Tesla a Bright Spot in Still Dim, but Improving Electric Car Industry

Photo of Nissan Leaf S courtesy of evworld.com

Photo of Nissan Leaf S courtesy of evworld.com

Anyone watching the still slow but improving progress of the electric car industry may have seen the Bloomberg Businessweek story on the “Tale of Two Electric Car Makers: Tesla Soars, Fisker Flops” (http://www.businessweek.com/articles/2013-05-08/a-tale-of-two-electric-car-makers-tesla-soars-fisker-flops). Tesla Motors not only produced a profit in the first quarter, as advertized, but also increased its guidance on sales for the year, from 20,000 to 21,000 cars. TSLA revenues were up 83 percent year-over-year to $562 million and the stock is soaring (see below).

While the article outlines supply chain and battery issues and other “kinks in its processes” Tesla needs to iron out, their stock is soaring and the outlook looks good. The contrast was provided by Anaheim, CA-based Fisker Automotive, which is laying off employees and hiring bankruptcy consultants, the article reports. Another electric car maker, Los Angeles-based CODA Automotive, recently filed for bankruptcy protection and announced it was “focusing its business strategy on the growing energy storage market,” according to a company filing.

For more positive electric car news, the BBC posted an article this week on the Nissan Leaf (http://www.bbc.com/autos/story/20130509-leaf-charges-into-mid-life) as it “charges through mid-life.” The Leaf, billed as “the first truly global mass-produced electric vehicle,” now includes the Leaf S, a lower cost model “designed to lower the barrier of entry to EV ownership.” One of the cost cutting moves was to move its assembly line from Japan to another Nissan factory in Smyrna, TE.

The BBC put the Leaf through its paces and managed to get 75 miles from a full charge, right about in line with Nissan estimates. Competitors mentioned in the article include the Toyota Prius PH-V and Ford C-Max Energi, both plug-in hybrids.

If anyone out there is charged up about the electric vehicle market, and knows of a small cap stock play in this market, please let us know. Meanwhile, we’ve been following a few small caps, plus Tesla to see how their stock is moving. We’ve also added a new company, Car Charging Group, to our list.

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. It’s way too large for our small cap blog focus, but just as a reference, the last time we looked at Tesla last February 20 it was trading at $38.90 with a market cap of $4.4 billion. As we mentioned, TSLA stock has been on a huge roll. It closed May 15 at $84.84, up $1.60 for the day. Its 52-week trading range is now $25.52-$97.12.

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. When we last checked on Feb. 20 its stock closed at $0.08 with a market cap of $24. ZAAP closed May 15 at $0.14, up 3 cents for the day, with a market cap of $42 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 back on Feb. 20 at $10.01 with a market cap of $292 million. It closed May 15 at $6.36, up 11 cents for the day, with a market cap of $185 million. Its 52-week trading range is now $4.90-$11.08.

Miami Beach-based Car Charging Group (OTCQB: CCGI, http://www.carcharging.com/) caught our eye with the announcement March 12 that it was acquiring EVPass, a company building destination charging networks for EV charging. CCGI  is also in the business of building charging station networks and has been busy making more acquisitions. Earlier this month, CCGI announced it had acquired 350Green LLC. CCGI closed May 15 at $1.34, up 4 cents for the day, with a market cap of $70.8 million. Its 52-week trading range is $0.60-$2.

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Obama Budget Proposes Big Increases for Spending on Clean Energy

Photo courtesy of KMBC.com

Photo courtesy of KMBC.com

President Barack Obama’s fiscal year 2014 budget proposal made headlines this week mainly for its changes to Social Security, but the increases proposed in US government support for clean energy spending did not go unnoticed. Reuters News Service called the increases for electric cars, wind power and other green technology “dramatic,” particularly because they arrive in the face of Republican criticism.

While many government agencies get slimmed down in the budget proposal, the Department of Energy would get an 8 percent increase to $28.4 billion next year, Reuters reported. Included are a 75 percent increase in spending on advanced vehicles to $575 million and a 29 percent increase in spending on the ongoing effort to integrate solar and wind power into the national electric grid, Reuters reported. Support for biofuels would increase by 24 percent.

“These increases in funding are significant and a testament to the importance of clean energy and innovation to the country’s economic future,” the Obama administration wrote in the budget proposal, according to the Reuters report.

While Republicans have criticized the US backing of companies like Solyndra, a solar panel maker that went bankrupt, and Fisker Automotive, a hybrid sports care maker which is struggling and laying off employees to hold off bankruptcy, President Obama has maintained that clean energy is a key to the country’s future.

