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.

Hybrid Buses May Be Pioneers When We Look Back in a Few Years

2004: The first GM hybrid delivered to Seattle, looking very much like a traditional bus (http://editorial.autos.msn.com/article.aspx?cp-documentid=435202)

The municipal authorities around the United States — bus systems and school systems most obviously — have been way out in front of the breaking wave of interest in greentech, emissions control, carbon footprints.  The general public is mostly still driving internal combustion-driven vehicles, in spite of the rising sales of hybrid electric vehicles like the market-dominant Toyota Prius.

By early 2008 GM was delivering its 100th GM-Allison hybrid, this one to Las Vegas, and Seattle ordered an additional 500 such buses in May 2007. http://www.autobloggreen.com/2008/01/09/las-vegas-to-the-get-the-1000th-gm-allison-hybrid-bus-this-month/.  In October 2007, New York City announced it would acquire 850 hybrid buses for $435 million.

Of course a lot has happened since the first GM-Allison bus was delivered in 2003.  Now Allison is owned by The Carlyle Group, having been sold by GM for $5.6 billion in the good old days when automobiles were still selling and car companies still looked like they had a chance of being viable.   And, of course, GM sucked up a lot of federal stimulus money and still declared bankruptcy, was dropped from the NYSE, and is now a Pink Sheets small-cap (Pink Sheets: GMGMQ,  http://www.gm.com/),  with a market cap of about $528 million as of the close of the market on Friday, and a stock price of $0.78.  A deal was announced to sell the Saturn division to Penske Automotive Group (NYSE:PAG, http://www.penskeautomotive.com/), itself arguably a small cap with a market cap of only $1.3 billion, and a closing stock price of $14.65 vs a 52-week high of $23.58.

But in the meantime, evolution has been a strong force in municipal buses and school buses, with some small players emerging as interesting companies to watch.

Proterra All-Electric Clean Bus in San Jose

The  all-electric clean bus by Golden, CO-based privately held Proterra (http://www.proterraonline.com/)  , with batteries probably from Reno-based Altair Nanotechnologies (Nasdaq: ALTI, http://www.altairnano.com/), presents one vision of the future, built entirely of composites to minimize weight, and streamlined beyond what the bus designers of yesteryear could have imagined.  ALTI shares are still somewhat down-and-out, closing Friday at $0.94 vs a 52-week high of $2.94, and a market cap a hair under $90 million, but average trading of 500,000 shares, which may make it easier to look at as a stock to be interested in.   Autobloggreen article on the Proterra bus: http://www.autobloggreen.com/2009/02/08/proterra-touring-california-with-fast-charging-electric-bus/.

Given Germany’s reputation as a leader in greentech, it is also worth noting that Puchheim, Germany-based Proton Motor Fuel Cell GmBH (http://www.proton-motor.de/ )  has teamed up with Czech partner, Pilsen-based Skoda Electric, and announced last month a bus on a standard chassis with no internal combustion engine at ALL — just a combination of fuel cells, batteries and ultracapacitors.  http://www.proton-motor.de/fileadmin/documents_pm/press_releases/20090508_TripleHybridBusPreview_EN.pdf

Proton-Skoda Pure Electric Fuel-Cell-battery-Ultracapacitor Bus

Torrance, CA-based Enova Systems (Amex: ENA, http://www.enovasystems.com/)  has teamed up with Navistar’s IC Corporation to build a plug-in hybrid diesel that is now operating at the top of the western hemisphere in Alaska’s Denali National Park.  The bus is claimed to use 70% less fuel than a conventional bus. http://gas2.org/2008/07/30/plug-in-hybrid-bus-at-denali-np-uses-up-to-70-less-fuel/

Enova-IC Corp bus for Denali Natl Park

ENA shares have been largely ignored by the market, closing Friday at $0.83, up $0.08 on a very light 24,000 shares.  The year-high was $4.70, and the market cap is a very low $17 million, but it may well be a diamond in the rough.   It is also the go-to company behind the Hybrid Electric School Bus Project, in which it is partnered with Raleigh, NC-based state-sponsored Advanced Energy, which says it has delivered school buses to Austin, Napa CA, and two school districts in NC. http://www.hybridschoolbus.com/.

We should also point out Oak Park, MI-based Azure Dynamics (TSE: AZD and Pink Sheets: AZDDF, http://www.azuredynamics.com/).  AZD announced this year a 5-year pack with Johnson Controls to supply advanced li-ion batteries for its commercial vehicles and buses, including the Altoona.  AZDDF closed Friday at $0.23 and has an average volume of 115,000 shares.  It was formerly listed on AIM, but is no longer.

Azure Dynamics' Altoona CitiBus

As always we have no recommendations on these companies, nor is this an attempt to equably survey the hybrid bus market, which is also being supplied by very large companies that are completely outside our area of interest.  We write about companies that we find newsworthy.