Building a market for new technology is never easy, and the one for electric cars has given us ample examples. The latest is coming from charging company, Ecotality, which warned investors Monday that it may file for bankruptcy soon. Ecotality’s shares plummeted 79 percent on the news to close at $0.31 per share on Monday.
The San Francisco company said it’s been struggling to increase sales, bring a new product to market, raise more funds and figure out an overheating problem with some charging equipment already in use, according to its filing with the U.S. Securities and Exchange Commission. It’s working on restructuring the business for a potential sale, but bankruptcy filing is also an option, the company said.
Since it’s been running out of money, it’s also been having a hard time carrying out a federally-funded EV Project to install electric car chargers in major cities across the country. In fact, it received a letter from the U.S. Department of Energy last Thursday that said the government would suspend payments to it. Ecotality originally received approval for $99.8 million in 2009 for the project and won an additional $15 million in 2010.
The EV Project counts Nissan and General Motors as partners and the automakers subsidize the home installation of the charging stations. The charging project met its goal in residential charging in March this year, according to Ecotality. The project also was designed to install chargers at businesses and public spaces and collect data about the effectiveness of its network of residential, commercial and public charging.
Ecotality was among a group of tech companies, from automakers to battery developers, that won government support for creating a market for electric cars in recent years. But growing that market has been fraught with obstacles, and understandably so.
Electric cars require ample fueling station networks and also need longer battery ranges to reduce consumer worries about driving range and ease of fueling. Though electric car prices have been coming down gradually, many models are still not affordable by regular consumers. Another electric car charging company that also received federal funding to roll out a network around the country is Coulomb Technologies.
Companies that thought the electric car market would take off more quickly than it has have suffered setbacks as a result. Some battery companies overbuilt manufacturing capacities and had to try to sell their products in other markets, such as energy storage and consumer electronics. Still others have struggled to fix technical problems that only highlighted the risk of selling a new technology that hasn’t been deployed in the field long enough to show long-term reliability.
A123 Systems, a venture-backed lithium-ion battery company that went public years ago, received government funding and seemed to be on its way to become a successful battery maker. However A123 encountered both problems mentioned above and was sold to Chinese auto giant, Wanxiang.
Tesla Motors has stood out as an example of how government support can make a positive difference. The electric car company paid off its federal loan early and recently beat its quarterly shipment goal. Even then, Tesla executives understand that there’s a lot of work to be done for companies in the electric market before they see a mass adoption of electric cars.
“It’s a long way to go,” said Elon Musk, Tesla’s CEO, during an earnings call last week. “The mainstream audience will need to see a lot of cars on the road for a long time before feeling comfortable about buying it, particularly for new technology like electric cars.”