Posts Tagged ‘credit crisis’


photo: Think

Norwegian electric carmaker Think said Tuesday it has obtained a $5.7 million bridge loan from battery maker Ener1 Group and other investors to allow the company to resume limited production of its City urban runabout.

In December Think idled its assembly line and laid off workers as the global credit crunch took its toll and the company was unable to obtain funding to finance continued production of its electric vehicles.

Think CEO Richard Canny said in a statement Tuesday that the company is continuing negotiations to raise capital but the interim financing from Ener1, which is supplying lithium-ion batteries to Think, will allow the recall of some workers to complete cars from parts on hand.  “We have encouraging engagement with a number of potential new equity investors for our recapitalization process,” said Canny.

The Think financing comes as Ford (F), Toyota (TM), Honda (HMC) and other major automakers unveil prototypes for new electric cars and plug-in hybrids at the Detroit Auto Show.

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photo: Think

Think Global, the innovative Norwegian electric car company, has temporarily halted production of its City urban runabout and laid off half its workforce as it considers a sale to survive the credit crisis, Think CEO Richard Canny told Green Wombat Tuesday.

“Think is in a situation where we can’t grow anymore,” Canny said from Think’s Oslo headquarters, where the management team was still working at midnight. “We have started an emergency shutdown to protect our capital and our brand. We’ll need a new and stronger partner, whether that is a 25% owner or a majority owner or someone who buys the company.”

The Norwegian government said on Tuesday that it would not make an equity investment in the automaker but is considering Think’s request to guarantee up to $29 million in short-term loans. “Even a small participation from the Norwegian government will give investors confidence,” Canny said, noting that the company needs to raise $40 million to continue manufacturing its electric car. “The financial crisis has hit at a very critical stage as we’re ramping up production and when external financing is hard to bring into the company and internal funding is limited.”

He said a rescue package might include aid from from the Norwegian government and an infusion of cash from new investors or strategic partners. “We’re putting a hand out. People who would like to work with us should pick up the phone.”

Ford (F) acquired the startup in 1999 and sold it a few years later. Norwegian solar entrepreneur Jan-Olaf Willums and other investors rescued Think from bankruptcy in 2006, aiming to upend a century-old automotive paradigm by changing the way cars are made, sold and driven to create a sustainable auto industry.

As Green Wombat wrote in a 2007 feature story on Think, “Taking a cue from Dell, the company will sell cars online, built to order. It will forgo showrooms and seed the market through car-sharing services like Zipcar. Every car will be Internet-and Wi-Fi-enabled, becoming, according to Willums, a rolling computer that can communicate wirelessly with its driver, other Think owners, and the power grid. In other words, it’s Web 2.0 on wheels. ‘We want to sell mobility,’ Willums says. ‘We don’t want to sell a thing called the Think.’

The company sells the car but leases the battery so buyers don’t have to fork over cash upfront for an electric vehicle’s single most expensive component – an idea subsequently adopted embraced by everyone from Shai Agassi’s Better Place electric car infrastructure company to General Motors (GM).

The failure of the new Think would be a blow at a time when the auto industry desperately needs to reinvent itself. While Think is a niche player and faces formidible competition as Toyota (TM)  and other big automakers go electric, it has pioneered  the idea of a new automotive infrastructure that includes tech companies and utilities like PG&E (PCG).

Whether Think can survive the global financial crisis remains to be seen, but Willums, who stepped aside as CEO recently but remains on the board, is a prodigious networker with deep contacts in Silicon Valley and elsewhere. In little more than a year he raised around $100 million from an A-list of U.S. and European investors that includes General Electric (GE), Keiner Perkins Caulfield & Byers and Rockport Capital Partners – the latter two marquee venture capital firms formed a joint venture with Think to sell the City in North America. Canny said the U.S. expansion plans are now on hold.

The question now is whether Think’s investors, absent a government bailout, will step up to save the company just as it has started to gain a foothold in the market. In a presentation made Monday, Canny, a Ford veteran, said eight to 10 two-seater City cars a day had been rolling off the company’s assembly line outside Oslo.  Think has a blacklog of 550 orders and 150 cars will be delivered by January.  The company was set to begin selling a 2+2 version of the City in mid-2009. (Think had planned to begin selling its next model, a five-seat crossover car called the Think Ox, in 2011.)

