promote 7,500 to 10,000 bikes a yr, on the very least.

Cake reportedly additionally has six completely different share courses for traders, with differing guidelines about which courses get dividends earlier than different courses. This disincentivizes potential shareholders from wanting to affix a decrease class that’s much less more likely to obtain dividends.

Swedish Companies Registration Office Confirms The Filing

Cake Motorcycles Bankruptcy Proceedings Initiated – Swedish Companies Registration Office Screenshot captured on February 2, 2024

A public data search reveals that chapter proceedings for Cake formally started in Sweden on February 1, 2024. It’s not but clear how this story will play out, as a result of the proceedings are nonetheless in progress.

What we are able to let you know is that DI studies six entities as the most important shareholders within the firm. They are:

For a radical rundown of the corporate’s financials, together with its losses, the DI piece is value a learn (keep in mind, we’re RideApart, not FinanceApart).

At the time of writing, Cake has but to difficulty any official assertion relating to any of this information. The most up-to-date official assertion out there on Cake’s web site was posted on January 25, 2024, and regards the corporate’s proud announcement of a brand new distribution community for its bikes within the Czech Republic.

RideApart will proceed to report any info we study, together with any official statements from Cake as they come up.