Electric Car Maker Think Files for BankruptcyBy Scott Doggett June 22, 2011
Electric-car maker Think Global filed for bankruptcy today in its home market of Norway after running out of money, Automotive News Europe (ANE) reported, citing a statement by Think's spokesman for Europe, James Andrew. The report follows the early-May announcement by Think's major investor, lithium-ion battery producer Ener1, that it had severed its relationship with the automaker. Ener1 said in a government filing today that Oslo-based Think owed it $35.4 million, and the Manhattan-headquartered Ener1 suggested that Think would be liquidating its assets.
Referring to the $35.4 million owed, Ener1 said in a filing with the U.S. Securities and Exchange Commission that "this amount is subject to change to the extent that we receive any recovery as a result of the liquidation of Think Global; we presently believe that any such recovery, to the extent it occurs at all, is not likely to be significant." Efforts by AutoObserver to reach Think Europe's Andrew and Think North America spokesman Brendan Prebo were unsuccessful.
A court-appointed trustee from Oslo-based commercial law firm Thommessen took control of the company Wednesday afternoon, ANE quoted Andrew as saying. The trustee has responsibility for managing the company's assets, including wholly owned U.S. subsidiary Think North America, which has an EV production plant in Elkhart, Indiana. Although Think North America is a separate entity, it relies on Think Global for funding. Think's sole product, a 3-door highway-capable four-seat BEV called the City, was made exclusively in Finland prior to last December, when it started rolling off the assembly line in Indiana. Construction of the plant was made possible by millions of dollars in federal, state and local loans, grants and/or tax credits.
High-Priced Little BEV
The spartan City BEV carried a manufacturer's suggested retail price before government incentives of $36,495 when it went on sale via Think's Website earlier this year. That's $4,000 more than the nicely equipped four-door, five-passenger Nissan Leaf BEV. The initial contract between Ener1 and Think back in October 2007 called for the company's EnerDel battery manufacturing subsidiary to deliver production prototypes in March 2008 and pre-production parts in July 2008. Once these milestones were met to Think's satisfaction, production orders under the contract were expected to result in Ener1 battery sales of $70 million over the two-year period ending in 2010. Under Thinks growth plan, the total value of the contract was to eventually have exceeded $200 million, which was enough enticement for Ener1 to gradually invest more than $90 million in Think.
But early last month, Ener1 reported in a regulatory filing that its quarterly losses had widened with results weighed down by a $59.4-million impairment charge related to stalled operations of its electric-car-market partner. By then, Think had stopped taking battery shipments from Ener1 as demand for the City car declined. "On May 9, 2011, we surrendered to Think Holdings [Think's parent], for no consideration, all shares of Think Holdings' voting equity held by Ener1...based on our determination that our investment in Think Holdings was impaired and written down to zero," the company said in last month's filing.
In Ener1's 2010 fourth-quarter and year-end conference call with analysts last month, company President Tom Goesch said Ener1 remained pleased to have been the first lithium-ion battery maker in the world to commercially launch mass-produced prismatic battery packs into volume production, which Ener1 did with the City BEV program in 2010. On the business front, however, sales of the Think City vehicle have been intermittent "as Think continues to refine its distribution of vehicles in Europe and the United States. This has resulted in an unfavorable inventory balance of battery packs at Think that will cause us to idle our production for the short-term," Goesch said.
What remained to be seen was the impact Ener1's decision to severe its ties with Think would have on the automaker, which had entered bankruptcy three times during its 20-year history. Today marks its fourth financial collapse, and prospects for a recovery have never seemed bleaker.