“There are limited possibilities of funding working capital through bank credits without extra guarantees in today’s financial market,” Canny said, noting that the company hopes to resume production in the first quarter of 2009. “Think’s automotive suppliers are severely hit by the overall industry crisis, leading to tougher terms of parts delivery to Think.”

Green Wombat will throw out one potential savior of Think: Google (GOOG). Many aspects of Think’s innovative business model were born at a brainstorming session that the search giant hosted in 2006 for Willums at the Googleplex in Mountain View, Calif. Given that Google.org, the company’s philanthropic arm, has poured tens of millions of dollars in green energy companies and electric car research, an investment in Think would be another way to drive progress toward its goal of a carbon-free economy.

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photo: Todd Woody

CEDAR RAPIDS, Iowa – For the past four years, the global wind industry has grown at a Google-like 30% clip as wind farm developers and turbine makers met demand for the one renewable energy source that has become competitive with fossil fuels. In the United States alone, new wind capacity will have jumped 50% in 2008.

Now the credit crunch is taking its toll – at least when it comes to forecasts for the industry’s prospects in 2009. Over the past week, analysts and industry insiders have ratcheted back growth predictions due to uncertainty over whether developers will be able to secure financing for the ever-bigger wind farms on the drawing boards.

“There is little visibility into the project finance market over the next 18 months,” wrote HSBC analysts Robert Clover, Charanjit Singh and James Magness in a report issued last week. “Thus far, company management in the wind sector continues to say that it is not experiencing a slowdown in growth, although developers say that finance is more expensive than it was. We do not believe that the long-term growth story has been undermined, but expect a period of reduced growth.”

The HSBC analysts predict the industry won’t grow at all next year. Meanwhile, the American Wind Energy Association, a Washington, D.C., trade group, also expects a slowdown in 2009.

“Clearly the market’s perception of growth for the wind industry has declined dramatically, but against a backdrop of virtually no industry data points,” the HSBC analysts acknowledged.

Ah, there’s the rub. Aside from the fear of the future that threatens to paralyze just about every industry, absent a complete collapse of capitalism the wind industry would seem poised to continue its run, albeit at a slower pace. (The nascent Big Solar business, in contrast, finds itself in a more precarious situation.)

In the U.S., state mandates that require utilities to obtain a growing percentage of electricity from renewable sources will drive growth for years into the future. That’s the reason you’re seeing plans for gigawatt-sized wind farms like the 4-gigawatt one T. Boone Pickens is building in Texas. As analysts were souring on the industry’s prospects last week, oil giant BP’s (BP) wind subsidiary finalized a deal with California turbine maker Clipper Windpower to build a five-gigawatt project – the world’s largest, sorry T. Boone – in South Dakota. (Of course, that’s little comfort to investors who have seen wind stocks take big hits in recent weeks. Nor is it good news for two U.S. startups that have filed for IPOs –  First Wind and Noble Environmental.)

The wind developers and turbine makers Green Wombat has talked to in recent weeks for an upcoming Fortune magazine story say the long-term impact of the financial crisis remains unknown at this point. A large pipeline of orders for windmills – Danish turbine king Vestas’ orders spiked 52% from the first quarter to the second, according to HSBC – suggests that growth will continue unless wind farm developers start canceling projects – something that hasn’t happened to date.

The wombat happened to be at Clipper’s Cedar Rapids, Iowa, turbine factory on Tuesday and put the question to Bob Gates, the Carpinteria, Calif.-based company’s vice president of operations. Clipper is only one of two U.S. turbine makers, the other being General Electric (GE). (GE acquired its turbine operations from a bankrupt Enron, which itself had bought the business in 1997 from Clipper’s founder.)

“I think growth will be flat next year and that may continue to 2010 and then go back up,” said Gates as workers assembed gigantic drive trains for Clipper’s 2.5-megawatt Liberty turbine. “You have to put in your order for some components a year in advance, so if demand drops in 2009 you’ll have fewer turbines to bring to market in 2010.”

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