President Obama on Thursday plans to swing by Smith Electric Vehicles U.S. Corp., a company working with government backing on electric trucks for commercial fleets. Reportedly the President will use his visit to Smith’s facility near the Kansas City International Airport (en route to a Democratic fundraising event) to tout stimulus grants as a means for boosting private investment and creating jobs.
Smith won a $10 million grant under the DOE’s electric vehicle battery initiative last summer to develop and deploy up to 100 electric vehicles in Kansas City and Michigan, and scooped up another $22 million under the same program earlier this year. The UK’s Tanfield Group owns a 49 percent stake in the company, licensing it to build, sell and service its electric vehicles in North America and collecting a 1 percent-per-vehicle royalty fee.
In March, Smith CEO Bryan Hansel told us the company was planning on an IPO “sooner rather than later” and that Smith was on track to become, “a sustainable business without subsidies” by January 2011.
Obama’s scheduled stop at Smith Electric Vehicles tomorrow comes on the heels of his visit to another DOE-backed greentech company, thin film solar startup Solyndra. In late May the President delivered a speech at Solyndra’s Fremont, Calif. facility, holding up the company as an example of a successful investment from the stimulus package.
At this point, however, it’s too early to tell whether Solyndra or Smith Electric Vehicles will succeed or not (see: Was the DOE Loan Guarantee for Solyndra a Mistake?). Smith has hit some key milestones (notably, starting production in Kansas City) and delivered vehicles to corporate customers including Coca-Cola, PG&E, AT&T and Kansas City Power & Light.
But the company has changed course since the DOE first awarded the initial $10 million last summer. In October, less than a year after Ford Motor and Smith announced plans to collaborate on an electric version of the Detroit automaker’s Transit Connect van for the U.S. market, the two companies called it quits on the deal.
Smith has also made a bid to split off from Tanfield, announcing a conditional offer in March to buy out the parent company in a deal that Hansel told us at the time he expected to close by July (we’ve followed up with Smith for an update). In addition to buying Tanfield’s 49 percent stake, Smith would also acquire Tanfield’s British electric vehicle unit (Smith Electric Vehicles UK), if the deal goes through.
The original offer, according to the Financial Times, included £37 million ($56.13 million) in cash, plus a £33.3 million ($50.52 million) stake in the new, combined Smith Electric Vehicles if it manages to go public before September 2015.
Those plans may change, of course. It wasn’t too long ago that DOE darling Solyndra was also eying an IPO. But last month, citing “going uncertainties in the public capital markets,” the company said it was ditching its $300 million public offering plan and opting instead to raise $175 million through existing investors.
In contrast to Solyndra, whose manufacturing and capital factory costs are among the highest in solar, Smith has outlined a relatively streamlined manufacturing plan. Hansel has compared Smith’s approach to that of Southwest Airlines, which uses a point-to-point flight routing system, as opposed to the more common model of routing flights through one main hub with many spokes. Rather than setting up one or a few large-scale manufacturing facilities, Smith’s model calls for decentralized production, with smaller-scale facilities serving each market.
Will Smith’s IPO actually happen? We’ll have to wait and see. But the emergence of a sustainable electric vehicle business nourished into life through stimulus funds would sure be an accomplishment for the President to tout.
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