Quantum's Leap of Faith With Fisker and Uncle Sam


For Quantum Fuel Systems Technologies Worldwide, (s QTWW), the road to electric car riches will be paved by deals with Fisker Automotive and government funds. That’s the hope, at least, of the company whose powertrain and software control systems lie at the core of Fisker’s upcoming plug-in hybrid Karma.

According to Quantum’s financial report for the fiscal year ending April 30, filed this week with the SEC, Fisker made up 46 percent of Quantum’s total revenue in the 2009 fiscal year, and a whopping 59 percent of its revenue in the 2010 fiscal year. Quanum reports that Fisker has paid it $19 million in cash to date, including $2.2 million, $13.8 million and $4.4 million in the fiscal years 2008-2010, respectively.

Since 1997, Quantum says it has sold around 20,000 systems for alternative fuel vehicles — mostly to General Motors (s GM). But the company is banking on Fisker for “a substantial portion” of revenues in 2011, and any delays in the development or production of Fisker’s planned Karma, or lower-than-expected sales of the model, would spell bad news for Quantum’s operations and finances.

Quantum’s business is made up of a couple segments, including renewable energy (wind and solar farms developed through Quantum’s recently acquired subsidiary Schneider Power) and fuel systems. In the fuel systems segment, Quantum saw its contract revenue plummet 63 percent to $8.2 million in the 2010 fiscal year, compared to $22.3 million the previous year. Why such a big drop? According to Quantum, it’s primarily due to “program delays at Fisker Automotive due to their funding constraints,” which were tied to the lengthy process of gaining access to funds awarded by the Department of Energy on a conditional basis in September 2009.

But now that Fisker has started to draw some of the $528 million in low-interest loans from the DOE, and raised a pile of funds from the private sector, Quantum expects contract revenue (from development work on the drive system for the Fisker Karma) to pick up during the first half of the 2011 fiscal year. By the latter half of next fiscal year (i.e. between November 2010 and April 2011), Quantum plans to begin shipping hybrid drive system components to Fisker.

Knocking on Uncle Sam’s Door

Quantum notes in its filing that certain subsystems of its Q-Drive system, while designed for integration in Fisker’s Karma, “can be scaled and adopted to integrate into” hybrid platforms from other automakers, and the company expects “a certain portion of any future development costs to be funded by customer-sponsored programs or government funding.”

The company believes it has enough capital on tap to cover “existing operations and expenses through at least April 30, 2011,” but it will need to raise new funds in order to complete a planned solar manufacturing facility in Irvine, Calif., develop renewable energy projects and develop a second generation of its hybrid drive propulsion system. Quantum sees a couple routes open for raising these funds: public or private offerings of equity or debt securities, or government grant and loan programs at the state and federal level.

What Happened to ALP?

Another tidbit from Quantum’s filing: Advanced Lithium Power, or ALP, the 6-year-old lithium-ion battery company backed by Fisker and Quantum that was once slated to supply batteries for the Fisker Karma, ceased operations in June 2010. Back in May 2009, Fisker spokesperson Russell Datz told us that the car startup would “continue to work with ALP but we are always on the lookout for new technology, especially with the government poised to finance it.” By January of this year, Fisker had struck a deal with A123 Systems (s AONE) (the recipient of a $249 million DOE grant) for batteries and a $23 million investment.

Images courtesy of Quantum and Fisker

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