Watch CBSN Live

EnerDel EV Battery Company Lands $118.5 Million DOE Grant

There will be batteries. EnerDel an Indianapolis-based lithium-ion battery with several development and supply contracts in its pocket--with Volvo, Nissan, Fisker and Think Global (as well as the Japanese postal service, which is converting delivery vehicles to EVs)--learned last week that it will be the recipient of $118.5 million in federal Department of Energy stimulus grants. The program awarded $2.4 billion to 48 companies.

"We're thrilled, obviously," said Charles Gassenheimer, CEO of EnerDel's parent company, Ener1, in a call from Europe, "and happy to see the money start to move." Gassenheimer said the money would be used to double the company's lithium-ion battery production capacity in Indiana, from 30,000 to 60,000 packs annually. The grant money must be spent by the end of 2011, and Gassenheimer is convinced that by that time its increased capacity will be met with demand from customers. "We think we'll have the contracts," he said. "We have the visibility toward those numbers today with just current customer list, and we're convinced that demand will outstrip supply for some time to come."

Lithium-ion battery production is an uncertain business today, but its future does seem assured. In the second quarter, Ener1 reported a net loss of $12 million, with revenues of $7.5 million (compared to just $437,000 in the same period of 2008). The company has $6 million in cash.

EnerDel has also applied for a long-term, low-interest loan under the DOE's larger $25 billion Advanced Technology Vehicle Manufacturing program. Gassenheimer said the DOE grant amount was "everything we asked for," and he's very optimistic that EnerDel will receive a loan also. "We're excited about our positioning," he said, "and we actually think the loans offer better returns on invested capital than do the grants. The grants are an upfront 50-50 cost share. The loans need to be repaid, obviously, but over time and with cash from operations."

Some jilted DOE applicants have said that politics and related geographic factors played a part in loan funding--more Detroit companies were funded than California ones, for example. "I doubt that politics were a deciding factor," Gassenheimer said. "The DOE said it was looking for shovel-ready projects, and it had tough decisions to make. Some of the start-up companies are untested, and some have never built auto batteries before. So are they ready to make the leap into that market? That's the big question."

Ener1 recently signed a research and development agreement with Nissan to develop a next-generation electrolyte for lithium-ion batteries that could be marketed to the rest of the industry.

View CBS News In
CBS News App Open
Chrome Safari Continue