Electric-Car Battery Maker Ener1 Files For Bankruptcy, But Isn’t Dead

Editor’s Note: EarthTechling, always looking to bring you interesting cleantech reading, is proud to repost this article courtesy of partner Green Car Reports. Author credit goes to Nikki Gordon-Bloomfield, a Green Car Reports contributing writer.

Last week, lithium-ion battery specialists Ener1 made an official filing for Chapter 11 bankruptcy.

Another firm to take advantage of U.S. Department of Energy loans — an estimated $55 million to date — Ener1’s bankruptcy has already become the latest pawn in the (mainly Republican) battle against the current administration’s bailout policies for green firms.

Think, Norway, Electric Car, Electric Vehicles

image via Think

But the real story of what happened to Ener1 goes beyond political posturing and back to the firm’s connections with Norwegian electric automaker Think, maker of the diminutive two-seat Think City.

When Ener1 became the official supplier of battery packs to Think Global, Think had already been bankrupt twice before.

Ener1 wasn’t first choice as battery supplier to the 20-year-old company either.  In fact, by the time Ener1 had been named an official supplier, Think had already worked on failed battery deals with Tesla Motors and A123 systems, not to mention a low-volume production run using highly temperamental Zebra molten sodium aluminum chloride batteries.

Shortly after Ener1 became official battery supplier for the Think, it was hit with the news that Think was in dire financial crisis. To help out and secure its own future, Ener1 helped provide the majority of funds in a $5.69 million bridge loan to Think.

For better or worse, Ener1 became an investor in a firm whose business it relied on to survive, a symbiotic relationship which would eventually prove catastrophic.

Over the next few years, the amount of investment given to Think by Ener1 increased, with the hope that both firms would be able to help bring an affordable electric car to market.

Had the Think City launched in 2009, that might have been possible.

But when mainstream automakers like Nissan and Chevrolet launched cars like the 2011 Nissan Leaf and 2011 Chevrolet Volt just before the Think City really started to sell, things went from bad to worse.

Think’s new rivals were bigger, could go faster, had better features, and were made by automakers consumers already knew.

By the time Think entered its third bankruptcy in June last year, Ener1 owned 48 percent of the firm, and was forced to write off over $73 million in losses and accounts receivable against Think.

At that point, Ener1’s house of cards started to fall down, with its shares entering free-fall as the stock market reacted to its Think-inherited debt.

In November, the firm was officially delisted from the Nasdaq stock exchange after it failed to file required financial reports in a timely manner. After that point, it continued to trade, but only on pink sheets.

Since then, the electric auto industry and analysts have viewed Ener1’s bankruptcy as an almost inescapable certainty.

But unlike Solyndra and some other much-publicized green energy firms, Ener1’s story doesn’t look like it will end just yet.

According to TheEnergyCollective, Ener1’s Chapter 11 paperwork included details of how major creditors of Ener1 are already planning to write-off Ener1’s debts against them in exchange for Ener1 shares.

At that point, trade creditors and employees will be paid, Ener1’s EnerDel facility in Indianapolis will continue to operate, and an additional $81 million of private investment will be given to the company.

Ener1 may have inherited Think’s debt, but it appears it has also inherited its abilities to rise again from the ashes of insolvency.

  • Flyboy3633

    As usual the (assumed) lefty author of this piece couldn’t resist taking a jab at Republicans in the very first sentence.u00a0 But there are plenty of Democrats and independants that are outraged at the irresponsibility of the Obama administration’s stewardship of tax-payer moneys.u00a0 Notice how the author goes on to state that Think had gone bankrupt twice before yet never asks the obvious question “Why the hell did the Obama administration grantu00a0millions in loans to a company that had already proven it can’t function?”u00a0 I guess because that would have made him (or her) appear to be thinking clearly.nnAt the end he states that Ener1 has found 81 million in “private” investment.u00a0 Yeah, right.u00a0 Who would invest large amount of their own cashu00a0into a company that has gone bankrupt three times (now) while so many other “green” ventures are failing left-and-right ?u00a0 Maybe the author should run a follow-up piece on why these “green” ventures are failing so often and where the money is coming from – and going to.u00a0 Then tell us – including the label Democrat this time.

    • Pete

      Exactly. It’s only green companies that go bankrupt. Even Hostess, they were doing great until the DOE gave them all that money and convinced them to embark on the doomed photovoltaic Twinkie project. Meanwhile, I believe it is quite possible that Indiana’s Republican governor, Mitch Daniels, and Republican senator, Richard Lugar, will in the end be vindicated for their enthusiastic support for government subsidies to Ener1/Del. (As an Ener1/Del executive said a couple of years ago: “No single individual has been more important to us than Governor Mitch Daniels, our advocate-in-chief in Washington and on missions abroad.”) The Bush Administration–which gave Ener1/Del more than $10 million, will, too, in the end be proven to be correct in supporting the company’s work. So I have to agree with you that the attacks on Republicans for their support for “green” ventures is uncalled for.

      • Flyboy3633

        Smart-assed replies do not make a rebutal. Tongue-in-cheek writing has to be done correctly or the reader doesn’t understand your position.u00a0 Without a clear position your writing serves no purpose.u00a0 nnCompanies go bankrupt all the time.u00a0 But we’re not talking about mere companies on this thread.u00a0 We’re talking about companies that received tens or hundreds of millions of taxpayer dollars then foreseeably, belly up.u00a0 nnNow what would you expect an Ener1 executive to say ?u00a0 Of course he’s going to thank Daniels for helping them get their captial.u00a0 Daniels could have blocked it, but it actually is his job to secure federal funding to expand industry in his state isn’t it ?u00a0 So he doesn’t need any vindication. u00a0You can’t blame Ener1 or Daniels for asking for the money.u00a0 Blame Congress.u00a0 It’s their collective job to control the money going to the states and the fed (and foreign countries).u00a0 And what party has controlled the Senate since 2006 ?u00a0 Of course they gave awayu00a0the ability to control this type of spendingu00a0in 2009 when they voted for Obama’s Stimulus Plan.u00a0 Now Obama can spend that 787 billion anyway he pleases with no approval from Congress.nnContrarians love to point out that Ener1 received funding under Bush.u00a0 So let’s say Bush granted a paltry (by today’s twisted standards) 10 million to Ener1.u00a0 Nearly all environmentalists would say that was a good thing.u00a0 But after gobbling that cash up and still running in the red why would the Obama adminstration throw them another 118 million in 2010 (as part of the 2009 stimulus) ?u00a0 If you’re pointing a finger at Bush for 10 million you have to point all ten (and 1.8 toes) at Obama (with the same vehemence please).u00a0 And Obama had the foresight of history that Bush did not !nnBecause GM’s Volt requires Ener1’s battery to function you can be certain that Ener1 will receive the “too important to fail” status and any amount of cash will be thrown at them to prevent yet another of Obama’s centerpiece “green” companies from failing.nnNow add to that Solyndra (535 million) and Beacon (43 million) and I see a pattern here.u00a0 Who knows how many smaller “green” companies have bellied up, but don’t make the news because they’re smaller (or better concealed).u00a0 How many continue to run in the red but stillu00a0survive on due to a fiscal I.V from the feds ?nnIt makes me sick…