Government support for the clean energy industry “has nearly doubled (the US) energy generation from wind, solar, geothermal and other renewable energy sources” since Obama took office in 2008 and maintaining this level of support “could lead to breakthroughs in the years to come,” Reuters reported.

We’ve been following several wind and solar energy companies, including:

Newbury Park, CA-based Sauer Energy (OTC: SENY, http://www.sauerenergy.com/) is a development stage company developing vertical axis wind turbines for commercial and residential uses. Formerly BCO Hydrocarbon Ltd., the company disposed of its oil and gas interests and in July 2010 purchased Sauer Energy and in May 2012 purchased Helix Wind Corp. Back on Dec. 24 it was trading for $0.24. It closed April 12 at $0.10, down 1 cent for the day. Its market cap is now $9 million and 52-week range is $0.08-$0.39.

China-based China Ming Yang Wind Power Group (NYSE: MY, http://www.mywind.com.cn/) is a wind turbine manufacturer focused on designing, manufacturing, selling and servicing megawatt-class wind turbines. Last July, MY announced it was considering a joint venture with China-based Huaneng Renewables Corp. to develop wind power and solar power projects in China and overseas markets. MY stock closed Dec. 24 at $1.21. It closed April 12 at $1.35, up 1 cent for the day. Its market cap is now $169 million and 52-week trading range is $1.06-$2.47.

Chatsworth, CA-based Capstone Turbine Co. (Nasdaq: CPST, http://www.capstoneturbine.com/) develops and markets microturbine technologies, including technologies used to provide on-site power generation for wind power. It closed Dec. 24 at $0.91 with a market cap of $278 million.CPST closed April 12 at $0.93, down 4 cents for the day. Its market cap is now 282 million and 52-week trading range is $0.73-$1.20.

San Mateo, CA-based SolarCity Corp. (Nasdaq: SCTY, http://www.solarcity.com) designs, installs and sells or leases solar energy systems to residential and commercial customers, as well as electric vehicle charging products.  It closed March 15 at $16.74 with a market cap of $406.5 million. SCTY closed April 12 at $19.97, down 41 cents for the day. Its market cap is now $1.5 billion and 52-week trading range is $9.20-$21.40.

Ontario, Canada-based Canadian Solar (Nasdaq: CSIQ, http://www.canadian-solar.com/ ), which sells a variety of solar products, closed back on March 15 at $3.50 with a market cap of $151 million. It closed April 12 at $4.07, down 3 cents with a market cap of $176 million. Its 52-week trading range is $1.95-$5.15.

San Jose, CA-based SunPower Corp. (Nasdaq: SPWR, http://www.sunpowercorp.com/), which makes a wide variety of solar products and systems, closed back on March 15 at $11.80 with a market cap of $1.4 billion. SPWR closed April 12 at $11.06, up one cent for the day. Its market cap is now $1.8 billion and its 52-week trading range is $3.71-$13.88.

China-based Trina Solar Ltd. (NYSE: TSL, http://www.trinasolar.com/) designs, manufactures and sells photovoltaic modules worldwide. Back on March 15, TSL closed at $4.11 with a market cap of $291 million. It closed April 12 at $4.19, up one cent, with a  market cap of $335 million. Its 52-week trading range is now $2.04-$7.99. 

China-based Yingli Green Energy Holding Co. (NYSE: YGE, http://www.yinglisolar.com/) makes photovoltaic products including cells, modules and systems. YGE closed back on March 15 at $2.47 with a market cap of $387 million. It closed April 12 at $2.12, down 5 cents, with a market cap of $324 million. Its 52-week trading range is $1.25-$4.12.

China-based Suntech Power Holdings (NYSE: STP, http://am.suntech-power.com), the world’s largest producer of solar panels, closed at $0.70 back on March 15 with a market cap of $127 million. It closed April 12 at $ 2012, and then rose to $1.87 in early January, but has been falling since. STP closed March 15 at $0.75, udown 12 cents for the day, with a market cap of $135 million. Its 52-week trading range is $0.30-$2.96.

St. Peters, MO-based MEMC Electronic Materials (NYSE:WFR, http://www.memc.com) manufactures and sells silicon wafers and photovoltaic materials. Through SunEdison, it’s a developer of solar energy products. It closed March 15 at $4.53 with a market cap of $1 billion. WFR closed April 12 at $4.76, down 6 cents, with a market cap of $1 billion. Its 52-week trading range is $1.44-$5.70.

