Boston-Power Raises $60 Million, Seeks Stimulus Money In China

June 24, 2010

Boston-Power said Friday it raised another $60 million in venture funding as it closes in on stimulus money from China and its first Chinese factory.

The new capital brings financing for the lithium-ion battery maker to $185 million, making it one of the most richly financed start-ups in the industry. The high cost of battery factories makes large bank accounts a necessity.

The Westborough, MA, company said the money should help it win stimulus funding from the Chinese government. CEO Christina Lampe-Onnerud declined to predict how much or provide details on the negotiations. But she said talks with several authorities in the country are continuing and an arrangement is expected in three to four months.

Boston-Power says it expects to announce new electric vehicle deals this year. The company is already working to develop an EV patterned after the Saab 9-3.

A deal will require Boston-Power to build a factory in China, which reportedly will be near Shanghai. Such a deal would represent a major step for a company that was turned down for $100 million in federal stimulus money last August in a bid  to build a U.S. factory.

Separately on Friday, Boston-Power said it is close to announcing deals with additional vehicle manufacturers and utility customers. The announcements are expected later this year.

The company’s first contract, a deal with Saab, was unveiled in December. Lampe-Onnerud said in an interview that the development of an electric car patterned after the Saab 9-3 is on track. The first prototype is to be on the road this summer at Saab’s Trollhattan headquarters in Sweden. More will follow in 2011. The program has production models scheduled for release but has not disclosed the date, she said.

Despite the progress, Boston-Power has no shortage of well-funded competitors. Battery maker A123, which went public in a $378 million IPO in September, raised $266 million prior to the offering and added another $249 million last year with an Energy Department grant.

EnerDel received $118.5 million of government funds, and Warren Buffett put $230 million of his money in Chinese battery maker BYD.

Boston-Power said it would use its new money to expand manufacturing in Taiwan. The company’s plant, owned by GP Batteries, needs scale to supply laptop batteries to Hewlett-Packard and Asus, which Boston-Power added as a customer earlier this month.

The company also will add engineers and sales staff at its Westborough, MA, headquarters and elsewhere.

The five-year-old start-up differentiates itself from rivals by making a lithium-cobalt battery with the same chemistry commonly used in notebooks and by the Tesla Roadster. The technology is modular, meaning that numerous small cells are packed into a single casing, as with laptops. The Saab prototype now under development will have 2,000 small cells clustered together from Boston-Power’s new Swing battery line.

The advantage with lithium cobalt is power and long life – perhaps 1,000 charge cycles compared with 300 or so with more conventional lithium-ion technologies. The downside is the greater chance of a meltdown and short circuit. Alternative chemistries – lithium manganese and lithium phosphates – don’t catch fire, but also don’t have as much power.

Boston-Power says that despite the competition, revenue growth is “very fast.” It declines to offer figures, but says it employs 110 people in Massachusetts, 50 in China and 350 in Taiwan.

“I believe we have the chance to be one of the significant players” in the industry, says Lampe-Onerud. “I think (the funding) will be a very serious signal for big time growth.”

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Posted by Mark Boslet

Better Place Moves Ahead In China; GE Prepares Charging Station Rollout

June 16, 2010

Clean-tech venture capital is hard to come by, and the smart grid still moves at a glacial pace.

But General Electric is making good on its thrust into charging stations, and Better Place is revving up its efforts in China.

These were the key takeaways from Tuesday evening’s Cleantech Enterpreneurs: Think Global, Think EU event in Palo Alto.

Better Place has had more success in China over the past 90 days than anywhere else in the world, say Communications Vice President Joe Paluska

The session’s overall message was clear: electric cars are hot, but capital-intensive projects are not. And corporations steadily show interest in green technologies even if they not quite sure when the payback will come.

Here is what was said:

*General Electric said it will unveil a suite of electric car charging station products in several weeks. The company has a modular approach to product design, letting customers buy just what they need. The package will include both hardware and software, and a complete set-up will sell for about $2,500.

The company announced in February a partnership with Ohio-based Juice and promised the first joint offerings would be available by the end of June under the Plug Smart name. Watch out Coulomb Technologies, the giant has arrived.

Smart grid deployment around the world is slower than expected, says GE government relations specialist Kevin Decker

*Better Place expects to kick off a battery swapping pilot project in China, perhaps later this year. The company anticipates China will step up its commitment to electric cars in the same time frame adding new cities to the more than dozen already committed to promoting electric cars.

“We’ve had more success in China in the past 90 days than we’ve had in 2½ years” elsewhere, said Joe Paluska, vice president of communications.

