This Big, Bad, 949-Horsepower, Million Dollar-Monster Is a Hybrid

If you are a fan of electric and particularly hybrid vehicles, and more people apparently are every day, you have to like the spectacular news coming out of Ferrari and the recent report from Autodata Corp., a research firm.

Photo courtesy of automonthly.blogspot.pt

Let’s start with Ferrari, which unveiled its La Ferrari supercar in Geneva in March. Yes, Ferrari’s “biggest and baddest” car these days is a hybrid, according to the Los Angeles Times (http://www.latimes.com/business/autos/la-fi-hy-autos-hybrid-20130330,0,2070748.story). It’s a V-12, “949-horsepower, million-dollar monster” that also has two electric motors and recharges its batteries with regenerative braking and the engine’s excess torque.

Who knows how many La Ferraris will actually sell, but the good news from Autodata is that hybrids are certainly selling faster than ever. Hybrid sales in the first two months of 2013 are up 32 percent over the same period last year, according to the Times report.

While overall marketshare is still low, about 4 percent, the fact that Ferrari is now in the hybrid market underscores the fact that that hybrid technology “is being taken seriously by virtually all the automakers,” noted analysts in the Times, including Nissan which introduced a new hybrid version of the Pathfinder at the New York Auto Show in February after dropping out of the hybrid market a few years ago. Overall, hybrids deliver 40 percent better fuel economy than conventional gasoline-powered cousins of the same model.

As we have noted earlier, the Prius is now the best-selling car in California, the nation’s largest auto market, and they’re apparently reliable. Not only are they now being used as taxicabs, which take a notorious beating, but the Times story notes that Toyota reports that 90 percent of all Prius cars it sold since introducing the model are still on the road. 

The story includes a note that one large Houston Ford dealership reports that its sales of hybrids are up 400 percent from a year ago. Nationally, Ford reports it’s selling 3,000-4,000 of its C-Max hatchback hybrid, a direct competitor to the Prius V station wagon, according to the Times.

While Toyota’s hold on the hybrid market has dropped from 73 percent to 63 percent, thanks to competitors like Ford, the overall market size is much bigger, meaning “both automakers are sharing a bigger pie,” noted the Times.

Unfortunately, hybrid vehicles are difficult to link directly to small cap stocks. So we’ve taken some liberties and included companies like Tesla Motors, which makes electric vehicles and is a mid-cap, and Axion Power International, which makes a battery used in a hybrid 18-wheeler made by a private company called ePower.

Palo Alto, CA-based Tesla Motors (Nasdaq: TSLA, http://www.teslamotors.com/) manufactures the Tesla Roadster, the Model S and other electric vehicles and electric powertrain  components. The last time we looked at Tesla last on Feb. 20 it closed at $38.90 with a market cap of $4.4 billion. But it came out with promising news this week, saying car sales nearly doubled in the first quarter of 2013 compared to the fourth quarter, and expects to turn a profit. TSLA closed April 2 at $44.34, up 41 cents, with a market cap of $5.1 billion. Its 52-week range is now $25.52-$46.68.

New Castle, PA-based Axion Power International (OTC: AXPW, http://www.axionpower.com/) has developed a specialty PbC battery technology designed for micro- and mild-hybrids, as well as an advanced energy storage device. A private Pennsylvania-based company, ePower, is developing 18-wheeler hybrid trucks with the Axion PbC batteries. Axion closed April 2 at 26 cents, down 1 cent for othe day, with a market cap of $30 million. Its 52-week trading range is $0.20-$0.47.

Santa Rosa, CA-based ZAP (OTC: ZAAP.OB, http://www.zapworld.com/) makes a variety of all-electric vehicles including trucks, motorcycles, shuttle buses and sedans and was formerly known as ZAPWORLD.COM. Most of its business at this point is with government or military customers. When we last checked on Feb. 20 its stock closed at $0.08 with a market cap of $24 million. It closed April 2 at $0.17, up 2 cents on the day with a market cap of $51 million. Its 52-week trading range is $0.06-$0.27.