U.S. Division of Chinese Automotive Components Maker Outbids Others for A123

Photo of Wanxiang America courtesy of siteselection.com

Photo of Wanxiang America courtesy of siteselection.com

As a follow-up to our recent posts about the auction of the assets of bankrupt battery maker A123 systems, it was announced this week that Wanxiang America Corp, the U.S. arm of China-based Wanxiang Group Corp. was the winning bidder at $256.6 million. The deal must still be approved by the U.S. Bankruptcy Court, which supervised the auction, and the Committee on Foreign Investment in the U.S., a group overseen by U.S. Treasury that regularly reviews any sale that results in a foreign country or person gaining control of a U.S. business.

The hearing in the bankruptcy court was scheduled for Dec. 11.

If approved, Wanxiang would receive A123’s automotive battery business, grid energy storage division and other commercial business assets including U.S. facilites in Michigan, Massachusetts and Missouri. The government business previously owned by A123 is being sold to Navitas Systems, a company spun off from Sun Microsystems, for $2.25 million.

Johnson Controls, one of the bidders that lost out in the auction, told the Wall Street Journal that it is still interested in A123 if the regulators do not approve the deal with Wanxiang. Johnson Controls bid “about $250 million” for A123, according to the WSJ.

Wanxiang Group Corp. is the largest automotive components maker in China. A123 Systems has been the sole battery supplier for Anaheim, CA-based Fisker Automotive. Fisker has halted production of its $100,000 hybrid Karma because of a shortage of A123 lithium ion batteries.

Legislation, Subsidies Adding Fuel to Still Overlooked Natural Gas Vehicle Sector

A plethora of media attention has descended on the emerging natural gas cleantech sector since the New Alternative Transportation to Give Americans Solutions (NAS GAS) Act of 2009 (http://themccormickstandard.com/new-alternative-transportation-to-give-americans-solutions-act-of-2009/). Still, natural gas vehicle-related companies (NGVs) are a sometimes overlooked segment of cleantech. There’s even a stock website solely devoted to NGV stocks (http://ngvstocks.com/). NGVs are common in Europe and emerging markets but still relatively unknown in the U.S.

CNBC and stock market pundit Jim Cramer have had their say about the sector ( http://www.cnbc.com/id/36497893/Natural_Gas_Plan_Gaining_Support_in_Congress_Pickens) (http://www.cnbc.com/id/37472995/CNBC_EXCLUSIVE_CNBC_TRANSCRIPT_CNBC_S_JIM_CRAMER_SPEAKS_WITH_T_BOONE_PICKENS_CHAIRMAN_CEO_OF_BP_CAPITAL_TODAY_ON_CNBC_S_MAD_MONEY_W_JIM_CRAMER).

Well-known advocate for NGVs T. Boone Pickens, the Chairman of BP Capital Management, has spent more than $60 million in what is known as the Pickens Plan (http://www.greentechmedia.com/articles/read/t.-boone/). 

Pickens wants to transition 18-wheelers to natural gas and has suggested that AT&T’s fleet is already moving entirely in that direction.  There are about 250 million heavy-duty vehicles in the U.S. Once there are a million or more adopters investors could see light-duty trucks make the same transition. Natural gas is about $1 less a gallon than diesel or gas and is trading as of late October at multi-year low’s near $3.539 per MMBtu (One million British thermal units) (http://www.eia.doe.gov/oog/info/ngw/ngupdate.asp).

There are already excellent natural gas subsidies from the government and upcoming (and very likely to get passed) legislation could increase these incentives for buying a natural gas engine. The order rate could increase dramatically with a corresponding major rise in demand for fleet vehicles and larger trucks. 

Natural gas is clean, inexpensive and abundant. While electric vehicles for small vehicles are here to stay NGVs could be a near term solution for energy efficiency and a cleaner environment for larger vehicles. 

Here is a brief look at some small cap NGV or hybrid-related stocks that could benefit from legislation and/or a move to NGVs:

Seal Beach CA-based Clean Energy Fuels (Nasdaq: CLNE, http://www.cleanenergyfuels.com/) has an $850 million market cap and provides natural gas as an alternative fuel for vehicle fleets in the United States and Canada  through 400 fleet customers and 200 NGAS fueling stations. CLNE is in the fueling station business as well as supplying compressed and liquefied natural gas. The company also produces renewable biomethane, which could be used as vehicle fuel. CLNE also provides natural gas conversions, service, warranty support, and research and development for natural gas vehicles. The stock trades well over 1m shares a day with a 52-week range of $10.95 – $23.70. It currently trades at about $14.

