The Wall Street Journal called it a “gold rush,” the mad scramble among battery technology companies to make June’s hard deadline for filing applications to win part of $2.4 billion in federal stimulus funding (http://online.wsj.com/article/SB124329271803452475.html). According to the Journal, the feds wound up with 122 applications. While some analysts say lithium ion batteries have an edge for use in the electric car market, most of the capacity to create those batteries now exists in Asia. All the U.S. Department of Energy has said on the subject, according to the Journal, is that the government “wants transportation batteries to be built domestically, fearful that otherwise the nation may be swap dependence on foreign oil for dependence on foreign batteries (http://online.wsj.com/article/SB124709705632415141.html).”
The busy battery companies were joined by state bureaucrats scrambling to offer tax credits and other incentives to the battery companies in hopes of getting their own share of the stimulus funds and any jobs that might be generated. How this will all play out remains to be seen, but according to a Financial Times story, the U.S. Department of Energy has not yet decided whether to support a wide range of different technologies or put most of its money on a smaller number of “potential ‘champions.” Funding decisions are expected this month.
States including Indiana, Michigan, Missouri and Florida, just to name a few, jumped into the fray. A typical state-battery alliance was Florida and Orlando-based Planar Energy Devices (http://www.planarenergy.com), a maker of a variety of battery technologies. With stimulus money in its sights, Planar has shifted to solid-state batteries and plug-in vehicles, says Josie Garthwaite in GigaOm. She notes that Planar has purchased a shuttered lithium ion factory in Gainesville, called by company officials “the largest rechargeable battery manufacturing facility outside of Asia.” In California, the state offered about $20 million in assistance to privately-held battery maker Quallion LLC (www.quallion.com) to locate a new $220 million facility in Palmdale. Michigan is reportedly giving as much as $400 million in state funds for a group of battery makers including Johnson Controls (NYSE: JCI, http://www.jci.com).
In Kentucky, a group of 50 battery companies have formed a consortium seeking federal funding to build a shared manufacturing facility near Louisville. According to the Journal, the group, which calls itself the National Alliance for Advanced Transportation Batteries, has already managed to line up “about $200 million in state and local incentives.”
Finding smallcap companies creating advanced battery and power storage technologies who stand to be the beneficiaries of this stimulus package may be the smart way to play this market. Among the possibilities are lithium-ion battery makers like Reno, NV-based Altair Technologies (Nasdaq: ALTI, http://www.altairnano.com), which develops nanomaterials for what they call a lithium titanate battery cells, batteries and battery packs, among other things. Others include Reading, PA-based EnerSys (NYSE: ENS, http://www.enersysinc.com) maker of a variety of lead acid batteries including those specifically designed for backup power applications and whose fourth quarter revenue fell short of expectations. Blue Bell, PA-based C&D Technologies (NYSE: CHP, http://www.cdtechno.com) manufactures and markets electrical power storage systems. Like many smallcaps in a variety of industries, CHP is trading at about $2.16, way down from its $9 high about a year ago and the company recently received a warning from the NYSE that its listing was in danger.
New Castle, PA-based Axion Power International* (OTCBB: AXPW.OB, http://www.axionpower.com), a developer of a unique new lead-acid battery technology, has applied for a share of the stimulus funds based on the contention what it calls its PbC technology allows batteries to charge faster, cost less and are much easier to recycle. Axion recently announced a multi-year global supply partnership with Alpharetta, GA-based Exide Technologies (Nasdaq: XIDE, http://www.exide.com), an0ther lead acid battery developer, that makes Exide Axion’s principal battery OEM customer.
*Client of Allen & Caron, publisher of this blog