San Diego-based Maxwell Technologies Inc. (Nasdaq: MXWL, http://www.maxwell.com/) was formerly known as Maxwell Laboratories. The company manufactures ultracapacitors that are energy storage devices and power delivery systems for use in transportation, automotive, IT and industrial electronics.  MXWL closed Feb. 20 at $10.01 with a market cap of $292 million. It closed April 2 at $4.98, down 17 cents for the day, with a market cap of $145 million. Its 52-week trading range is $4.92-$18.33.

Once Promising Battery Maker A123 Systems Now Focus of Controversial Auction

Many media eyes are watching the auction of bankrupt battery-maker A123 Systems, which is currently underway in Chicago. Bids were accepted starting December 6, but the auction apparently could run into next week before a buyer is announced because of the complexity of the deal.

Some of those watching, also including politicians and military leaders, have expressed concern that the A123 lithium ion battery technology, much of it funded by the U.S. government, could wind up in foreign hands, according to

Photo courtesy of AP

the Chicago Tribune (http://www.latimes.com/business/la-fi-a123-auction-20121206,0,359683.story). The Tribune notes that A123, which was once called “one of the most promising U.S. innovators in the clean fuel auto industry,” was awarded a $250 million grant in 2009 and had drawn down about $132 million of it before bankruptcy.

While none of the companies has commented publicly since the bidding opened, four suitors, including one American company, have qualified to bid, according to the Tribune story and other reports: Milwaukee-based Johnson Controls (NYSE: JCI) is the American company and NEC Corp of Japan, Siemens AG of Germany and Wanxiang Group Corp of China (the largest automotive components maker in China) are the others. The Tribune notes that Johnson Controls bills itself as “one of the last standing American companies competing in and building this U.S. advanced battery industry.” (New Castle, PA-based Axion Power International, among some others, would argue with that statement. See below)

As we noted back in August, Wanxiang made a bid to buy A123 back and thought they had a solid agreement, according to the Tribune. But apparently, due to concerns politics would be problematic, A123 never agreed to make the deal.

Other companies are apparently interested in buying parts of A123, according to the Tribune, but no names have yet been made public.

There are a few small cap battery makers that could be considered peers of A123, although most of them are not in the lithium ion battery business. They include:

Newark, NY-based Ultralife Corp. (Nasdaq: ULBI, http://www.ultralifecorp.com/) designs, manufactures and offers services for power and communications systems, including rechargeable and non-rechargeable batteries as well as communications and electronic systems and accessories, and custom engineered systems. ULBI operates in two segments: Battery and Energy Products, and Communications Systems. The battery segment includes lithium 9-volt, cylindrical and various other non-rechargeable batteries, as well as rechargeable batteries. ULBI has a 52-week trading range of $2.39-$5.50 and a market cap of $46 million. It closed Dec. 7 at $2.62, down 8 cents on the day.

Salt Lake City-based Oak Ridge Micro-Energy Inc. (OTC: OKME) is a development stage company that licenses thin-film, solid state batteries for industrial, medical and government applications. The applications include wireless smart sensors, security cards, RFID tags, semiconductor memory chips and implantable medical devices. The thin-film lithium and lithium ion batteries are ideally suited for a variety of applications where a small power source is needed. OKME has a 52-week trading range of $0.06-$0.51 and a market cap of $20 million. It closed Dec. 7 at $0.20, down 3 cents for the day.

Carrollton, TX-based Universal Power Group (AMEX: UPG, http://www.upgi.com/) is a supplier and distributor of batteries and related power accessories. UPG sells, distributes and markets batteries and related power accessories under various brands and its own brands. Back in August, UPG’s market cap was $11 million and was trading for about $2.15. Its current 52-week trading range is $1.26-$2.35 but its stock has fallen. It closed Dec. 7 at $1.66, down 3 cents for the day. Its market cap is now $8.3 million.