In April, the company took a first step into the Chinese market by partnering with the automaker Chery Automobile to develop electric-car prototypes with switchable batteries. The company said at the time it hoped to secure a pilot project.

*Despite the excitement over electric cars, the deployment of the smart grid around the world is slower than expected given the billions of dollars being spent, said Kevin Decker, U.S. engagement leader in GE’s government-relations arm.

“The smart grid is going to be big,” he said. “It’s not big yet.”

*Venture capitalists continue to be cautious with cash and start-ups find it hard to get funding in Silicon Valley, said Chief Operating Officer and founder of Calisolar, Kamel Ounadjela.

“I would not be able to raise money today with the same story,” said Ounadjela. The company raised more than $170 million since it was formed in 2006.

*However, corporations are investing. Sheeraz Haji, president of research firm Cleantech Group, said investments were up 180 percent from the fourth to the first quarters, with several billion dollars committed. Companies such as Boeing and Raytheon are participating.

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Posted by Mark Boslet

Tesla’s Leap Of Faith: IPO To Launch June 29

June 15, 2010

I don’t get it.

Tesla Motors makes the highest performing electric car on the road today. But it is spilling red ink and the prospects of a reversal are many years away.

Now it has raised the amount of money it anticipates from its IPO to $178 million, well above the original target of $100 million. The company will need a patient group of stockholders.

Battery packs for Tesla's Roadster electric sports car. Can the company turn its red ink to black in next five years?

The Palo Alto carmaker announced Tuesday it will sell 11.1 million shares to the public on June 29 for a price of between $14 and $16 a share. The offering will attract proceeds of $155 million to $178 million.

With underwriters such as Goldman Sachs, Morgan Stanley, J.P. Morgan and Deutsche Bank Securities, one would imagine the temperature of prospective stockholders has been taken. That temperature must be relatively hot considering the 78% increase in the size of the initial public offering.

But for these buyers, the bet on Tesla is anything but a sure thing. The company sold only 1,063 of its $109,000 Roadsters through March and plans to discontinue production in 2011. The car is a technical dynamo, accelerating to 60 in 3.7 seconds and traveling 236 miles between charges.

But the halt in production will leave Tesla without a vehicle until its “every-man’s” car, the Model S sedan, launches in the 2012. But even this people’s car will be geared toward buyers with real money in their pockets, limiting its market appeal. It will start at $49,900, after subtracting the $7,500 federal alternative vehicle tax credit that may or may not remain in place – well more than the $33,000 Nissan Leaf and the expected $38,000 Chevy Volt.

For some shareholders, the real bet on Tesla may be a five-year or more gamble that looks beyond the Model S. In May, the company said it will develop a third-generation electric car with a lower price than the Model S and higher volumes. The model will be built at the Fremont auto plant the company plans to buy from Toyota, but won’t be on the showroom floor for a “few years” after the introduction of the Model S. That suggests it is five years away.

Until then, company finances are a real question mark. Tesla, since its inception, has recorded revenue of $147.6 million and an accumulated loss of $290.2 million. That amounts to red ink of $273,000 a car.

In fairness, the accumulated loss includes start-up and development costs that won’t need to be repeated. So for sake of argument, assume Tesla sold half its Roadsters in 2009 (the car has been on the market for about two years and 2009 is half the period). With losses of $55.7 million in 2009, the deficit per car falls to $105,000.

So how much further will it fall with the Model S? That is a key question for investors. The company intends to make up to 20,000 Model S sedans a year. That will generate revenue of about $1 billion. If costs were to fall to $50,000 a car, the losses would also be $1 billion – breakeven.

Tesla suggests its finances may look more appealing. In a filing on Tuesday with the Securities and Exchange Commission, the company says its goal is to design a business model that can generate profits on a low volume of cars.

As if to prove the point, the company says its capital expenditures, and its research and development spending to design and build the Roadster come to $125 million, or only slightly more than the $116 million in revenue it earned if each car sold for $109,000.

And yet, Tesla hits a cautious note as well. “We believe that we will continue to incur operating and net losses each quarter until at least the time we begin significant deliveries of the Model S,” the company says in its filing.

Then it adds: “We expect the rate at which we will incur losses to increase significantly in future periods” as the company designs the Model S, opens new stores, equip its Fremont plant and expands its sales force.

For many investors, buying in to the IPO will be a leap of faith. It will be interesting to see how deep that faith runs.

