Lithium: Auto Industry Loves It, Feds Throw $$ At It

Last week  there were (at least) two articles that pointed out some important issues in the increasingly big business of electric vehicles.  Neither was front-page news. 

Sexy Tesla Roadster -- and you own part of it theoretically

One was the announcement that a small but widely heralded company, privately held, San Carlos CA-based Tesla Motors (http://www.teslamotors.com) , has gotten the signature of DOE’s Steve Chu and will harvest a bounty of $465 million in federal loans to throw its EV business plan into high gear: http://green.autoblog.com/2010/01/23/done-deal-tesla-doe-complete-loan-paperwork/.  As AutoBlogGreen’s Sebastian Blanco laconically points out, if you’re a citizen of the United States, “you’re officially an investor in Tesla Motors.”  Of course rumors of a Tesla IPO have floated around for quite a while, so you may be able to invest directly one of these days instead of funneling your cash through DOE.

Bolivia's lithium resources are vast -- and look like another world

And in the same week, a distinctly different type of news was purveyed by The Associated Press: Bolivia, which just re-elected Evo Morales as its leader, is unquestionably the Saudi Arabia of lithium, the prize mineral that Tesla and so many others are staking their futures on.  http://autos.aol.com/article/lithium-resource.  Out of the frying pan of oil and into the fire of scarce lithium deposits under dried-up lakes in the Andes?  Notice the sub-headline on the article: “Toyota secures lithium supply in Argentina.”  Argentina may not be a paragon of stability, but compared to Bolivia, it’s Gibraltar (remember that President Morales’s political party is called MAS: Movement for Socialism).  For a slide show of Bolivia’s lithium resources, go to http://www.nytimes.com/slideshow/2009/02/03/world/0203-LITHIUM_index.html (the photo above is from this slide show).

It was not long ago that Toyota’s ice-breaking Prius was a solo act, and most Americans thought of electric vehicles as glorified golf carts.  Now there is a dizzying array of EVs, HEVs, BEVs, PEVs, etc — and they  come with the brand names of virtually every carmaker in the world.   To some extent Prius is still the act to beat, though: http://www.dailytech.com/Honda+Goes+Back+to+the+Drawing+Board+to+Beat+Toyotas+Prius/article17501.htm

And if you think Tesla is pulling in a big fish, have a look at its archrival, Irvine CA-based Fisker Automotive, which secured $115 million in private equity funding this week, in order to allow it to harvest $528 million from DOE.  Basically that means the federal government is committing $1 billion to two very small companies with very pretty cars and very short track records.  And you, as a US citizen, are part of that bounty.

Sexy Fisker Coupe: Feds Have Put $1 billion into loans for Fisker & Tesla

In addition to your taxpayer-funded pending investment in Fisker, though, there is a way to put some Fisker equity into your portfolio, even though it is, like Tesla, privately held.   Irvine CA-based Quantum Fuel Technologies (Nasdaq: QTWW, http://www.qtww.com) owns a stake in Fisker that was said to be 21.9% in a financing document QTWW filed with the SEC about a year ago.  QTWW shares are trading at $0.89, down about half from its year-high of $1.77, and one assumes that the QTWW stake in Fisker has been further diluted in the meantime, because the Fisker financing mentioned in the previous paragraph was also released as QTWW news last week: http://finance.yahoo.com/news/Quantums-Affiliate-Fisker-prnews-2355193003.html?x=0&.v=1.  Smaller slice, but a much bigger pie.

But the distinctly uncomfortable feeling that comes with lithium’s presence in a series of US-unfriendly locations does not seem to be slowing anyone down.  The government of Taiwan makes it clear why this bandwagon continues to roll: according to their forecasts, sales of EVs will grow to 7.29 million units by 2018, of which 86% (or 6.26 million units) will be powered by lithium-ion batteries.  The line of thought leads directly to an increase in Taiwan’s support for Li-ion technology: http://www.greencarcongress.com/2010/01/moea-20100124.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+greencarcongress%2FTrBK+%28Green+Car+Congress%29.  What would a li-ion-powered EV sell for?  What if it were $30,000 per unit?  That would create a worldwide sales projection of  nearly $188 billion for that 2018 theoretical demand.  Hefty, hefty, hefty.

Please keep in mind that we do not recommend stocks; we simply write about companies that we find interesting.  Do your own diligence.

There are various flavors of lithium batteries, including the somewhat under-wraps “Ferrous battery” that China’s BYD introduced at the Detroit Auto Show.  From what we can tell, a Ferrous battery is a lithium iron phosphate battery, so President Morales can rest easy on that one.

There are many ways to invest in the EV movement, or in the lithium sweepstakes.  Most obviously there are the shares of the 3 leading lithium-ion battery makers in the US.  First to consider is Milwaukee-based Johnson Controls Inc (NYSE: JCI; http://www.johnsoncontrols.com/), but they are way too big for us to look at, and besides, they are very diversified.  In terms of pure plays in Li-ion, the two best-known (and bigtime federal funds recipients) are NYC-based Ener1 Inc (Nasdaq: HEV: http://www.ener1.com/), which has recently been screaming ahead, not only announcing car deals, but working with Japan’s ITOCHU on a series of futuristic li-ion applications involving buses and an advanced smart grid.  HEV shares are trading Monday at $4.76, vs a year-high of $7.90, so there are doubts out there in spite of the federal money fountain spewing dollars at them.  HEV has good volume of nearly 1 million shares per day, and a market cap that flirts with $600 million.

The second name that comes to mind is Watertown MA-based A123 Systems (Nasdaq: AONE; http://www.a123systems.com/), which started out making batteries for power tools and has graduated up and up to transport applications.  Since its IPO last year, the stock has always traded above its initial sale, and is trading today at $17.83, with a market cap of $1.8 billion and daily volume of about 2.5 million shares.  Smokin!