New Castle, PA-based Axion Power International * (OTCBB: AXPW.OB, http://www.axionpower.com/) manufactures high-performance, low-cost lead-carbon (PbC) batteries for a variety of markets, including mild- and micro- hybrid vehicles, which may be the commonest form of hybrid in the US within a couple of years (and already the most common in Europe). AXPW announced in May that the U.S. Department of Energy had awarded it a $150,000 grant toward the commercialization of its PbC batteries for micro hybrids. PbC batteries are as easy to manufacture as the older lead-acid batteries, but they use activated carbon instead of half the lead and are lighter, 100% recyclable, have a higher charge acceptance and faster recharging rates, all ideal for the micro-hybrid and mild hybrid markets.  AXPW has a 52-week trading range of $0.20-$0.64. It closed Dec. 7 at $0.30, no change on the day.

*Denotes a client of Allen & Caron Inc., publisher of this blog.

Looking for Silver Linings in Small Cap Energy Storage/Electric Power Market

All of us at Smallcapworld are optimists at heart, so when it’s time to write about battery companies, we look for the good story lines. It’s a “glass half full” philosophy.

PbC batteries courtesy Axion Power International

For that reason we are temporarily ignoring lithium ion battery maker A123 Systems (Nasdaq: AONE), which on May 11 posted a first quarter net loss of $125 million, more than twice the loss it reported in  the fourth quarter of 2011 and the first quarter a year ago. Quality problems and a slack demand for electrical cars are mostly the blame, according to press statements.

Perhaps we can put another lithium ion technology company, Valence Technology (Nasdaq: VLNC), in the same category, being that it is trading at the very bottom of its 52-week range (67 cents as of May 14 with upper end of range $1.34) for many of the same reasons as A123. As optimists, however, we might argue that these low valuations (A123 closed May 14 at 91 cents and was as high as $6.20 last June) may be good bargains. We shall see. If you want to know more about VLNC, listen to the company results conference call May 23 at www.valence.com).

So where are some silver linings in the small cap energy storage/battery market? Here are a few randomly chosen companies where you might find some hope:

San Diego-based Maxwell Technologies (Nasdaq: MXWL, http://www.maxwell.com) makes ultracapacitors and high voltage capacitors that provide energy storage and power delivery solutions for applications in many industries including transportation, automotive, information technology, renewable energy and industrial electronics. It also makes microelectronic products for satellites and spacecraft. While management reduced sales growth guidance durings its earnings call May 9, four insiders bought 48,000 shares at prices between $9 and $10.20, suggesting perhaps that they thought it was a good buy, according to Renewableenergyworld.com.  (http://www.renewableenergyworld.com/rea/news/article/2012/05/maxwell-technologies-mxwl-buy-or-steal). Market cap is about $233 million, 52-week range is $8.62-$21.49. MXWL closed May 15 at $8.26, up 21 cents for the day.

Reading, PA-based EnerSys (NYSE: ENS, http://www.enersysinc.com) is a little big for our blog (market cap is $1.52 billion) but we’re looking everywhere for some good news. We found it at Motley Fool (http://www.fool.com/investing/general/2012/04/10/1-reason-to-expect-big-things-from-enersys.aspx) which apparently believes that ENS inventory levels indicate the company may see increased demand on the horizon. ENS makes industrial batteries, battery accessories, chargers and power equipment. Its 52-week trading range is $17.35-$36.51. Daily trading volume is about 390,000 shares a day. It closed May 15 at $31.44, down 32 cents on the day.

Newark, NY-based Ultralife Corp. (Nasadaq: ULBI, http://www.ultralifecorp.com) operates in three segments: Battery and Energy Products, Communications Systems, and Energy Services. It makes a lithium 9-volt battery as well as various other rechargeable and non-rechargeable batteries. Management confirmed its previous guidance of year-over-year revenue growth “approaching double digits,” according to Reuters. ULBI has a market cap of about $74 million and its 52-week trading range is $3.88-$5.50. It closed trading May 15 at $4.16, down 30 cents for the day.

