The future prospects of companies involved in electric vehicles continue to be greatly influenced by the support (or lack thereof) from the federal government. This week the government handed out another $300 million in funding for alternative fuel programs to Clean Cities initiatives around the country.
Of the 25 Clean Cities initiatives that received funding, 10 involved electric vehicles or vehicle charging stations. These projects will provide much-needed income to companies that produce batteries, vehicles, and charging stations. During this tight economy, even small orders such as these can provide a life line to startup companies looking for capital, as well as boost investor confidence.
Earlier this month the DOE handed out $2.4 billion in grants for electric vehicle-related manufacturing that went to the big 3 auto companies as well as smaller companies including A123 Systems, Ecotality, UQM Technologies, and Smith Electric Vehicles. More than 100 other companies applied for funding but lost out, and at least a few of them are unlikely to survive.
One company that continues to receive strong government support from outside the U.S. is Palo Alto, California’s Better Place. The company’s unique business model is to provide electric vehicles as a service rather than to produce any equipment. Better Place will build a project pilot in Tokyo that will include an automated battery swapping station that can install fresh batteries in the city’s fleet of electric taxis in a matter of minutes.
Better Place has made more progress internationally than in the U.S., with partnerships to provide EV infrastructure services in Israel, Denmark, and Australia. The company’s “batteries as a service” and swapping station operations are either highly visionary or very risky, depending on whom you ask.
Lining up at government troughs that have less price sensitivity is great to help companies get off the ground, and will continue to be a considerable source of income for many of these companies for the next 2-3 years. But they must then prove themselves with products that can compete in an open market. For some, that will be a rude awakening.