More bad news: US charging station developer/supplier Ecotality has filed for bankruptcy protection.
This is the company that benefited from a $99.8 million grant from the U.S. Department of Energy, and the The US Energy Department is currently the largest unsecured creditor.
The reason for bankruptcy: “significant liquidity constraints and the difficulty of obtaining long-term financing”, and a the statement when they originally warned of the possibility of bankruptcy: “disappointing sales and a suspension of payments from the federal government”
So I presume they ran out of people prepared to lend them money to re-finance, because of under-performance due to lack of consumer demand – presumably they committed to projections based on wider consumer demand and adoption of EVs.
The credit crunch has led to a more pragmatic banking system, combined with a lack of commitment at a policy level to the EV industry – banks are not willing or able to take risks or long-term speculative investments. The early consumer uptake projections haven’t panned out and many of the investments based on those early projections are not meeting expectations.
But it’s not just the credit crunch; there does seem to have been a little bit of a gold-rush mentality and over-speculation – there are a number of high profile failures now which have been attributed to a lower consumer uptake. Bankruptcies will continue unless there is better policy framework to support EVs, because although there are on-going forecasts that the costs of batteries will drop, that range will be extended and more model choices are being launched each month: it clearly isn’t happening as quickly as it needs to for some of the business models and return forecasts that have been applied.
It’s fairly certain that a network of charge stations would eventually make money, because wide scale adoption of EVs is an inevitability, but the question is “when?”, and another questions is “what changes to technology or standardization will make this the infrastructure obsolete in the mean time?” – that is probably the big question while the policy framework remains insufficient.
Without some commitments from the automotive industry to standardization, and a bit more support from the policy makers; it is a fairly risky investment no matter what the early forecasts for consumer uptake.
According to Reuters: Nissan North America has agreed to provide $1.25 million of financing to keep it operating during the bankruptcy.
No doubt Nissan will be concerned about the impact this will have on sales, not to mention the commitment made to existing EV owners. Small change though.
Origional story here: Ecotality, an electric car charger maker, files for bankruptcy | Reuters
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