New Castle, PA-based Axion Power International * (OTCBB: AXPW.OB, http://www.axionpower.com/) manufactures high-performance, low-cost lead-carbon (PbC(R)) batteries for a variety of markets, including for “mild” and “micro” hybrid vehicles, which are anticipated to be the commonest form of hybrid in the US within a couple of years (and already the most common in Europe). Its PbC batteries are as easy to manufacture as the older lead-acid batteries, but they use activated carbon instead of half the lead.  They are lighter and 100% recyclable (unlike lithium ion batteries), and have a higher charge acceptance and faster recharging rates, making them ideal for the growing  micro-hybrid and mild hybrid markets.  AXPW announced in April that Norfolk Southern had placed an initial order for the company’s PbC batteries for a battery-powered locomotive. AXPW has a market cap of $46 million and a 52-week trading range of $0.25-$0.84. It closed May 15 at $0.38, down 4 cents for the day.

Danbury, CT-based FuelCell Energy Inc. (Nasdaq: FCEL, http://www.fuelcellenergy.com) makes high temperature fuel cells for clean electric power generation. FCEL sells its products to electric utilities, independent power producers, universities, waste treatment facilities and other customers. The company has posted three consecutive quarters with “positive gross margins, revenue that beat expectation and a strong backlog, according to Seeking Alpha (http://seekingalpha.com/article/546321-fuelcell-energy-strong-quarter-and-a-shot-at-fuel-cell-profitability?source=yahoo). FCEL has a market cap of $151 million and a 52-week trading range of $0.80-$1.97. It closed May 15 at $1.09, up 5 cents for the day.

* Denotes client of Allen & Caron Inc., publisher of this blog

Hot Market Driving Interest in Automotive Technologies, Both Old and New

They say the used car market is hot right now, thanks mostly to the slumping economy. But even a hot market can’t really explain the recent news from CNNMoney that the world’s oldest, still running used car just sold for $4.6 million (http://money.cnn.com/2011/10/10/autos/worlds_oldest_car/index.htm?iid=HP_Highlight). No, this 1884 De Dion-Bouton et Trepardoux, also called “La Marquise,” is a collector’s item and its selling price, according to the report is the “highest price ever paid for an early automobile at auction” and twice what its owners expected. The car certainly offers an interesting look at how automotive technology has changed over the years.

This is, in effect, where car technology started: Its fuel was not gasoline, but powered by steam created by “coal, wood and bits of paper.” Top speed is 38 miles per hour but it takes about a half hour to warm up and create enough power to drive it.

Of course, for our purposes, this is an interesting ignition point for covering some of the new automotive technologies that are powering some small cap stocks. Here are just a few and perhaps we can add to this list in the near future:

Cincinnati-based AMP Electric Vehicles * (OTCBB: AMPD, http://www.ampelectricvehicles.com/) is a young company that currently retrofits those sport utility vehicles (SUVs) and crossovers that Americans love to emission-free pure electric vehicles. AMPD is currently working on the Mercedes Benz SUV ML 350; they drop out the internal combustion engine completely and integrate their proprietary electric drive components into the Mercedes, leaving all the safety and luxury components intact. Drivers tell us that the superb M-B performance is not only undiminished; in some ways it is actually enhanced. CEO Jim Taylor is a former President of GM’s Cadillac division and CEO of its former Hummer division.  We anticipate announcements about the Jeep Cherokee as well.  The stock trades thinly, as often happens in such early stage companies, and is currently selling for $0.50. Its 52-week high is $1.05.

New Castle, PA-based Axion Power International * (OTCBB: AXPW.OB, http://www.axionpower.com/) manufactures high-performance low-cost lead-carbon (PbC(R)) batteries for a variety of markets, including for “mild” and “micro” hybrid vehicles, which are anticipated to be the commonest form of hybrid in the US within a couple of years (and it already is the most common in Europe). Its PbC batteries are as easy to manufacture as the older lead-acid batteries, but they use activated carbon instead of half the lead.  They are lighter and 100% recyclable (unlike lithium ion batteries), and have a higher charge acceptance and faster recharging rates, making them ideal for the growing  micro-hybrid and mild hybrid markets.  AXPW stock closed Oct. 10 $0.51, near the low end of its 52-week range ($0.42-$1.27).

