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GM Ditches Saab, Leaving Boston-Power's EV Ambitions With A New Hurdle

General Motors (s GM) announced plans this morning to shut down its struggling Saab brand, after talks with the last remaining bidder fell through just two weeks ahead of the January 1 deadline for a sale. Today’s news comes on the heels of laptop battery maker Boston-Power’s announcement that it had joined with Saab and several partners in Sweden for the first demonstration of its vehicle batteries. Now the road ahead for that project — and Boston-Power’s efforts to break into the auto market — looks uncertain.

Boston-Power, founded in 2005, supplies upgrade batteries for Hewlett-Packard (s HPQ) laptops. But nearly a year ago CEO Christina Lampe-Onnerud told us the company was working on a battery for plug-in vehicles. In May, the startup unveiled a battery for plug-in vehicles and said it was in discussions with range of potential transportation customers. But Boston-Power’s involvement in the 100-vehicle demonstration project with Saab this week was the first real evidence it had made headway with an automotive customer.

This morning we contacted Boston-Power to ask about plans for finding a new auto partner, and also reached out to GM and Saab inquiring about plans for involvement with the Swedish EV project, in which the Swedish Energy Agency planned to invest 86 million SEK (about $12 million). “That I don’t know,” a GM spokesperson told us. We’re still waiting to hear back from Boston-Power and Saab.

But the shutdown of Saab illustrates how the shakeup of the world’s largest automakers continues to create barriers for startups hoping to supply the upcoming generation of plug-in vehicles with battery technology. As the number of available dance partners dwindles — with legacy battery companies snapping up contracts for some of the earliest plug-in models, such as the Chevy Volt and Nissan LEAF — startups have to compete for scrappier deals. In today’s environment, startups that hammer out an agreement may have no guarantee the partner will be around to see the project through to completion.

Massachusetts-based A123Systems (s AONE), which went public this fall, managed to snag the supply contract for Chrysler’s lineup of electric vehicles. But while A123’s deal with Chrysler marks an exception to the rule of legacy battery makers dominating the competition for supply agreements with car companies, it’s far from the meatiest project on the market: Chrysler revealed plans last month to scrap its ENVI electric vehicle division and slash electric car production targets to just 60,ooo units by 2014, or 2 percent of Chrysler sales, down from the previously announced goal of 500,000 electric vehicles.

When Boston-Power and Saab came together for the Swedish EV project this month, it was already apparent that the automaker stood on shaky ground. Selling only 93,000 vehicles globally last year, Saab filed for bankruptcy in Sweden in February. And as the New York Times notes today, GM’s announcement that it will wind down the brand represents “the third time in less than two months that a sale of a G.M. brand has been called off, reflecting the difficulty of selling underperforming divisions in the midst of a global sales slump.”

According to a statement from GM Europe President Nick Reilly in today’s release, “In order to maintain operations, Saab needed a quick resolution.” GM and bidder Spyker concluded, however, that due diligence would require more time. “This is not a bankruptcy or forced liquidation process. Consequently, we expect Saab to satisfy debts including supplier payments, and to wind down production and the distribution channel in an orderly manner while looking after our customers,” said Reilly.

GM did find a taker in China for some of Saab’s technology. The country’s fifth-largest car maker — state-backed Beijing Automotive Industry Holding Co. (BAIC) — announced on Monday that it had closed a deal to buy powertrain technology and tooling for Saab’s 9-5 and 9-3 sedans. GM said in its release that it “expects today’s announcement to have no impact” on that agreement.

China could be where Boston-Power finds a taker, too. That would be a page out of A123’s playbook, which yesterday announced a new joint venture with China’s biggest automaker (by volume), SAIC Motor. Analyst Mike Omotoso of J.D. Power and Associates commented in an email this morning, “Saab is or was a small player,” when it comes to batteries, “so this won’t have much of an effect on the overall market. Boston Power can look for other companies to partner with. Or work with BAIC.”

The Chinese automaker told reporters today that it will start integrating Saab’s tech into its vehicles “right away.” BAIC president Gu Lei also said the company is exploring possibilities for “new energy” vehicles with Saab, although it’s unclear whether those discussions will proceed now that GM is shutting down the brand.

6 Responses to “GM Ditches Saab, Leaving Boston-Power's EV Ambitions With A New Hurdle”

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