‘Try It, You’ll Like It’ Is Hope of Non-Profit Group Backing Plug-In Electric Vehicles

Much has been made about the relatively weak sales of electric and plug-in hybrid vehicles, particularly the Chevrolet Volt. The Volt received good reviews for its pep, its seamless operation and design when it first debuted in December 2010 (http://www.nytimes.com/2010/12/26/automobiles/autoreviews/26volt.html?pagewanted=all). But then it was priced at $41,000 (before a $7,500 federal tax credit) and initially sold in only six states (California, New York, New Jersey, Texas, Connecticut and Michigan) and Washington, DC. By last March, General Motors announced it would suspend production of the Volt for five weeks because inventory had built up faster than sales.

Many electric car/plug in hybrid advocates have suggested that the real reason car buyers are not choosing these

Chevy Volt photo courtesy about.com

vehicles is that they haven’t driven them. To that end, a nonprofit group called Plug In America has organized National Plug In Day on Sept. 23, a celebration taking place in 60 U.S. cities that allows people to drive these cars. Cars available for driving include the BMW ActiveE, Chevy Volt, Coda, Fisker Karma, Honda Fit EV, Mitsubishi iMiEV, Nissan Leaf, Plug In Prius, Tesla Roadster and Toyota Rav4 EV.

On Sept. 18, Pike Research issued a report tracking factors like age, race, gender and income, among other determinants, that indicate the likelihood of a North American consumer to buy a plug in electric vehicle (PEV). One of the most important indicators is geography and the report concluded that that state with the highest PEV sales for the remainder of this decade will be California. The report, titled “Electric Vehicle Geographic Forecasts,” notes that PEV sales “roughly correspond to population but other factors, including demographics, socioeconomics and public policy have a strong influence as well.” The report including an executive summary is available for free at the Pike Research website.

We last covered a random variety of small caps related to the PEV and hybrid automobile markets, including battery companies, last March.  Here’s a look at what has happened to these stocks in the meantime.

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. Its stock has been on a gradual downturn since it sold for 90 cents in early 2011. It sold for 20 cents last March 13 with a market cap of $45.25 million. ZAAP closed Sept. 19 at $0.13. Its market cap is now $38.7 million.

Waltham, MA-based A123 Systems (Nasdaq: AONE, http://www.a123systems.com/) makes lithium ion batteries based on its proprietary Nanophosphate technology. It stock was a high flier back in the fall of 2009 when it traded for about $26 but those days are long gone. Last March 13 the stock closed at $1.69. AONE closed Sept. 19 at $0.32 cents. and market cap is now $54.4 million.

Austin, TX-based Valence Technology Inc. (Nasdaq: VLNC, http://www.valence.com/) manufacturers energy systems based on another phosphate-based lithium ion technology. Its products are used in a variety of applications in addition to all-electric vehicles, such as wheelchairs, robotics and remote power devices. VLNC stock has come way down in value from $5 in 2008. Last March it traded for 88 cents and its market cap was $150 million. VLNC closed Sept. 19 at $0.019 with a market cap of $3.2 million. It is currently facing a variety of class action shareholder lawsuits.

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, as well as microelectronic products including single board computers and high-density memory and power modules for satellites and spacecraft applications. Last March 13 MXWL stock was trading near the top of its 52-week range at $18.69 with a market cap of $522 million. The stock took a hit when management cut back on its revenue guidance in August. MXWL closed Sept. 19 at $8.54, down 31 cents for the day. Its market cap is now $249 million.

San Carlos, CA-based Tesla Motors (Nasdaq: TSLA, http://www.teslamotors.com/) manufactures the Tesla Roadster and other electric vehicles and electric powertrain  components. Its market cap of $3.3 billion puts it out of our smallcap focus but its stock hit a 52-week high of $36.29 March 12, which put the stock up more than 30 percent in the past five months. By Sept. 19 it had dropped down to $31.05.

