Although green cars aren't speeding along as fast as many advocates would like, there are signs this week indicating they are cruising forward.
Only a few weeks after unveiling its first production sports car, Tesla Motors told the Financial Times it plans to raise $250 million, through debt financing and an initial public offering, in the next two years to bring its second model -- a sedan code-named White Star -- to the market. The company already raised $140 million to roll out the Roadster (also see posts in Earth2Tech and VentureBeat).
In the meantime, Think Global -- a company that had previously planned to buy batteries from Tesla -- said Tuesday it had signed a deal with Enova Systems (AMEX: ENA) to provide at least 1,000 power-control units for its small Think City electric car this year. The company hopes to increase production to at least 10,000 cars in 2009.
Valence Technology (NSDQ: LVNC) announced that it is shipping 300 of its lithium-phosphate batteries to OEMtek, a company converting Toyota Prius hybrids into plug-in hybrids, and that it has received an order for 600 more. And Quantum Fuel Systems Technologies Worldwide said it has signed a $14.5 million contract to add plug-in hybrid capabilities to Fisker Automotive's four-door sport sedan, the Karma.
All this news shows that alternative-vehicle companies are beginning to focus on forming their supply chains, an important step toward mass production and distribution, said Thilo Koslowski, lead automotive analyst at Gartner.
"Companies are heading in the right direction, looking at additional financing to move ahead and executive on their strategies," he said. "It's a healthy development. It's very important for the entire industry that the companies are making headway."
The deals announced by Think, Valence and Fisker show that the companies are taking on the considerable business challenges needed to succeed, including setting up a supply chain and distribution, and preparing to increase scale and production capacity, Koslowski said.
Distribution deals could help make companies more alluring to major automakers that could be potential buyers or partners.
And if Tesla goes public, it's likely to motivate others to come out with internal-combustion-engine alternatives. "If Tesla can pull this off, it certainly would encourage others to follow suit," he said.
Tesla, Think and other startups are hoping to grow the market in advance of large car companies entering the scene. General Motors, for instance, plans to bring its sporty plug-in hybrid, the Chevrolet Volt, to the streets in 2010.
Of course, large scale is the key to reaching the mass market and lowering prices, and the production numbers so far show these companies have a long way to go.
"Scale is still an issue," Koslowski said. "This is still an emerging market. But you have to start somewhere, and the fact [that] companies are having these announcements shows they are getting somewhere. This all demonstrates some intelligent good thinking from companies that are setting the foundation now to achieve scale going forward."
But while it will take time to reach high volumes, the announcements still are important steps toward vehicle electrification, said Eric Fedewa, vice president of global powertrain forecasts at research firm CSM Worldwide.
"It's a really exciting time for the battery manufacturers, motor manufacturers and the people combining these technologies in the vehicles," he said. "Really what we're seeing is that CO2 issues are really coming to the forefront globally, and there's going to be a lot of pressure for vehicle manufacturers in the next seven to 10 years to improve efficiency of the vehicles."
Fedewa said the powertrain is the most inefficient part of the vehicle, with more than 80 percent of the energy put into the tank lost through internal-combustion-engine inefficiencies. Electrifying the driveline is one very, well, efficient way to fix the mechanical inefficiencies, he said.
"To put it into perspective, as the world demands more efficiency, you're going to have to go to an electrical architecture in the vehicle, and Tesla and others are really at the forefront of developing the technology," Fedewa said. "Really, the electrification of the powertrain is the future. It's coming. It might not be super high volume or high scale in the next two years, but the industry is definitely moving in that direction."
The main barrier is the battery technology, which isn't ready yet, said Fedewa, who predicts that the industry will see real advancements in batteries in five to seven years.
And as scientists and entrepreneurs work to improve the storage capacity, life cycle and longevity of the battery and figure out "which recipe works the best," you can expect to see a stream of announcements, he said.
"These are very exciting steps to see," Fedewa said. "Even the smallest announcement is very significant."