Less well known, but just as interesting is Reno-based Altair Nanotechnologies (Nasdaq: ALTI; http://www.altairnano.com/), which may well have more interesting IP than either of its larger peers, but, like the NY Jets, got knocked out of the SuperBowl, at least for this year.  Thomas Weisel initiated on Altairnano in December with an “overweight” rating, but the stock is sagging at half its year-high price of $1.55, trading today at $0.81, and in some danger of being delisted by Nasdaq as a result.   Market cap is about $85 million, and the shares trade pretty well at 400,000+ per day.  Worth a look.

If you want to place your bets outside of Bolivia, however, your options with regard to transportation are fairly limited.  You could start, however, by looking at a company that has, surprisingly, been marginalized among investors because its heritage is in old-fashioned lead-acid batteries.  That is New Castle PA-based Axion Power Inc* (OTCBB: AXPW; http://www.axionpower.com/.  AXPW owns patents on nanocarbon ultracapacitors used in lead-acid batteries in various ways, and is in partnership with one of the world’s largest batterymakers, Milton GA-based Exide Technologies (Nasdaq: XIDE; http://www.exide.com/).  There is good reason to believe that the AXPW-XIDE team may be a contender in the early hybrid-vehicle business, especially in European markets, where carbon-emission regulations come into play in a matter of months, as opposed to the US, where the timeline is longer (but the pair was named for a federal grant of about $35 million last year, and AXPW has received various other federal and state grants as well).  The name of the battery here is PbC, comprised of the chemical symbols for lead and carbon — and whatever the outcome, these batteries will be the low-cost choice for consumers and carmakers, costing a fraction of the more exotic lithium batteries.  AXPW is trading at $1.34 today, vs a year-high of $2.75, so it is off at a rate similar to many of its battery peers.  Market cap is about $80 million after taking into account its December financing, and the shares trade about 32,000 per day.  AXPW will be presenting at the Piper Jaffray conference the last week of February in NYC.

XIDE is trading at $8.30 on volume of 650,000 shares per day for a market cap of about $630 million.  Year-high on XIDE was $8.87.

Equally interesting in the non-lithium part of the world is San Diego-based Maxwell Technologies (Nasdaq: MXWL: http://www.maxwell.com/) .  MXWL delivered it 1-millionth largecell ultracapacitor this month (http://maxwell.investorroom.com/index.php?s=43&item=107), which gives it more operating muscle than most of its peers, and is on track to do about $100 million in revenue for 2009.  MXWL will also be presenting at the Piper Jaffray conference in NYC the week of Feb 22.  MXWL shares are trading at $16.63 at the moment, vs a 52-week high of $21.81.  Average daily volume is about 220,000 shares, and the market cap is $440 million. 

Clearly there are LOTS of players in this arena — we couldn’t possibly survey them completely.  If you use a news aggregator, you will be amazed at the quantity of news on lithium-ion batteries in particular, and on EV batteries in general. 

*Client of Allen & Caron, publisher of this blog

The LA Auto Show, Hybrids, and a Bit on Micro & Mild Hybrids

What makes this year different from all others at the LA Auto Show, which runs December 4-13?  Well, for starters, there are 49(!) hybrids and alternative-energy models being shown (http://www.laautoshow.com/AlternativeFuelVehicles.aspx).  The Auto Show’s website lists the following automakers as showing such vehicles: Audi, BMW, Cadillac, Chevrolet, Fisker, Ford, GMC, Honda, Lexus, Lincoln, Mercedes-Benz, Mercury, Mitsubishi, Porsche, Subaru, Toyota and Volkswagen.   For once US carmakers were getting a lot of the buzz; people are talking about the Ford Fiesta and the Chevy Volt of course.

Fisker Karma -- being shown at LA Auto Show

And then there is the keynote address, delivered by GM’s Bob Lutz, who said, in part, “At GM, we deeply believe that, in an energy-constrained world marked by dramatic growth in developing markets, it is critical that the global automotive industry – as a business necessity and as an obligation to society – develop alternative sources of propulsion based on diverse sources of energy. … Going forward, the automobile industry simply can no longer rely on oil to supply 98 percent of the world’s automotive energy requirements.” (quoted in AutoBlogGreen’s coverage by Sebastian Blanco: http://green.autoblog.com/2009/12/03/la-2009-bob-lutz-keynote-the-automobile-industry-simply-can-n/).

Bob Lutz -- Keynote Speaker at LA Auto Show

At the same time, GreenCarCongress reports that Pike Research has predicted 10-fold growth in lithium-ion batteries by 2015, up from $878 million to $8 billion annually in that period.  That is in spite of the novelty and relatively untried technology involved.  They quote John Gartner, the senior Pike analyst as saying: “Just as Li-ion batteries are relatively untested in real-world transportation applications, plug-in hybrid and all-electric vehicles are an unknown as a mass consumer offering. ” (http://www.greencarcongress.com/2009/12/pike-liion-20091203.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+greencarcongress%2FTrBK+%28Green+Car+Congress%29)

That constitutes quite a leap of faith, especially when at the same LA Auto Show, the “Green Car of the Year” (as named by a panel of experts and Green Car Journal) is not a hybrid but a diesel: the Audi A3 TDI.  According to Wired Autopia, “The A3 diesel is powered by a 2.0-liter direct-injection turbocharged engine that puts down 140 horsepower. It delivers 30 mpg in the city and 42 on the highway.”  (http://www.wired.com/autopia/2009/12/audi_a3_tdi_green_car_of_the_year/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+wired%2Findex+%28Wired%3A+Index+3+%28Top+Stories+2%29%29)

Green Car of the Year -- Audi A3 TDI

 At the same time, there may be a growing consensus, at least in Europe, that the bridge from oil-powered to electric vehicles (BEV, PEV, EV, whatever you call them) may well be what are called “micro” or “mild” hybrids, rather than what the public knows as Prius-type HEVs.  That would not sit well with the lithium-ion crowd, because it’s unlikely that micro and mild hybrids will be made using li-ion batteries, which do seem to be the current candidate for pure EVs, although as we reported recently, the Nissan Leaf, set for introduction in 2015, will use a more exotic battery with a new-fangled cathode: lithium nickel manganese cobalt oxide, referred to as a Nissan Super Battery.

