Ener1 Sees "A Lot to Prove in 2010," Banking on Loan

The “best year yet” — that’s how Ener1 (s HEV) CEO Charles Gasseinheimer described how his company fared in 2009 during a call with shareholders this afternoon following the release of Ener1’s latest financial results. Competitor A123Systems (s AONE) offered a similar take on its 2009 earnings earlier this week. But like A123, Ener1 (which also works on fuel cells and nanotech) still faces a tough slog to build a profitable, large-scale battery making business. As Gassenheimer put it, “We’ve got a lot to prove in 2010,” as the company builds out production capacity, starts deploying batteries from its EnerDel subsidiary in vehicles, and works to secure additional government funding and customers.

Today Ener1, which has seen operating losses since 1997 does not expect to be profitable for at least “the next several years,” reported a net loss of $51.5 million for the 2009 calendar year, about the same as its losses in 2008 with $51.2 million. Revenues for the last three months of the year hit $11 million, higher than analysts’ expectation of about $10 million for the quarter.

Based in Indiana, Ener1 holds a 31 percent stake in electric vehicle maker Think, which has made EnerDel the exclusive battery supplier for its electric two-seater in the U.S., slated to launch later this year. But both Think and Ener1, which scored a $118.5 million award under the Department of Energy’s highly competitive battery grant program last year, are hoping for government funding to help make that happen.

Ener1 executives said today that they expect to land a $250 million to $300 million Department of Energy loan within the next four months. While the company still has one more “round of due diligence to go through” with the agency, Chief Strategy Officer Jeffrey Seidel said today, “The loan amount is settling out,” and the company is “hopeful that we’ll see a loan” around the second quarter of this year.

In addition to the update on the DOE loan process, Ener1 today announced that it expects to announce deals with two new customers — one based in an Asia and one in Europe — in 2010. Gassenheimer said Ener1 has “already delivered some number of packs” to the Asian company for testing, and “development-style” revenue on the order of around 5-10 battery packs will be “hitting the income statement” this year, with more orders likely to follow in 2011.

In Europe, meanwhile, Ener1 is now in talks with three companies (one is a “huge variability,” said Gassenheimer, suggesting it’s a long shot), and it expects a deal with one of those firms to start contributing revenue next year. By 2012, Ener1 expects these two new customers alone to make up 28 percent of its revenue. Down the road, Gassenheimer said he expects “lifecycle management companies” deploying lithium-ion batteries in secondary markets after their useful life runs out in electric vehicles “could be the largest consumer within a few years.”

Gassenheimer said the stage of the electric vehicle industry remains too early “to say what revenue is going to be,” in 2010. But one thing appears certain — most of it will come from overseas, where the company sees consumer demand for electric vehicles picking up more quickly than in the U.S. “due to higher energy prices, carbon emission legislation and driving patterns.” The company expects the U.S. to drive no more than 10 percent of its revenue in 2010.

Still, asked about the prospect of serious excess production capacity in the U.S. battery market, Gassenheimer said,  “It’s not build it and they will come. The question is timing.” He predicted, “Congress may be asking how they can stimulate demand,” now that stimulus dollars are flowing to support the supply side. “Building capacity here still makes a ton of sense,” said Gassenheimer, “but we’re still in the first inning.” He noted growing interest from the utility sector, grid storage opportunities, and the buildout of charging infrastructure spurred by stimulus awards.