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

All-Electric Coda Off and Running, with Bevy of Small Caps in Pursuit

What started out five years ago in an airport hangar in Southern California officially became an all-electric car company this week when the first Coda sedans came off the assembly lines and on to the streets, according to the San Jose Mercury News (http://www.mercurynews.com/ci_20156808?IADID=Search-www.mercurynews.com-www.mercurynews.com).

Privately-held Coda Automotive Inc. is dedicated to creating “cars that do not spoil the Earth, drain the treasury or hurt

Coda sedan photo courtesy of matternetwork.com

the health of our children,” according to a quote in the story attributed to Mac Heller, Coda’s executive chairman.

Coda (www.codaautomotive.com) is headquartered in Santa Monica, assembles the cars in Benecia, CA, a city on the bay east of San Francisco, from parts and a battery system made in China. The story suggests Coda is expected to make about 5,000 cars this year. A typical four-door sells for about $37,500 “but qualifies for a $7,500 federal tax credit,” according to the story. The battery pack, produced by a joint venture of Coda and China-based Lishen Power Battery, provides a range of 125 miles per charge, notes Wikipedia.

According to a 2010 Wheels post in the New York Times, Coda has plans to build a battery plant in Ohio to manufacture lithium ion batteries, pending federal funding (http://wheels.blogs.nytimes.com/2010/05/25/coda-to-build-batteries-in-ohioif-the-feds-help/). Given the difficulties with Solyndra, we don’t know if those plans still stand.

The progress of Coda has to be good news for the far flung world of electric vehicle- and electric energy-related stocks. There are many up and coming names to choose from, particularly if you believe this type of alternative energy vehicle will be an important part of our transporation future. These are all picked randomly, however, so due diligence is required.

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. Its stock has been on a gradual downturn since it sold for 90 cents about a year ago. It closed at 20 cents March 13. Market cap is $45.25 million.

Walthan, MA-based A123 Systems (Nasdaq: AONE, http://www.a123systems.com) makes lithium ion batteries based on its proprietary Nanophosphate technology. It stock was a high flier back in the fall of 2009 when it traded for about $26 but has come down considerably. Its 52-week range is now $8.08-$1.51. At the close of market March 13 the stock was trading for $1.69, up 6 cents on the day. 

Austin, TX-based Valence Technology Inc. (Nasdaq: VLNC, http://www.valence.com) manufacturers energy systems based on another phosphate-based lithium ion technology. Its products are used in a variety of applications in addition to all-electric vehicles, such as wheelchairs, robotics and remote power devices. Back in the summer of 2008 its stock traded for nearly $5 but like some of the other battery makers, it has dropped in value although it continues to trade actively, nearly 350,000 shares a day. Its current 52-week range is $1.67-$.70. VLNC stock closed March 13 at 88 cents, up 1 cent on the day. Market cap is $150 million.

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, as well as microelectronic products including single board computers and high-density memory and power modules for satellites and spacecraft applications. Its stock has been on the upswing since December 2008 when it bottomed at $4.52. Its now trading near the top of its 52-week range of $13.78-$21.49. MXWL closed March 13 at $18.69, up 39 cents. Market cap is $522 million.

San Carlos, CA-based Tesla Motors (Nasdaq: TSLA, http://www.teslamotors.com/) manufactures the Tesla Roadster and other electric vehicles and electric powertrain  components. Its market cap of $3.8 billion actually puts it out of our smallcap focus, but it certainly should be included in even a brief survey of new automotive technologies. Its stock hit a 52-week high of $36.29 March 12, despite several online reports of its huge (50 percent as a percentage of float) short interest.  That puts the stock up more than 30 percent in the past five months. It trades very actively, more than 1 million shares a day.\

Another stock to look for soon is Kansas City, MO-based Smith Electric Vehicles, a company that started in the UK and has developed a respected global brand for all-electric trucks, vans and step vans including the Newton and Edison that are used by many companies including FedEx. Smith filed for an IPO last November, and you can find its prospectus here (http://sec.gov/Archives/edgar/data/1455900/000104746911009328/a2206090zs-1.htm).