In fact, most micro and mild hybrids today are using a variation of the traditional lead-acid battery, variously called a VRLA or AGM battery — much less expensive than a comparable NiMH or Li-ion version.  Interestingly the micro and mild hybrids can achieve pretty good improvements on mileage and on carbon emissions, which is the key to the technology.  The EU has carbon limits it will impose, backed by draconian fines on automakers, on 2012 fleets.  Those limits can be reached with full hybrids like those being shown in LA, or with EVs like the US-based privately held Fisker and Tesla vehicles, or the Norwegian Th!nk Electric mini-cars, and a variety of other fairly uncommon passenger vehicles.  The EVs have no carbon emissions at all, so they are a bull’s-eye for carmakers looking to comply with the 2012 bogey.  And, as we reported recently, there are several candidates for no-emission winners among commercial vehicles.

According to some estimates,  10-13 million vehicles will be outfitted as micro hybrids within a couple of years, affording improvements in carbon emission or mpg of up to 15%.  A micro hybrid assembly assists the gas-driven engine only (there is no electric drive train, and they never power the car solo), and some use the friction of regenerative braking to recharge themselves.  On the other hand, they are mostly a drop-in or clip-on technology that is relatively easy for a carmaker to implement.  Mild hybrids, which offer even more efficiency, may follow along behind, but are anticipated to be slower off the block than the micro assemblies.

The sticking point is the energy storage device.  Even “advanced” lead-acid batteries face classic problems: corrosion and sulfation on the poles, slow re-charging, and limited life expectancy.  All the newer, more exotic batteries face cost issues, and some may face safety issues as well.  What is needed is a battery that combines the cost and easy of manufacturing of lead-acid with the better performance characteristics of higher-priced batteries.  The difference may lie with a relatively cheap ultracapacitor: carbon.

Several companies have been developing lead-acid batteries with new, potentially game-changing technologies.  Peoria IL-based privately held Firefly Energy (http://www.fireflyenergy.com) offers its Microcell(TM) foam grid technology.  With a strong scientific background, the Firefly battery is being tested by the US Army and by a small number of others, but does not seem to be in mass production.  Lyon Station PA-based privately held East Penn Manufacturing (http://www.eastpenn-deka.com) , a major supplier of lead acid batteries) is working with Japanese developer Furukawa on an UltraBattery with an enhanced negative electrode that also seems not to be ready for prime time yet.  And New Castle PA-based Axion Power International* (OTCBB: AXPW; http://www.axionpower.com) has introduced its PbC battery technology, being commercialized in a supply agreement with global battery giant, Alpharetta GA-based Exide Technologies (Nasdaq: XIDE, http://www.exide.com/).  The PbC battery may be the closest to the finish line with a multi-patented nanocarbon electrode that maximizes performance and minimizes lead-acid downsides such as corrosion and sulfation, while preserving its price advantage and ease of manufacturing and recycling.   One of these may be the winner of the micro hybrid sweepstakes.

Meanwhile, the King of the Hybrids, Toyota, is showing the 2010 Prius at the LA Auto Show — this time with a Panasonic lithium-ion battery instead of the NiMH batteries of the first two generations of Prius (http://www.greencarcongress.com/2009/12/prius-phv-20091202.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+greencarcongress%2FTrBK+%28Green+Car+Congress%29).  Hyundai is showing the 2011 Sonata hybrid, with its own li-ion battery pack (http://www.greencarcongress.com/2009/12/hyundai-introduces-2011-sonata-at-la-auto-show-with-4cylinder-gdi-engine-gdi-turbo-and-hybrid-powert.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+greencarcongress%2FTrBK+%28Green+Car+Congress%29). 

At the LA Auto Show it is clearly the Year of the Hybrid, and it is clearly the year of the Asian-made li-ion battery, which must be a bit of a trial for the US-based li-ion giants: Johnson Controls/Saft, Ener1 Inc, and A123 Systems.  Go see all the hybrids, see the future of vehicle transportation — and have fun!

Please do your own diligence before buying stocks — we don’t make recommendations; we just write on interesting companies.

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

EVs Anyone? Yup, Where Can I Plug In?

The New York Times ran an article that I suspect few people read, because it was in the middle of section 1 opposite a bunch of desperate retail ads for SALES-SALES-SALES, but it points at the soft spot of the move toward electric vehicles (EVs): how to get them charged when you are not at home (http://www.nytimes.com/2009/12/02/business/energy-environment/02electric.html?_r=2&partner=rss&emc=rss).   Henrik Lund, a professor of energy planning at Aalborg University in Denmark, puts his finger on it: “There is a psychological barrier for consumers when their car is dependent on a battery station.” 

Better Place plug-in -- sleek and easy

In this article, Palo Alto CA-based, privately held Better Place is teaming up with the largest Danish electric utility to put charging stations up across Denmark, and they have $100 million to spend doing it.  Kudos, but it is grid electricity, and it tries the imagination to think of grid plug-ins every few miles on the huge US Interstate Highway system.  Works for Denmark though.

We have relatively few EVs on the road today, and one of the big reasons is just that: how do you get them re-charged?  That is not to say that the EV movement is not taking off — it clearly is, but it is taking off from a different runway, so to speak.  Just to be clear, yes we are aware of Tesla, Fisker, Th!nk Electric, and several other small companies with slick-looking EVs and HEVs, but they are not very common yet.

Ford Transit Connect EV will be shown at the Chicago Auto Show Feb 2010

If you look at the recent announcements from Ford Motor Company (NYSE: F) and Oak Park MI-based Azure Dynamics* (TSX: AZD and Pink Sheets: AZDDF.PK; http://www.azuredynamics.com/), one of the most high-profile EV announcements in recent months relates to delivery vans: the super-successful (in Europe) Ford Transit Connect: http://www.fordvehicles.com/transitconnect/.  Point being that this EV is designed for vans that have routes to drive, especially urban routes with lots of start-and-stop traffic — very little open-road driving, so the mileage to “empty” is not an issue.  There should be thousands of these puppies on the road when they show up in select Ford showrooms in 2010.