San Carlos, CA-based Tesla Motors (Nasdaq: TSLA, http://www.teslamotors.com/) manufactures the Tesla Roadster and other electric vehicles and electric powertrain  components. With a market cap of $2.9 billion it’s really out of our smallcap focus, but it certainly should be included in even a brief survey of new automotive technologies. Its stock was highest (more than $35) about a year ago but like many companies now is languishing. It closed Oct. 10 at $27.80.

Northville, MI-based Amerigon * (Nasdaq: ARGN, http://www.amerigon.com/) is the world’s leading marketer of thermoelectric technologies for automobiles and is best known for its actively heated and cooled seat systems featured in more than 50 vehicles. But it is winning new headlines for a thermoelectric generator (TEG) that the company is developing with partners including BMW, Ford and Caltech’s Jet Propulsion Lab. The TEG converts waste exhaust heat into electricity, a technology that has been shown to reduce toxic emissions and increase fuel economy along with providing a much needed new source for electricity in a vehicle. The TEG is currently being tested in a BMW X6 and Lincoln MKT. The stock closed Oct. 10 at $14.02, down from its $18.18 high for the past year, but above the $9.33 low.

Oak Park, MI-based Azure Dynamics (Toronto: AZD.TO, http://www.azuredynamics.com/) develops and manufactures electric power trains for light and heavy-duty commercial vehicles, including vans and buses. The company is best known for partnering with Ford and building the electric drivetrains for the all-electric Ford Transit Connect. Azure recently announced that it is enrolling Ford truck dealerships across North America to be electric Transit Connect dealers and service centers, the sale of 100 electric Transit Connect vans in Europe, and the sale of 34 electric Transit Connect to municipalities and a regional governmental authority in North America. Its stock closed Oct. 10 at $0.15 with a 52-week range of $0.11-$0.41.

* Denotes client of Allen & Caron, Inc., publisher of this blog

Surge of Students Seeking Science Studies

Is it the impending doom of global warming? The popularity of President Obama? The advent of environmentalism? The enormity of the global economic crisis? More likely, experts say, it’s a confluence of all these events that has prompted what they call a “surge” of students toward “clean energy” careers. The rush of our best and brightest into science and engineering studies is being compared to the late 1950s, when the Russian Sputnik satellite prompted a similar swelling of those ranks, according to the Los Angeles Times (http://www.latimes.com/news/nationworld/nation/la-na-energy-students29-2009mar29,3,2984851.story).

No doubt many of these students would have opted for lucrative business school degrees and Wall Street jobs just a few years ago. But the Obama administration is banking on the idea that federal aid included in the stimulus package will help stoke the interest in innovative clean energy concepts. The package includes $20 billion to support basic science research, according to the Times.

While this doesn’t precisely translate into a boost for smallcap stocks, it does prompt a look at some innovative small companies in various clean energy fields. Two unique solar energy companies are Marlboro, MA-based Evergreen Solar (Nasdaq:ESLR, http://www.evergreensolar.com), a pure solar play known for its “string ribbon” technology using thin strips of multi-crystalline silicon that is cut into wafers that make up solar panels. Or Littleton, CO-based Ascent Solar Technologies (Nasdaq: ASTI, http://www.ascentsolar.com), a maker of thin film, flexible solar modules.

An interesting battery maker is New Castle, PA-based Axion Power International* (EBB: AXPW, http://www.axionpower.com), which has developed an advanced version of the traditional lead acid battery the company believes can play an important role in the burgeoning electric and hybrid car markets. Details on Axion’s PbC battery technology was recently covered in The Economist (http://www.economist.com/science/tq/displaystory.cfm?story_id=13174459). Another smallcap is Tampa, FLA-based UTEK Corp.* (Amex: UTK, http://www.utekcorp.com), a consulting firm that tracks innovations around the globe for a variety of high-profile clients and a leader in the modern “open innovation” movement.

*client of Allen & Caron, publisher of this blog