Vancouver-based Westport Innovations (Nasdaq: WPRT, http://www.westport.com/) has nearly a $700 million market cap and makes engines and fuel injection systems that use gaseous fuels, including natural gas for the on-road commercial vehicle sector primarily in North America and Asia. Their targets are heavy- and light-duty vehicles of all types and they also make a direct injection LNG system for heavy-duty trucks and engines fueled with LPG. WPRT also provides alternative fuel engines and relevant parts and kits for use in automobiles and heavy duty trucks.  WPRT stock currently trades around $17, with a 52 week range of $9.23 – $21.34 and volume around 500,000 shares a day.

New York City-based Fuel Systems Solutions (Nasdaq: FSYS, http://www.fuelsystemssolutions.com/), with nearly a $700 million market cap,  is in the business of alternative fuel components and systems which control the pressure and flow of gaseous alternative fuels, such as propane and natural gas used in internal combustion engines. FSYS also provides systems integration support for light- and heavy-duty refueling applications. FSYS supplies its products and systems primarily to automobile manufacturers, taxi companies, transit and shuttle bus companies, and delivery fleets.  The stock has a 52-week range of $24.50 – $52.53 and currently trading near $40 with daily volume of about 350,000 shares.

Chatsworth, CA-based Capstone Turbine (Nasdaq: CPST, http://www.capstoneturbine.com/), with a market cap just under $200 million) is in the hybrid electric vehicle market already and makes turbine generator sets with applications helpful to NGVs.  CPST microturbines are fueled by various sources, including natural gas. It primarily sells its products directly to end users, as well as through distributors in North America, Asia, Europe, and the Russian Federation. CPST stock trades near 2 million shares a day with a 52-week range of $0.62 – $1.45. It is currently trading at about 74 cents.

Last but certainly not least is Irvine, CA-based Quantum Fuel Systems (Nasdaq: QTWW, http://www.qtww.com/). QTWW makes propulsion systems, energy storage technologies, and alternative fuel vehicles engaging in hybrids, alternative fuels, and hydrogen refueling stations and systems providing fast-to-market solutions to support the production of hybrid and plug-in hybrid, hydrogen-powered hybrid, fuel cell, and alternative fuel vehicles (so are well positioned as natural gas becomes more popular to possibly add producst to their business line) as well manufacturing modular and transportable refueling stations. QTTW has strategic alliances with Fisker Automotive, General Motors, Asola, Advanced Lithium Power, Inc.; Power Control and Design, Inc.; and Shigan Quantum Technologies PVT LTD. The stock trades about 700,000 shares daily at a current price of about $.45. Its 52-week range is $0.38 – $1.49. As an aside, QTTW also owns a big chunk of privately-held Fisker Automotive,  which has an impressive plug in hybrid car (http://auto.ocregister.com/2010/10/04/irvines-fisker-automotive-eyes-possible-ipo/43352/). Buying  QTWW is the only way a public-market investor can own part of Fisker until it goes public (which has been rumored).

EVs and HEVs: Mushy Veggies or the Hope for the Future?

“Like mothers who push healthy food at skeptical children, carmakers insisted that despite the mushy-veggies taste of smaller engines and hybrid everything, Americans will learn to love gas sippers and drive them without shame.” (from coverage of the New York Intl Auto Show by the NY TIMES: http://www.nytimes.com/2010/04/04/automobiles/autoshow/04SHOW.html?hpw)

Now while it’s clear that automobile writers may be wondering where the muscle cars went (and choosing to write about ever-clunkier-looking crossovers and sport utility vehicles),  it turns out the first mass-market pure EV is hitting the showrooms in Japan, and auto buyers are taking to it like the proverbial duck to water: http://finance.yahoo.com/news/Japanese-start-buying-apf-3281658505.html?x=0&sec=topStories&pos=1&asset=&ccode=.  It’s a 4-seater from Mitsubishi called the i-MiEV and it costs about $30,000 after tax and other incentives.  The car is rated for 100 miles between charges, and can be charged in as little as 30 minutes at a turbo-charged charging station (no, there are not very many of them).  See this article from AutoBlogGreen: http://green.autoblog.com/2010/04/02/mitsubishi-aims-for-sub-30-000-price-tag-on-u-s-i-miev/

i-MiEV from Mitsubishi, Japan's first mass-market EV

At the same time, Nissan announced that its new EV, the Leaf, will be in showrooms by December, and they have started taking orders.