In fact, from a non-scientific scan of the market, it appears that most of the pure EV announcements (not all, but most) relate to commercial vehicles.  Look at Kansas City-based Smith Electric Vehicles, whose website says they have led the EV market for 80 years (http://www.smithelectricvehicles.com/) — all the vehicles they show are commercial vans and trucks.  Makes sense, of course, because they all go back to the same place every night and can plug in.  Smith announced at the end of October that they will introduce a postal delivery vehicle: perfect application.

The much-heralded but perhaps under-funded commercial vehicle from Anderson IN-based privately held Bright Automotive is also clearly aimed at a barn-stored commercial user who can bed down vehicles next to a plug every evening.  http://www.brightautomotive.com. 

Same with Torrance, CA-based Enova Systems* (NYSE Amex: ENA; http://www.enovasystems.com), which creates drivetrains for hybrids and pure EVs for some of the largest commercial-vehicle manufacturers in the world (Freightliner, Laidlaw, First Auto Works of China).  The funding — partly because of tax breaks and stimulus money — is in commercial vehicles.

But back to the NYT story.  In order for ME to turn in my one-horse-open-shay for an EV, I have to be able to drive on the open road without worrying about finding a plug for my car to recharge.  I’ve pushed cars that ran out of gas, and it’s no fun, but at least there are gas stations pretty much all over the place.  Without that infrastructure , there is some nail-chewing about driving an EV.

Apparently there are some jurisdictions that are trying to pioneer the infrastructure for EVs.  There has been a fair amount of attention paid to privately held Campbell CA-based Coulomb Technology (http://www.coulombtech.com/), which has been signing deals with a variety of municipalities, most recently Houston, according to their website.  They are conducting demonstrations with stand-alone charging stations, but most of the ones they are installing today seem to be grid-connected — which probably doesn’t cut it for my drive through the Catskills.  There was a demo of interest  in Washington DC this year, where Coulomb worked with San Diego-based privately held Envision Solar (http://envisionsolar.com/) and New Castle PA-based Axion Power International* (OTCBB: AXPW.OB; http://www.axionpower.com).  The product was a pretty slick-looking, no-emissions, solar-powered charging station with inexpensive longlasting PbC batteries to make it work when the sun don’t shine.  Sounds good, looks good, is good — but how many miles of highway would have to be served in order for the Clampetts to get from the Appalchians to Beverly Hills?

This morning there was an announcement that Nissan will introduce an EV with a 200-mile range — in 2015 (http://www.reghardware.co.uk/2009/12/02/nissan_super_battery/ ).  They will use a lithium nickel manganese cobalt oxide cathode (say that five times fast).  But something that’s 5 years out has little effect on people who are considering buying a car today.

Nissan Leaf, due in showrooms in 2015 or so

The big lithium-ion battery companies — Ener1 Inc, A123 Systems, and Johnson Controls/Saft — all seem interested in grid-connected battery applications.  That is, they are interested in storing electricity generated in nonpeak hours for peak distribution (very helpful, by the way, but no help for my car).  But I have not read anyplace of anyone wanting to install lithium-ion batteries in solar car-charging stations out in BFE; they’re too expensive, and they might get wet (which is a no-no for lots of exotic batteries).  Ener1 Inc is Nasdaq: HEV; http://www.ener1.com.  A123 Systems is Nasdaq: AONE; http://www.a123systems.com.  Johnson Controls is NYSE: JCI;  http://www.johnsoncontrols.com/. 

Axion Power’s supply agreement with Alpharetta GA-based Exide Technologies (Nasdaq: XIDE; http://www.exide.com/) looks like a candidate, with the carbon-based PbC technology, to provide an affordable, long-lasting battery for a charging station.  And the Advanced Lead Acid Battery Consortium has a lot of information on souped-up lead-acid batteries that work-better-last-longer, but still have the same killer problems of short life and low rechargeability that makes them dowdy wallflowers at the EV prom.

All told it may be up to the Coulombs, the Better Places, the Envision Solars, the Axion Powers, the Exides to come up with the ideas and demos for charging stations (and they have).  But like the Interstate Highway system itself, a good way to get EVs on the highways would be for the federal government to puts a priority on charging stations.  More stimulus, anyone?

Please do your own diligence before investing in any stock.  We do not recommend stocks — we just write about interesting companies and interesting developments.

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

Heavy Vehicles Trailblazing for EVs: 2nd in a Series

This morning, the widely read website, seekingalpha.com, published an article with an intriguing headline: “Electric Cars Could Dominate Market by 2030.”  The article is based on a study carried out at UC Berkeley, and the proviso is revealing: “provided that consumers don’t have to buy the high-priced batteries themselves and an infrastructure can be built to maintain and manage them.” (http://seekingalpha.com/article/152127-electric-cars-could-dominate-market-by-2030).  There it is: the key to our willingness or ability to switch to electric vehicles is the batteries that power them.  The study is worth looking at (there is a link in the article above), and it figures the cost of an infrastructure to handle batteries at $320+ billion, partially offset by a saving of $205 billion occasioned by reduced healthcare costs due to fewer harmful emissions.  The article also ventures a guess that emissions could be reduced by 62% from 2003 levels, and that 350,000 new jobs could be added to the economy. 

In the first article in this series, we had a brief look at the definitions of two types of hybrids: power-split hybrids and mild hybrids.  We believe that these hybrids will dominate the EV market for the midterm at least, and that the pure EV market will arrive in terms of meaningful numbers several years down the pike.

Before we discuss the battery market, we should note that heavy vehicle operators, makers and conversion specialists may well be leading the way in emission reductions.  Torrance CA-based Enova Systems (Amex: ENA, http://www.enovasystems.com/) is an example of the conversion specialist.  It has had a string of good news recently, including a news bulletin this morning on its work with Smith Electric Vehicles, with vehicles delivered to numerous illustrious (and big) companies like AT&T, Frito-Lay, Coca-Cola, Staples, and PG&E (http://finance.yahoo.com/news/Enova-Systems-Sees-Fleet-bw-2788026103.html?x=0&.v=1).  ENA shares languish, primarily it seems because the audience is small, and the stock is trading at $0.52 vs a 52-week high of $3.45, a market cap of under $11 million, and average volume of only 30,000 (though that is not double-counted).  ENA is reporting losses and probably is due for some dilution from new financings in the future, but its market seems to be growing by leaps and bounds, and the endorsements of big companies can do nothing but good for them.

