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The award of hundreds of millions of dollars in grants and loans for electric vehicles, batteries and charging infrastructure in the last few months has provided a major boost for companies working in the space. That’s true for Scottsdale, Ariz.-based ECOtality (s ETLY), whose subsidiary eTec (with several partners, including Nissan) won a nearly $100 million grant from the Department of Energy in August to deploy 11,210 charging stations — tripling its total number of installations — in five states over the next three years. But the grant didn’t come cheap.
According to ECOtality’s first report of financial information since the grant award, released yesterday afternoon, the company saw revenue drop to $1.9 million during the three months ending September 30, down from $2.9 million in the same period last year — a change that ECOtality attributes largely to “the effect of the slowing economy and the focusing of resources on securing the DOE contract.” Meanwhile, operating expenses for the quarter jumped to $11.4 million, up from just $1.9 million a year earlier — an increase the company attributes primarily to bonuses paid to three executives after eTec snagged the DOE award.
The DOE grant this summer, allocated under the battery funding program created as part of the stimulus package, came toward the end of a somewhat grim period for ECOtality. The company describes some hard hits as a result of the economic downturn in 2008. ECOtality’s plans for growth “did not adequately capture the magnitude nor the speed of the economic down turn and its subsequent impact in even the alternative energy field,” the company writes. “These external forces restricting growth and access to capital simultaneously resulted in our financing options being very limited and expensive.”
For the first three quarters of this year, as in the second half of 2008, ECOtality has missed its growth targets and seen lower-than-expected revenue from manufacturing and sales of consulting services. Still keeping its eye on expansion — and the initial requirements of the DOE project — the company has recently filled its coffers with the DOE grant, $8 million from the California Energy Commission for the stimulus-funded infrastructure project and $15.5 million in equity financing, in addition to a conversion of $9.1 million in corporate bonds to equity. ECOtality also announced in September that it has formed two joint ventures with China’s Shenzhen Goch Investment in order to manufacture, assemble and sell EV charging equipment in China (SGI is slated to contribute $15 million for the effort).
During the next year, ECOtality expects to add “significant numbers” of employees to carry out the stimulus-funded project, although it also plans to outsource some research, development and production activities.
ECOtality and eTec (other subsidiaries have maintained a lower profile) are riding high these days, serving as a poster child of sorts for the Obama Administration’s commitment to electric vehicles (ECOtality CEO Jonathan Read joined the 40-person delegation accompanying Secretary of Commerce Gary Locke for a clean energy roundtable organized as part of President Obama’s visit to the country). We’ll be interested to see how the company evolves over the course of the three-year, government-supported project, and what type of competitor will emerge at the end of the stimulus tunnel.