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Posted by Mark Boslet

Ford Ahead Of Schedule With Strategy For Low Carbon Cars

June 8, 2010

Ford is relying on its EcoBoost engine and sharp reductions in vehicle bulk to meet its low carbon goals – putting electrification into the back seat for now

The carmaker will report next week that it could surpass its 2020 goal of cutting CO2 emissions from its new U.S. and European cars by 30 percent compared with 2006. The greater confidence will be highlighted in its annual Sustainability Report, which will be released June 15.

Up to now, the Dearborn manufacturer has maintained that it is on track to reach the goal.

Ford's economical EcoBoost engine is one leg of the carbon-reduction stategy. Weight loss is the other.

The greater-than-expected progress is the result of a two-pronged effort to push its economical EcoBoost engine into existing models and take hundreds of pounds out of next-generation designs, says John Viera, director of sustainable business practices.

Ford sent the EcoBoost into production last year and the engine could be available in more than a million vehicles annually by 2013. Its greater fuel efficiency comes from the use of high-pressure fuel injection, which sprays cylinders with a mist of gasoline. Fuel economy gains can be up to 20 percent. Performance improvements allow V6 motors to be used in place of V8s, and 4s instead of 6s.

Ford is accompanying the EcoBoost with more modest steps it calls “1 percent” enhancements. A six-speed transmission might be installed instead of a five-speed, or electric power-assist steering might be used to cut down on resistance.

Major overhauls of production vehicles are done every four to six years, and new designs will see a big focus on weight reduction.The initiative could take 250 to 750 pounds out of cars, major steps for an industry that rejoices at taking 10 pounds from a current model.

Some of the weight reduction will come from the use of different materials, particularly aluminum and high-strength steel. The consequence is that less energy will be needed to power cars, and engines can be downsized. So a 1.7 liter, four-cylinder motor can substitute for a 2.4 liter.

As to greater engine efficiencies from breakthroughs in internal-combustion design, technology gains are difficult to project at this time. “I don’t necessarily see that on the horizon,” says Viera.

Ford claims its 30 percent emissions cuts are necessary to blunt the environment impact of global warming. Cars and trucks contribute 20 percent of the world’s CO2 emissions, and if the danger line is 450 parts per million of CO2 in the atmosphere, as some scientists believe, then the 30-percent target is what the company needs to do its part. The CO2 level is about 380 ppm today.

Vierra says the role of electric cars in climate change will be limited for the immediate future because of their comparatively small volumes. Electric cars and trucks will play a far more important role in the 2030 to 2040 timeframe, when the world will need to move away from fossil fuels for transportation, he says.

It is important to prepare for that shift today.

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Posted by Mark Boslet

Western, Chinese Electric Car Companies Forming Bonds Of Convenience

May 27, 2010

EnerDel joined the parade of U.S. and European electric-vehicle companies striking deals with Chinese competitors, announcing on Thursday a joint venture with Chinese auto parts supplier Wanxiang.

The two companies will jointly manufacture lithium ion batteries with an eye on selling to the explosive Chinese car market, now the world’s largest.

Daimler is driving to China, but so is EnerDel, which announced a joint venture Thursday to manufacture lithium-ion betteries in China.

The deal is the most recent in a string of joint ventures underscoring the attractiveness of the rapidly growing Chinese market and the desire of Chinese companies to gain access to advanced Western technologies. By some measures, Chinese technologies trail those in the West and Japan by as much as a decade.

Among the Western interlopers is Germany’s Daimler AG, which early Thursday launched a $88 million joint venture with Chinese battery maker turned car developer BYD to build an electric car for the Chinese market.

Earlier this week, CODA of Santa Monica said it planned to open a Columbus, Ohio, lithium-ion battery factory. Lio Energy Systems, a joint venture between Coda and Chinese company Lishen Power Battery, will operate the plant.

The sometimes surprising bedfellows highlight the bond now forming between otherwise potential adversaries – largely to take advantage of the manufacturing muscle available from Chinese companies. “Our new joint venture is well positioned to make the most of the vast potential of electric mobility in China,” said Dieter Zetsche, Damiler’s chairman.

EnerDel, the battery-making arm of Ener1, said it expects its joint venture to produce 20,000 battery packs annually by year’s end and 40,000 by the end of 2011. The capacity will greatly expand production at the Indianapolis company, which now makes 20,000 battery packs at a facility in Korea and anticipates an additional 30,000 at a soon-to-open Indianapolis plant. A second Indianapolis facility operates at a comparatively modest level.