At the same time, Mississauga ONT-based Azure Dynamics (TSX:  AZD, Pink Sheets:  AZDDF; http://www.azuredynamics.com/), also a pennystock is developing, building and selling hybrid trucks delivery vans for companies like FedEx, and passenger busses for municipal bus lines.  We have written about AZD in the past.

Azure Dynamics Hybrid Delivery Van

AZD shares trade fairly heavily on the TSX, with an average daily volume of nearly 1.5 million shares.  The US Pink Sheets version of the stock trades far less (70,000 shares), but that is the price we will quote because it is in USD: $0.19 vs a 52-week high of $0.27.  AZD is also reporting losses and consuming cash, but it is hard to imagine how a company gearing up to make fleet vans and trucks and city busses could do so without breaking a few eggs.  They announced a supply agreement with Johnson Controls earlier this year.

Another Canadian company,  Reno-based Altair Nanotechnologies (Nasdaq: ALTI, http://www.altairnano.com/) is concentrating in its transportation segment in batteries for heavy-duty vehicles and municipal busses, although we hasten to add that its primary identification is with the storage of energy from renewable sources, and if you go to their website, the first thing you will see is wind turbines.  Altairnano batteries for the transport market are lithium ion powered.  ALTI shares are trading at $1.03 at the moment, vs a 52-week high of $2.94, and the average volume is nearly 700,000 shares, so there is some liquidity.

We did an article on the subject of busses on June 8.  If you put “hybrid bus” into the search engine of this blog, you can get to that article.  There are illustrations of several, including one from privately held, Golden CO-based Proterra, (http://www.proterraonline.com/pdfs/Index-5_Page-1.pdf).

In the next article in this series, we will start to look at batteries, which, as the SeekingAlpha article that began this article says clearly, are the sine qua non of hybrids now and EVs later.

Batteries Now, Fuel Cells Later?

The news this morning: although we are enthusiastic about today’s battery–powered EVs, the fuel-cell-powered vehicle will be an important part of the mix in the future.  (http://www.greencarcongress.com/2009/04/h2fcv-20090423.html).  

Many in the media seem to accept that EVs will be powered by either the current dominant technology (the Nickel Metal Hydride or NiMH battery), or the myriad variety of Lithium-ion batteries that are being designed and flogged in Asia, Europe, and North America.  But not every early winner finishes a winner.  Ask the Mets or the Cubs about that.

The Lithium-ion industry is grabbing the largest share of battery or batterylike stimulus dollars.  The Watertown, MA-based privately held and venture-backed A123 Systems (http://www.a123systems.com/)  has applied for $1.84 billion in subsidies, and the New York-based but Indianapolis-centered company, Ener1 Inc (Nasdaq:HEV, http://www.ener1.com), has applied for $480 millon, and was recently advanced to the finalist stage by the feds.  That’s all well and good — if the li-ion battery is not a mirage shimmering on the automotive horizon. 

There are some issues with li-ion batteries, and they are no secret.  The most well-known issue is that some of them have exploded, taking transporting aircraft and people’s laps down with them.  EVERY li-ion battery maker says they have fixed that problem.  Nobody wants to drive a car whose powertrain might blow up, after all.  Also li-ion batteries can have problems starting in cold temperatures (which is why li-ion vehicles still have a lead-acid battery for starter purposes). 

But if you look around, there are other technologies that “coulda been a contender” (with apologies to Marlon Brando) — and may yet be.  Perhaps the most obvious is the lineal descendent of the battery in the car you drive now — the “good old” lead-acid battery.  But wait! 

There are several companies that are modernizing the lead-acid battery, many of them working within the auspices of the US-based Advanced Lead-Acid Battery Consortium (http://www.alabc.org/)  .  That would include the R&D-stage Firefly (http://www.fireflyenergy.com/),  and Axion Power* (EBB: AXPW, http://www.axionpower.com) , which recently snared a deal with one of the world’s largest battery companies, Alpharetta, GA-based Exide Technologies (Nasdaq: XIDE, http://www.exide.com).  Both companies use forms of the element carbon to revolutionize and improve the performance of batteries.  It’s hard to tell a lot about Firefly batteries because they haven’t been sold commercially, but Axion batteries, branded as PbC(r) batteries, are the heart and soul of the Exide distribution deal, and are also being used in demonstration projects by widely diverse groups including NYSERDA and an industry consortium designing and building solar-powered charging stations for electric vehicles.  Axion has also been the recipient of DOD and DOE research funds, as well as industry grants to test and develop their proprietary technology, which basically replaces half the lead in a battery with nanocarbon that is analagous to the substance that is in your Brita water filter.

There are other tortoise-like technologies bringing up the rear behind the hare-like li-ion companies.  Some are pretty exotic — steam-powered assists, or devices that pump up gasoline efficiency by adding platinum, or urea, or even hydrogen additives.

Then there are the fuel cells, as mentioned at the top of this article.  The biggest problem with fuel cells is that few of them actually work well enough to be manufactured in quantity.  One assumes that will change.  The second biggest problem with fuel cells is that they are NOT batteries; they actually generate “new” electricity on the spot, rather than regurgitating “old” electricity that they have stored.  Other than that distinction (and it is important), they BEHAVE a lot like batteries.

