Electric vehicle battery startup Our Next Energy Inc. hired a Chicago financial consultant specializing in distressed businesses in its quest to rebound from a failed Series C fundraising round.

The suburban Detroit battery manufacturer tapped Birch Lake Partners, a merchant bank known for its work with struggling startups, two sources with knowledge of the matter told Crain’s Detroit Business, an affiliate of Automotive News. The bank was brought on as a financial adviser but not an investor, one of the sources said.

Our Next Energy told Crain’s in a statement that its fundraising pursuit “remains a critical part” of its “efforts to build an American battery company.”

“As part of these efforts, the company has worked with several investment consultants since ONE was founded in 2020,” Our Next Energy said. “These consultants help the company identify the best path forward for securing the necessary support to fully fund our business plan, build a battery cell factory in Michigan and accelerate the country’s transition to electrification.”

The company declined to comment further on the status of its fundraising.

Progress on that front was derailed at the end of last year when the automotive industry hit the brakes on the EV transition because of dramatically less demand than anticipated. The pullback hit suppliers hard and left Our Next Energy imperiled.

After its Series C fundraising round fell apart with the withdrawal of London venture capital firm Just Climate, the startup demoted its founder as CEO, installed a new executive steeped in manufacturing operations and slashed costs. Since the beginning of the year, it has laid off more than 160 employees.

Newly installed CEO Paul Humphries told Crain’s in January that Our Next Energy secured bridge financing from existing investors to keep it afloat at least through the year as it looks to land firm off-take agreements with manufacturers.

Build-out of a planned $1.6 billion factory in Van Buren Township, Mich., remains on hold, while a line for commercial vehicle batteries at contract manufacturer Piston Automotive is also shut off.

The startup must raise capital wherever it can find it, said Alex Calderone, a Birmingham, Mich., financial consultant who has expertise in distressed businesses but is not involved with Our Next Energy.

“It is an absolutely brutal environment out there for EV startups and their suppliers,” Calderone said. “The only way to survive is to procure more capital, but when you’re bleeding money and the investment thesis starts becoming less attractive to folks, it’s not easy to keep getting people to write checks even if you have tremendously good technology.”

Calderone said startups like Our Next Energy need to find investors who believe in the long-term vision, even if the payoff has been pushed out. “What these guys have is intellectual property and probably really solid products,” he said. “But they have products that are great that are not supported by the market for EVs right now.”