But does more than raise the company’s global capacity, according to a spokesperson. It gives EnerDel access to the high priority Chinese market. The company did not say what it will invest in the joint venture.

Wanxiang, China’s largest auto-parts supplier, is the majority stakeholder in domestic carmaker Guangzhou Automobile and has supply relationships with vehicle makers SAIC, Chana, Haima and Yutong – all of which are potential battery customers.

Daimlers says its alliance is designed to combine its expertise in electric cars with BYD’s command of battery technology and drive systems. BYD has 3,000 engineers working in Shanghai, with plans to hire more.

The new vehicle will be marketed under a yet unannounced brand. BYD, which counts Warren Buffett among its backers, already has built two electric cars: the hybrid F3DM and the soon to be released e6.

Coda says it is scouting sites for its plant. It also will apply for a manufacturing loan from the Energy Department. The company’s joint venture produces 20,000 battery packs a year in China, but will close the facility when the Ohio operations begin.

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Posted by Mark Boslet

California City Bemoans Tesla’s Departure (Even Before It Arrived)

May 21, 2010

The painful fallout of Tesla Motors’ decision to locate its new manufacturing plant in Northern California befell the Los Angeles community of Downey.

Tesla will make its Model S sedan in northern California. the southeast Los Angeles region was betrayed, said Downey Councilmember Mario Guerra.

Downey was convinced Tesla would open its first factory inside its municipal borders, delivering 1,200 jobs to the region. It was so convinced that city officials claim to have been hours away from signing a lease with the electric car upstart – after months of negotiating.

Instead at the last minute, Tesla announced an agreement with Toyota on Thursday to reopen the giant NUMMI plant in Fremont and jointly work on developing electric cars. As part of the deal, Toyota will invest $50 million in Tesla of the Silicon Valley town of San Carlos.

The NUMMI plant, officially known as the New United Motor Manufacturing facility, was formerly operated by Toyota and General Motors. Tesla has agreed to buy it. No financial terms were released

The news spells double-cross to Downey. “Today the Southeast Los Angeles County region was betrayed by Tesla,” said Downey Councilmember Mario Guerra. “Mr. (Elon) Musk (Tesla CEO) gave me his word that Tesla would be coming to Downey.”

Instead, in the U.S., money talks. Tesla said it began negotiating with Toyota in this spring.

Tesla plans to manufacture its Model S sedan at the facility, a four-door electric that will start at $49,900.

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Gm Snuggles Up To Google, Shows Off The Electric Volt

May 19, 2010

General Motors snuggled closer to Google on Tuesday by announcing it will use Google Maps to add location-based features to its Chevy Volt mobile app.

The carmaker said that with the release of version 2.0 of the app running on Google’s Android software, the smart-phone application will pinpoint the location of cars, even transmit voice-guided directions.

GM offers test-drives of the Chevy Volt. The verdict: largely favorable, with peppy acceleration and tight handling

GM unveiled the mobile app in January at the Consumer Electronics Show. In its present form, it allows owners of the upcoming Volt electric hybrid to check battery charge levels, unlock doors and start engines.

The joint development with Google is clearly a feather in the cap of GM’s OnStar, which is developing the app. Mobile apps are among the hottest trends in technology, and location-based services make a great deal of sense in cars.

But the real news Tuesday was the Volt itself. GM has been guarding details of the car’s feel and handling, and it cast aside the curtain to offer test-drives to a handful of San Francisco journalists. The verdict: largely favorable.

The Volt is GM’s first foray into the emerging electric car market, and instead of a tiny lightweight two seater, it is a roomy-enough mid-sized vehicle in keeping with the majority of cars on the road today.

It boasts respectable economy, with a 375-pound lithium ion battery from LG Chemicals capable of a 40 miles range. The 16 kWh battery has 220 cells and a GM designed heating and cooling system to preserve performance in cold and hot weather. Both heat and cold weather can rob a battery of its charge.

When it drains, a 1.4-liter, 4-cylinder gasoline powered generator kicks in to provide juice to the electric motor.

The car has a comfortable feel on the road. Its shocks are soft enough to absorb the ride and its steering is tight. Like many cars with high-efficiency electric motors, the vehicle has pep and is responsive.

GM is fond of say, it feels like a car, and it does, with the exception that it is quiet. The pleasure of leaving a parking spot with little to no noise is hard not to appreciate.

GM created uncertainty about the Volt by warning the production model, expected before the end of the year, will differ from the prototypes it is showing off. But Tony Posawatz, vehicle line director, put some of the questions to rest.