Toyota Fuel-cell vehicle (today)

For reality’s sake, there ARE fuel-cell vehicles operating today, just not in production quantities.  Read this from carlist.com: http://www.carlist.com/autonews/2004/toyota_fchv.html.   And in this picture you can see how the innards of a fuel-cell-car look (http://www.sfgate.com/cgi-bin/object/article?o=0&f=/c/a/2007/01/02/FUELCELL.TMP):

Mercedes Fuel-cell car cutaway

And lest we be accused of favoritism, there is this from GM and SAIC — both as American as apple pie: http://www.autobloggreen.com/2009/04/21/saic-to-use-gm-fuel-cell-propulsion-system-in-new-experimental-v

GM-SAIC Fuel-cell prototype

The problem to be surmounted is that only one company has ever managed to make portable (as opposed to the gigantic, truck-sized fuel cells that are called “stationary”) fuel cells in production quantities:  Medis Technologies (Nasdaq: MDTL, http://www.medistechnologies.com). Medis pumped out 250,000 of their hand-held fuel cells last fall, and now says it is in the process of upsizing the product and moving its production back to the US from Ireland, no doubt with stimulus funding on its agenda.  They also are eyeing military applications here and abroad (http://www.defencetalk.com/fuel-cell-power-technology-for-the-italian-military-17532/)

This article is already too long to go into the reasons WHY Medis fuel cells can be built in quantity and others can’t.  Suffice it to say here that they use a heretical technology employing sodium borohydride (http://en.wikipedia.org/wiki/Sodium_borohydride), where everyone else uses hydrogen, in most cases generated by breaking down natural gas.  The former works well; the latter is more orthodox and does not work well (and might explode — Remember the Hindenburg!).

As for stationary fuel cells, they seem to be chugging along.  FuelCell Energy Inc (Nasdaq: FCEL, http://www.fuelcellenergy.com) announced a new deal with the USAF: http://finance.yahoo.com/news/FuelCell-Energy-Power-Plant-pz-14856468.html.

*Allen & Caron client

A Surprising Spring Bouquet of EVs Pops Up All Over

SUBSEQUENT COVERAGE: After our article was published, this interview of Bright CEO Waters appeared on Fox Business News: http://tinyurl.com/ckl8oe  (video)

Electric vehicles seem to be cropping up everywhere like the flowers of spring these days.  Today there was an important unveiling in Washington DC, as Bright Automotive (http://www.brightautomotive.com) showed its utility vehicle, the IDEA on Capitol Hill.  As Earth2tech observed, it is hard to characterize it as terribly slick (http://earth2tech.com/2009/04/21/photos-bright-automotive-unveils-100mpg-plug-in-fleet-vehicle/), but its stats are pretty impressive.   It claims fuel efficiency amounting to 100 mpg, and it was developed by Rocky Mountain Institute-spawned company headed by John Waters, former head of the GM EV-1 project.  Bright aims to be building 50,000 of these little puppies annually in about 3 years.  From DC, it heads to Norway for an official debut at a show there.

Bright IDEA -- the new utility vehicle from Bright Automotive

This bright idea (ok, it’s a pun) is a useful vehicle that looks like a slicked-up panel truck, but if you count the number of panel trucks on the road today and add up their gasoline exhausts, there is probably more carbon to be saved on those than on the sexy 2-seaters that are being hawked around by Tesla (http://www.teslamotors.com)  and archrival Fisker (http://www.fiskerautomotive.com).   Fisker said today that a simpler EV power system might hold the combination of cheaper EVs (http://earth2tech.com/2009/04/21/fisker-eyes-simpler-engine-as-one-key-to-a-lower-cost-plug-in/).

The brouhaha in DC today also involved other green companies that are involved in providing charging stations, without which EVs are less useful (if you can only charge them at home, the driving range becomes less meaningful).  The charging mafiosi who showed up today included Coulomb (http://www.coulombtech.com), the company that is making a name for itself with charging stations in the SF Bay Area, Envision Solar (http://www.envisionsolar.com), and Axion Power (http://www.axionpower.com), who are ganging up to provide charging stations independent of the grid, courtesy of Envision’s solar panels and Axion’s PbC(R) batteries, which are lineal descendents of lead-acid, but which use nanocarbon anodes to replace the lead and to gear up the performance.  Axion Power trades on the EBB as AXPW, and their shares were quoted at the close today at $1.60, down from a 52-week high of $2.75 on volume today of 84,000 shares, mostly due to a global distribution pact signed last week with the giant Alpharetta, GA-based battery company, Exide Technologies (http://www.exide.com), which trades on Nasdaq as XIDE, and whose shares closed today at $4.69 on volume of more than 400,000 shares, down from a tad under $20 on a full-year basis. 

But last week we saw some other impressive EVs, most notably the busy little Bee  One, which is set to be sold for just UNDER $10,000 a copy — and it is a 4-seater with a top speed of 80mph and a driving range of 200 miles.   The Bee One is a fit competitor for Tata’s Indica (http://www.engadget.com/2009/04/21/tata-indica-soon-to-hit-the-streets-of-norway-its-electric/), which is set to be rolling off the assembly lines later this year.

The Not-Unsexy Little Bee One 4-seater (200 mile driving range)

None of these cars looks like a Formula One racecar, but they look a damned sight better than a lot of boxy gas-guzzlers.  Speaking of which, Raser Technologies introduced a PHEV (plug-in hybrid) HUMMER that, it is claimed, will also deliver 100 mpg in its trucky version (http://www.autobloggreen.com/tag/raser+hummer/).  Raser shares trade on the NYSE as RZ, and closed today at $4.17, down from a 52-week high of $11.79 on 480,000 shares (presumably not double-counted). 

And of course none of those announcements made more headlines than the deal Chrysler made with A123 for Li-ion batteries for their EVs (http://seekingalpha.com/article/130094-energy-storage-chrysler-a123-alliance-likely-to-spark-interest-in-sector) , nor more wide eyes than Toyota’s announced $21,000 price tag for the new, bigger, better Prius (http://www.dailytech.com/Toyota+Trims+Price+of+2010+Prius+to+Combat+Honda+Insight/article14929.htm).  Get ’em while they’re hot! 

Must be the time of year . . . .

