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Summary:

ECOtality’s latest report to shareholders shows a net loss of more than $29.5 million for 2009, up from $8.1 million in 2008 (a change attributed largely to the expense of pursuing stimulus funds), and reveals a company backing away from hydrogen ambitions.

ECOtality stepped into the limelight last year with nearly $100 million in coveted federal grant money to build out infrastructure for a massive demo of electric vehicles. When it comes to technology for a new generation of greener cars, however, ECOtality has some skin in more than the plug-in game.

The company has also bet heavily on a system (dubbed Hydrality) for generating hydrogen in a reaction chamber, originally with the intent to license it for use in fuel cell vehicles. But according to ECOtality’s latest report to shareholders — which shows a net loss of more than $29.5 million for 2009, up from $8.1 million in 2008 (a change attributed largely to the expense of pursuing stimulus funds) — the company has taken a step back from its hydrogen ambitions and determined that while its Hydrality tech “has a promising future…this future was not as imminent as it was two years ago.”

Of course, you wouldn’t have been hard pressed to find skepticism two years ago about the supposed imminence of hydrogen cars — despite gung-ho support from the Bush administration, California Governor Arnold Schwarzenegger and many automakers, the tech has always seemed a decade or more away from commercial viability. Nonetheless, ECOtality writes today that it has seen “dramatic changes in the hydrogen industry” in the last two years, and notes a gaping void of “interrelated product advancements (i.e. fuel cells).”

With that in mind, ECOtality says it’s now trying to develop the technology for remote power, back-up power systems and large-scale industrial and utility use. Going forward, the company indicates it will have its guard up against the temptations of an industry with “extreme vagaries,” writing in its filing that the “potentially long and expensive road” that lies ahead for “any hydrogen technology” to reach commercial viability and generate profit has forced ECOtality to scale back all hydrogen expenditures.

That’s for the time being, anyway. If the price is right, and the risks offset, ECOtality might consider jumping in again. The company says it may proceed with hydrogen tech development only under a joint-development or licensing deal — or if the Department of Energy comes up with another grant for ECOtality to significantly subsidize the project.

For now, ECOtality has several million reasons (the $100 million from the DOE, plus additional funds from California as well as private investment) to dive headlong into electric vehicle charging. In the process, it could morph from a developer of hydrogen tech whose day in the sun remains persistently on the horizon, as well as a behind-the-scenes provider (through subsidiary eTec) of battery and vehicle performance testing, to a higher-profile provider of charging stations for early adopters of electric cars.

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