“The (exterior) look is pretty much representative of what you’ll see in production,” he said. Some small interior changes could take place.

But Posawatz did not solve the biggest mystery: the price. GM has suggested the car could cost about $30,000 after a $7,500 federal tax credit. But late summer is when the sticker will be finalized, he said. “We’re still working through some details.”

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Posted by Mark Boslet

Recharging Standards Begin To Come To Electric Cars

May 18, 2010

Near the top of concerns Tesla Motors’ co-founder Marc Tarpenning has about the coming wave of electric cars is the non-standard recharging plug.

Imagine pulling into a charging station to discover the plug on your car doesn’t connect to the 240 volt recharging waiting to give you electric juice. Talk about going postal.

Apparently the industry is aware of this potential snafu and is (belatedly) addressing. SAE International, an organization of 128,000 engineers, including some from Ford, said Tuesday it released a new standard for electric cars – its first of five.

The standard will allow utilities and stations to communicate with one another about electric grid load-management requirements and electricity rate. This should allow drivers to recharge their vehicles at low costs during off-peak hours, and helps the utilities reduce grid congestion during peak periods.

The J2836/1 standard is obviously a good first step. Let’s see the others…pronto. The first crop of mainstream electric cars is coming to market in less than six months.

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Posted by Mark Boslet

Grid Storage Boom Looks Many Years Away

May 18, 2010

Grid storage is in its infancy today and is likely to stay that way, contrary to the hopes of an increasing number of venture investors.

Experts claim the demand for methods to storage energy on the electric grid will rise over the next several years, but at a slow pace. Fueling this trend is the build out of solar power plants and wind farms, which produce power at irregular intervals and therefore need to store it for future use, and the introduction of reasonably priced electric cars.

A grid storage flywheel test takes place in Massachusetts. But analysts see only 17 percent growth in grid storage over five years.

So far, few technologies are up to the task. Lithium batteries for too expensive, flywheels untested, hydrogen storage too energy intensive and molten salt thermal too developmental. Among the most promising at present are the more traditional compressed air and pumped water, despite the need for an uphill reservoir or an available underground mine.

Clearly progress will be made on these and other emerging technologies. But when it will arrive is anyone guess.

According to ABI research, the expected boom in grid storage is many years away. Today, electric grids have 128 GW of storage attached to them. That will grow to only 150 GW globally in five years, or about 17 percent over the period – clearly not enough to satisfy the desires of venture capitalists, who frequently call grid storage one of their hottest themes.

So is grid storage setting itself as one of the big disappointments of the new decade? According to ABI Research Director Larry Fisher:” Over the coming decade, as countries across the globe strive to meet their renewable energy targets, they will come to understand the need for energy-oriented storage. However, while such storage will serve to keep power costs low in the long run, each such implementation requires hundreds of millions of dollars to install and test, which will create a near-term rise in end-user electrical rates.”

Think 2020.

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Posted by Mark Boslet

Green Plastics, Water Tech And Management Software Are Hot Among Clean Tech Investors

May 14, 2010

Clean-tech investors appear to be shifting their focus from energy efficiency to water technologies, green plastics and software tools to manage the horde of data expected to flow across the smart grid.

Water is the next carbon, says H-P's Judy Glazer

With the economy on the mend, money again has been seeping into green start-ups. But a shift in focus appears to reflect the limits of a still capital-constrained environment.

VCs appear to be betting on companies that can do more with less. The exception is where technologies have the chance to turn a market on its ear – such as plastics made from carbon and materials other than oil.

This is certainly the case for Gerd Goette, managing partner at Siemens Venture Capital, an organization with 40 different funds and investments in 150 companies.

Goette says he is interested in software and services that connect power generators and customers – systems that turn bills into real-time communications and put supply and demand face to face. Some interesting business models might bypass utilities entirely, he said.

One particular need is for software tools to manage the flood of electric cars expected to enter European, U.S. and Chinese markets in coming years. When millions of cars draw power, the demands on the electric grid will multiply.

Software infrastructure also is a focus for Andrew Williamson, a director at Physic Ventures in San Francisco. Corporations need clean-tech tools for metrics and measurement, he says.

Other areas where he is starting to invest are green plastics and water technologies that could offer big returns by muscling bottled water out off the shelves of retail stores.

“Water is going to be the next carbon,” agrees Judy Glazer, director of global, social and environmental responsibility at Hewlett-Packard. That seems to be the consensus of the environmental community, she notes.

Goette says he is intrigued as well with sensing technology that might monitor plants, equipment and the like.

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