Queue for Fed Funds May Point the Way to Interesting Greentech Companies

It’s not easy to find out which green, alt-energy and electric-car companies have lined up at the federal trough to try for free money (grants);  cheap money (loans); or old-fashioned tax breaks, all of which are provided in the recent spate of stimulus bills.  The main reason is that there does not appear to be a master list of those companies who are applying that is published by the government. 

The spending bill that was passed yesterday in the Senate allocated $410 billion (those numbers seem less unusual than they did last fall, don’t they?) to the EPA, DOE, NIST and the USGS to dole out for solar energy, climate change studies, cleaning up diesel emissions, weatherization, etc.  The contents are ably reported this morning by Josie Garthwaite in Earth2Tech (http://earth2tech.com/2009/03/11/whats-in-the-410b-omnibus-bill-for-climate-energy/).  

But if you wanted to spot the companies where you as an investor might catch some of the coin falling out of the Washington sky, the task is not an easy one.  Some companies have announced that they have applied for money, and some are acting as though they already have it, planning factories, introducing new car models in theory, forecasting sales figures, etc.

Meanwhile a trickle of good news has encouraged the market a bit, and it has to be said that not all of the environmentally responsible activities of US business are a direct result of Washington prodding or paying.  We note that AT&T announced this morning, for instance, that it will buy and put into service 15,000 alt-energy vehicles, including the largest corporate buy of CNG vehicles to date (http://www.greenbiz.com/news/2009/03/11/att-accelerates-its-green-vehicle-fleet-15000).  But AT&T does not fall within our scope, and what we like to do is to ferret out those smaller, sexier companies that our readers might find interesting, as SmallCapWorld implies.

So, in no particular order, you might first look at Reno-based Altair Nanotechnologies (Nasdaq: ALTI, http://www.altairnano.com/), which this morning’s news tells us has applied for ARRA funds (American Recovery and Reinvestment Act) — and in this case they are looking for funds to help them apply their Lithium-ion battery technology to the task of buffering the electric power grid (http://www.greencarcongress.com/2009/03/altair-nanotech.html).  Sounds a bit unlikely based on cost, but AEP has been using batteries that are even more expensive than Li-ion in its pilots.  ALTI is trading at $0.66 this morning vs a high of 2.94, but perhaps the news has not been widely disseminated yet.

While we’re on Li-ion, it’s worth noting that two of the most visible Li-ion companies, NYC-based Ener1 Inc (Nasdaq: HEV, http://www.ener1.com) has been very out front about its application for $480 million from the ATVMLP (Advanced Technology Vehicles) to expand the manufacturing capabilities of its Indiana-based EnerDel operation.  HEV has fallen fast and hard recently, trading at $2.73 this morning, after a fairly fast decline recently and a 52-week high of $9.49. 

The seeming nemesis of Ener1 is privately held A123 Systems, which has tried to go public, but not been received well by the sour markets of the last many months.  They have applied for $1.8 billion to improve manufacturing of their li-ion batteries.  As far as we know, neither Ener1 nor A123 is supplying batteries yet to any production vehicle, though both seem to have participated in lots of pilots.  Both have signed deals with Norway’s Th!nk Electric, and Ener1 made an emergency investment in Th!nk last fall to keep it from going glub-glub.

John Petersen, a frequent contributor to SeekingAlpha and AltEnergyStocks, bases his recent article on “Why Energy Storage Stocks Should be an Easy Double for Investors” on federal stimulus dollars (http://www.altenergystocks.com/archives/2009/02/why_energy_storage_stocks_should_be_an_easy_double_for_investors_1.html)>, and suggests that investors ought to look at a series of them: Austin-based Active Power (Nasdaq: ACPW, $0.55 vs a high of $1.96,  http://www.activepower.com); New Castle, PA-based Axion Power* (EBB: AXPW, $0.90 down from $2.75 high,  http://www.axionpower.com); Tyngsboro, MA-based Beacon Power (Nasdaq: BCON,  $0.39 vs a high of $2.18,  http://www.beaconpower.com);  San Diego-based Maxwell Technologies (Nasdaq: MXWL, $5.27 today vs a high of $14.75,  http://www.maxwell.com) ; Ultralife Corp (Nasdaq: ULBI, $8.81 vs $14.43, http://www.ultralifecorp.com); and Menomenee Falls, WI-based ZBB Energy (Amex: ZBB, $0.90 today vs a high of $4.54,  http://www.zbbenergy.com).  Petersen also discusses some larger companies that do not fall in our grouping, like Enersys and Exide.  And if predictions in Josie Garthwaite’s article of March 9 are correct, battery sales in these categories will hit $51 billion by 2013 (http://earth2tech.com/2009/03/09/charging-ahead-battery-market-to-hit-51b-by-2013/).

According to various reports, more than 70 companies have applied for DOE’s Advanced Auto Loan program, though the only way to find them is to Google the loan programs themselves and pick the information up from press releases and fed filings of the publicly traded companies.  They include the back-and-forth duo of privately owned Zap Motor and Integrity Manufacturing, whose Kentucky project to build Zap cars seems to be on-again, off-again.  They have applied for $200 million in DOE-administered low-cost loans. 

Privately owned Tesla has asked for $400 million in one report, and $450 million in another (http://www.autobloggreen.com/tag/atvmlp/)  to build its Model S sedan, and Bright Automotive is looking for fed funds to build the EV it is planning to introduce its “light-weighted” car with a reduced battery pack.  Bright says that if it gets the funds it has applied for, it will build 30,000 in the first year, and 50,000 in the second year (http://news.cnet.com/8301-11128_3-10165562-54.html)

As always, we do not recommend stocks; we just report on companies that we think are interesting in their spaces. 

*Client of Allen & Caron, publisher of this blog.

Car-Company-Collapse: The Mother of Invention?

One of the themes that we have worked on over the last several month is the astonishing number of green startups, ingenious cars and vehicles, and innovative approaches to R&D that are happening as a result of the impending demise of the US (or world) big car companies, which seem at least a decade behind in greentech, and possibly more than a decade in understanding car buyers. 

