Updated with comment from Ener1: Norway-based electric vehicle developer Think has narrowed the “short list” of locations for its first North American manufacturing facility to at least three states, including Indiana, Michigan and Oregon. A Reuters article published late Tuesday reported that Indiana has a lock on the facility, citing an interview with the CEO of Ener1 Charles Gassenheimer. But the Ener1 chief — whose company holds a 31 percent stake in Think as well as a contract to supply lithium-ion batteries for the upcoming Think City electric vehicle — may have jumped the gun, as Inside Indiana Business reported and Think confirmed with us this morning.
Think spokesperson Brendan Prebo tells us that Indiana, Michigan and Oregon remain on the “short list” for the facility — the latest game-piece in an ongoing competition among states to woo advanced battery and electric vehicle factories, which raise the prospect of not only bringing manufacturing jobs and future business to a state’s economy, but also government investment. Prebo confirmed with us in an email that, “Indiana is one of the states on our short list for manufacturing sites and has been for quite some time,” but the company has not yet finalized a decision about the factory location. While Prebo did not disclose how many states are still under consideration, he said, “An earlier report that a decision had been reached was premature.”
Gassenheimer told Reuters that Think has entered the “initial stages” of a request for loans under a government program designed to encourage production of fuel-efficient vehicles. One program that matches that description is the Department of Energy’s Advanced Technology Vehicles Manufacturing, or ATVM, loan program. Earlier this year, Think announced plans for its North American joint venture (with the firms Kleiner Perkins and RockPort Capital Partners) to seek low interest loans under that program.
Ener1 also requested loans earlier this year under the ATVM program. Gassenheimer told us in March that while the company was not banking on the loans, “I cannot envision a scenario where government is not going to be part of our future.” In an earnings call last week, he told shareholders he expects to announce federal loans “before the end of the year,” adding to the $118.5 million in federal grants awarded this summer.
Indiana would be a logical pick for Think, given that Ener1 subsidiary EnerDel will be manufacturing batteries for Think in Hoosier state (Think also plans to offer customers a sodium battery option from another supplier, based in Switzerland). At the same time, however, the automaker plans to source some batteries from A123Systems, which will be producing vehicle batteries in Michigan (one of eight states Think was considering earlier this year).
As Bob Kanode, CEO of battery maker Valence Technologies explained earlier this year, vehicle battery packs are heavy and long-distance shipping costs add up. If Think is going to hit in the ballpark of its target to produce a sub-$25,000 electric vehicle, those costs will have to be top of mind.
Beyond the factors that Think must weigh surrounding the site itself — including proximity to suppliers and target markets — keeping its options open for as long as possible may also serve the company’s financial interests. States compete for these projects by putting together incentive packages, and Think could get a better deal with Indiana if it appears ready to take an offer from Michigan or Oregon.
Readiness to walk out may have helped electric car startup Tesla Motors secure a fat incentive package from California. The San Carlos, Calif.-based company initially said it would build an assembly plant for its second-generation vehicle (now known as the Model S) in California. It later announced plans to set up shop in New Mexico, and then it was back to California again after the Golden State put together juicier incentives, including a tax break expected to save the company nearly $29 million.
Think may not have the luxury to switch back and forth between states or prolong incentive negotiations. The company announced plans less than a year ago to introduce the Think City two-seater (already available in Europe) to the U.S. market in 2010. That’s already a delay from the 2009 launch announced last spring when Think took the step last April of forming its 50-50 North American joint venture to sell electric cars stateside.
Update: An Ener1 spokesperson told us in an email that Think has not made a final decision regarding when or where it will locate U.S. production facilities. Emphasizing that all future announcements about the project site will come directly from Think, the spokesperson wrote: “Charles was a little too far ahead of the curve yesterday.”