As companies across the nascent electric vehicle market seek Chinese allies to gain a foothold in the world’s largest auto market, Indiana-based Ener1 has found itself a new dance partner. Ener1, whose subsidiary EnerDel makes lithium-ion batteries for hybrid and electric vehicles, signed an agreement on Thursday to form a joint venture with the electric vehicle division of Wanxiang, one of the largest auto parts suppliers in China.
If all goes according to plan, the new joint venture will start producing battery systems this year for Wanxiang’s backlog of 2,000 powertrain and battery pack system orders for cars, buses and commercial utility vehicles. According to Ener1, the partners also intend to pursue “new customers and new geographies.” In China, Wanxiang currently supplies parts to SAIC, Haima and Yutong, among other firms, and it holds the second-largest stake in Guangzhou Automobile.
Under the letter of intent signed by Ener1 and Wanxiang executives today, Wanxiang will fund an ongoing expansion of its manufacturing facility in Hangzhou. The plant now has capacity for some 15,000 electric vehicle packs or around 390 megawatt-hours, and by the end of this year it’s slated to scale up to capacity for 20,000 packs or 520 megawatt-hours. As part of the deal announced on Thursday, Ener1 says it expects the Hangzhou facility to produce up to 40,000 packs (around 1.04 gigawatt-hours of capacity) by the end of 2011.
Ener1 chief executive Charles Gassenheimer told us in an interview last month that the company hopes to announce two original equipment manufacturing deals this year, including one in Europe and one in Asia (check out the video here — he starts talking about China as the key to driving down battery costs around 13:50). With a little luck, he said, Ener1 will have one of the world’s largest revenue streams associated with lithium-ion batteries and electric vehicles in the coming years, with China representing “one of the more important end markets for electric cars” and a “huge potential consumer market.”
Ener1, which has seen operating losses since 1997, said in a call with shareholders in March that it does not expect to be profitable for at least “the next several years.” The company 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. Ener1 executives have said they’re anticipating a low-interest loan award from the Department of Energy will come through around the second quarter of this year (Ener1 has requested between $275 million and $300 million) to help purchase battery production equipment for expanded capacity at manufacturing facilities in Indiana.
Gassenheimer said in March that 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 (which holds an approximately 32 percent stake in electric car maker Think and has an exclusive deal to supply batteries for any Think City vehicles sold in the U.S. through 2012) expects the U.S. to drive no more than 10 percent of its revenue in 2010.
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Image courtesy of Ener1