Why are we interested?  The startups discussed below and in preview articles in SmallCapWorld are backed in large part by philanthropic organizations, VC investors, cross-over combinations like Quercus Energy Trust, or by friends & family.  Logic would have it that some of those folks will want to get liquid whenever the famous “IPO window” opens again, and that it is worth keeping an eye on them meantime.

MIT Solar Race Car

It is easily apparent that there are new ideas around, as reported by Chuck Squatriglia on a Wired blog (http://blog.wired.com/cars/2009/02/hot-wheels—mi.html) .  Although it is a one-off and designed and built by students, this 3-wheeler solar race car is capable of 90 mph, and will attempt to prove itself in the tenth World Solar Challenge, a seven-day, 3000-km race in Australia ending on Halloween 2009 (http://www.wsc.org.au/welcome.html).   We also invite you to look again at Vista, CA-based Aptera’s nifty 100-mpg 3-wheeler, which we have written about before (http://www.aptera.com/).

But it doesn’t have to look futuristic in order to be green.  In fact, it doesn’t have to be exotic at all, and you may be able to buy a zero-emission vehicle this spring at Best Buy.  Really.  The Brammo Enertia,  a pure plug-in electric vehicle made by Ashland, OR-based privately held Brammo Inc (http://www.brammo.com/), looks for all the world like a “normal” motorcycle.  It will be sold at 5 selected Best Buy stores on the west coast starting in May — and then potentially at  Best Buy locations around the world.  The Brammo story was reported by AutoBlogGreen (http://www.autobloggreen.com/2009/02/27/brammo-enertia-to-be-sold-at-select-best-buy-locations-in-may)

Enertia Motorcycle, photo courtesy Brammo Inc

Not to be outdone, Santa Cruz, CA-based Zero Motorcycles (http://www.zeromotorcycles.com/) will be hosting a full 24 hours of Electricross (get it? like Motocross) in San Jose on April 4 at the 408MX Motocross Track.  http://www.autobloggreen.com/tag/zero+motorcycles

Zero X Motorcycle, photo courtesy of Zero

The working assumption of most investors and most car companies is that new electric vehicles, which range from amusing to hard-working, will be powered by lithium-ion batteries.  In fact, maintenance to Brammo bikes will be done by The Geek Squad, who were founded to take care of computer networks. 

But at least one company, Anderson, IN-based Bright Automotive, a spinout from egghead think tank, The Rocky Mountain Institute, seems to have a broader view.  We have written about Bright in the past, and invite you to look in our archive, as well as to have a look at http://www.brightautomotive.com/.  Bright is quietly assembling batterypacks of several different types of batteries, including the new advanced lead-acid batteries that include nanocarbon anodes that lengthen life, quicken recharging, and can be made on standard lead-acid manufacturing lines.  Have a look at New Castle, PA-based Axion Power International Inc (EBB: AXPW, http://www.axionpower.com) , clearly the front-runner in that game, with substantial IP on its PbC(tm) batteries.

For lithium-ion US-based innovators, see NYC-based Ener1 Inc (Nasdaq: HEV, http://www.ener1.com) or Watertown, MA-based privately held A123 Systems Inc (http://www.a123systems.com/company).

New Electric Cars from UK, India Push Range and Availability Forward

Could it be that the forward march of the EV crowd is finally going to produce mass-produced cars that will not be oddities on the road?  Reva, the Indian car company that is a partnership of a US-based company and an Indian company (http://www.revaindia.com/), has announced new models that will increase their driving range, as reported in earth2tech this morning (http://earth2tech.com/2009/01/05/reva-to-boost-range-with-lithium-ion-battery/).  They will also be throwing their hat into the Li-ion ring, having been a firmly lead-acid car maker in the past.

UPDATE/2:26PM EST: more information, this time from GreenCarCongress, including fast-recharge station: http://www.greencarcongress.com/2009/01/reva-introduces.html

Reva ElectriCity Lead-Acid EV

Simultaneously, UK car makers Lotus and Ginetta announced that they will “go direct” to the market and begin selling their own EV models (http://www.reghardware.co.uk/2009/01/05/lotus_ginetta_leccy_plans/).  Lotus has been OEMing chassis models for the high-profile Tesla roadster and the Dodge EV from Chrysler (http://www.lotuscars.com/).  Lotus Chairman Michael Kimberley told the FT last week that Lotus will be debuting an EV that “will become one of the showcases for the world of what you can do with electric vehicle technology.”   

Lotus Evora -- Does the name presage an EV?

The Ginetta (http://www.ginettacars.com/) entry will have a range of 250 miles on a full charge, and will be capable of 120mph, a fit competitor for the sexy-looking Tesla.   The Ginetta G50EV drive train will use “state of the art brushless DC motor technology” designed and manufactured by Zytek Engineering (http://www.zytekgroup.co.uk/).

Ginetta G50 -- with a range of 250 miles on a charge

The British entries are high-end, fast-lane cars, and the Reva is anything but that, but between the two of them, they almost book-end the market.  It makes the desperate situation at Th!nk Electric seem less horrific upon reflection.  It is our hope that Reva does not abandon its commitment to lead-acid, which is a less expensive, better-tested and fully recyclable alternative to the more costly and less-tried exotics like Li-ion.  We hope they will look at new technologies like the PbC carbon-based battery line from Axion Power (http://www.axionpower.com) and even the earlier-stage technology carbon-based technology from Firefly (http://www.fireflyenergy.com/), though we understand it may have patent problems with the earlier art of Axion.

Alt Energy Storage Comments from John Petersen

Frequent Seeking Alpha contributor John Petersen, who is a lawyer with Fefer Petersen & Cie (and who lives in Switzerland though he represents energy industry clients worldwide), comments today:

 “My basic premise was that every energy storage decision will boil down to a cost-benefit analysis where the value of the energy delivered to an application must exceed the cost of the original energy inputs plus the fully loaded cost of the energy storage system. My conclusion was that while companies at the performance extremes will enjoy an undue share of the publicity and glory, the companies that offer a cost-effective solution for the average user will book the lion’s share of the future revenues and profits.

http://seekingalpha.com/article/112441-alternative-energy-storage-for-global-warming-agnostics