Retrofitters struggle with funding
Ties to automakers may help but do not guarantee success
Executives from ALTe Powertrain Technologies, an electric vehicle conversion company, gather near a hulking Ford E-350 Econoline delivery van and a Ford F-150 pickup in a business park in suburban Los Angeles.
The vehicles have been converted to plug-in hybrids. ALTe is testing the drivetrain, and CEO John Thomas admits the drivetrain is not right for all weight classes and duty cycles. But he is confident that his company will survive.
"There is a place in the alternative-fuel ecosystem for many different technology solutions," he says.
Cost-conscious fleet operators would seem to be good candidates for electrification. But as high-profile failures such as Bright Automotive -- an aspiring producer of plug-in hybrid delivery vans that went out of business in February -- have shown, converting vehicles for fleet electrification is a risky business.
"It is a very small niche," says Dave Hurst, senior analyst with Pike Research. "There will be opportunities for some companies to carve out a piece of that niche, but it will be tough for some time because there were too many players."
Developing a relationship with a major automaker can be an advantage. ALTe is talking with Ford Motor Co. about becoming a qualified vehicle modifer for the automaker, Thomas says. That status would extend the Ford powertrain warranty to Ford vehicles with ALTe drivetrains. But ALTe is not in full production and needs more "gravitas" before that kind of relationship is possible, Thomas says.
Meanwhile, ALTe, of suburban Detroit, is getting short-term funding from Chinese and Korean investors and is near closing three major long-term funding deals, including one in China, says Thomas, declining to give details.
The company has attracted one significant investor. Simon Ahn, an attorney in Dunwoody, Ga., has put nearly $20 million into ALTe. He says he was impressed with the experienced management and the "seven million lines of code" that make ALTe's drivetrain work. Says Ahn: "I saw ALTe technology as something really valuable. There are going to be down times, but you just have to plow through it."
Other retrofitters also are struggling to get stable customer and financial bases. Via Motors of Orem, Utah, converts full-sized General Motors trucks and vans for fleets. Former GM product development chief Bob Lutz is on its board, and Via has access to GM product electrical coding. But the converted vehicles aren't covered by a GM warranty.
Even connections with automakers are no guarantee of success. Azure Dynamics of suburban Detroit converted Ford Transit Connect vans to EVs. Yet it filed for bankruptcy in March after low revenues, Hurst says.
'Force of will'
Enova Systems Inc., of Torrance, Calif., develops electric and hybrid drivetrains for fleets. The New York Stock Exchange-listed company faces delisting after one of its largest investors liquidated his shares. CEO Michael Staran and COO John Mullins resigned on June 18. Enova's head count is fewer than 30, from a peak of 150 a few years ago.
Enova still has a commitment from Daimler's Freightliner Custom Chassis Corp. for Enova to convert 3,000 vehicles over three years. In a June 18 filing with the U.S. Securities and Exchange Commission, Enova said it has sufficient working capital to continue operations through this year.
Philip Gott, director of long-range planning at IHS Automotive, says fleet operators are often wary of supplier failures that might leave a fleet without service support: "A businessman isn't out there to test new vehicles. He just wants it to do his job; that is much more important than getting the newest technology."
Another retrofitter, AMP Holdings Inc. of Loveland, Ohio, hopes a $7,500 tax credit will make its modified Jeep Grand Cherokee EV SUV and Mercedes ML350 EV crossover attractive to fleet operators.
The EVs qualify for the credit because the conversion is done by AMP before delivery to the customer, says AMP President Steve Burns. Privately funded AMP has survived for five years on $12 million, and Burns says it will continue to do so through "pure force of will."