We’re anxiously awaiting the Tesla IPO announced earlier this year (http://earth2tech.com/2010/01/29/tesla-ipo-electric-car-startup-files-for-100m-public-offering-finally/), and that offering, when it happens, may herald the first true US EV “muscle car” public company.

For the smallcap investor, there are ways to invest in the EV as a passenger-car trend, both by investing in cross-border companies and by investing in companies that make parts and pieces of EVs.  One hint at the broad influence that EVs will have if they are widely accepted (and we assume they will be) is written between the lines in an announcement by Ford and Microsoft, and released on the first day of April.  It deals with a cooperative agreement between the two companies as to a program called Hohm (a combination of the place you live and a measure of electrical energy), which may help EV owners calculate the cheapest and most efficient ways to re-charge their cars, considering that charging a car is likely to double the energy usage of some homes. http://www.greencarcongress.com/2010/04/hohm-20100401.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+greencarcongress%2FTrBK+%28Green+Car+Congress%29

Also mentioned in that announcement are Ford’s plans to introduce 5 new electric vehicles over the next few years, the first of which is the electric Transit Connect, which was shown at the Chicago Auto Show earlier this year, and which will start being delivered in the 4th quarter of 2010.  The Transit Connect is a co-product of Ford and Oak Park MI-based Azure Dynamics Corp* (TSX: AZD and OTC: AZDDF; http://www.azuredynamics.com/), and while it has been announced as a commercial vehicle, there seems a strong likelihood that some portion of the Transit Connects that hit the roads will find themselves serving at least partly as family vehicles.  It’s worth noting that the Transit Connect (which will be available in gas-powered and EV versions) was named North American Truck of the Year for 2010: http://www.northamericancaroftheyear.org/.  AZDDF and AZD shares closed Thursday at $0.26, with average volume of well over 800,000 shares a day in Toronto.   

Privately held Norwegian company, Think Electric, announced last week that it will begin selling its Think City, a mini-sized urban vehicle, in New York City and other US cities: http://www.thinkev.com/Press-Material/Press-releases/THINK-to-begin-selling-city-electric-car-in-New-York.  Think’s US cars will be built in Elkhart IN, near the operations center of its battery supplier and significant partial owner, Ener1 Corp (Nasdaq: HEV; http://www.ener1.com/), which has been the recipient of a hefty federal stimulus award for its own battery operations.  HEV shares closed at $4.40 vs a 52-week high of $7.90 on Thursday, for a market cap of $550 million and daily average trading of  nearly a million shares.  One could own Think indirectly through HEV shares.

Think City EV (in a bubble)

I attended a presentation last month by Henrik Fisker, founder of venture-backed Irvine CA-based Fisker Automotive, which has announced a plug-in electric luxury sports car, the Karma, and is taking orders for it now.  Fisker Automotive has been awarded more than $500 million in federal stimulus loans conditioned on the company’s posting adequate investment matching funds.  While Fisker is privately held, a small minority of its shares are owned by its strategic partner, also based in Irvine CA, Quantum Fuel Systems Technologies (Nasdaq: QTWW; http://www.qtww.com/).  QTWW shares closed at $0.67 on Thursday, vs a year-high of $1.77, with average trading volume climbing toward 2 million shares a day, and a market cap of just under $100 million.  While it seems obvious given the high level of venture capital that has been invested, that Fisker will eventually go public, no plans have been announced to date.

The cloud that hangs over the EV and HEV industries is some worry about whether the car-driving public will give up their gas-powered cars.  Hybrids (there really are very few EVs yet available) as a percentage of sales dropped year-to-year in March: http://blogs.edmunds.com/greencaradvisor/2010/04/march-us-hybrid-sales-rise-18-percent-but-lag-overall-vehicle-growth.html, although the figures are not complete since not all hybrid makers reported.  The Prius still leads the pack with 53% of hybrid sales last month. 

It could be that the EV will attract a more willing audience than the technologically complex dual-system hybrids.  Standard-looking cars like the Tesla and Fisker will be needed to establish that EVs are not glorified golf carts, a moniker still thrown at some of the smaller ones, and once the big car companies are putting EVs in their showrooms that will help as well.  For now, the electric Transit Connect by Ford and Azure Dynamics looks to be the first of those big-name cars in the US, probably followed by their Japanese brethren from Nissan and Mitsubishi.

*client of Allen & Caron, publisher of this blog