Cobasys CEO Defends His Battery Company

For the auto industry to make a transition from gas-guzzlers to super-efficient cars, it will need a steady and stable supply of advanced automotive batteries. That should be great news for Cobasys, a company that took an early lead in the development and production of nickel metal hydride hybrid batteries. Unfortunately, recent news has been almost all bad for Cobasys. The media has repeatedly reported that the company lacks adequate financing, that its products caused General Motors to recall 9,000 hybrids and crimped domestic production of hybrids, and—just last week—that Daimler is suing Cobasys for failing to deliver on a $6 million development contract.

In an exclusive interview, spoke with Cobasys President and CEO Tom Neslage about the reports—which Neslage refers to as “foolishness.” Cobasys is a joint venture between Ovonic Battery Company and oil giant Chevron. (This interview was edited for clarity.)

Tom Neslage: The allegation that Cobasys is cash-starved, and that we can’t make payroll, and we can’t fulfill contracts, is absolutely not true. Cobasys has been continuously funded since our inception and has not been cash-starved as alleged. For example, it’s public knowledge that Chevron has put in over $350 million. I would like to spend a lot more money, but that’s a lot of money. Has the flow or frequency or amount of the funding changed at anytime in 2008?

We are being funded on a monthly basis, with the cash we require.

What exactly does Cobasys do? Do you manufacture battery cells, integrate them into packs, or both?

Yes and yes. We build the cells, put them into modules, and put the modules into the battery packs with the controllers. When we deliver the product, it’s plug and play.

Has Cobasys had any problems with delivering on battery contracts?

Let’s put it this way. We’ve been looking at strategic alternatives for the company for about one year. We have kept, to the extent possible, Daimler abreast of our Strategic Alternative Review. For example, in their allegations, they said there was something going on to keep them from knowing what was really happening within the company. That’s just not correct.
[Editor’s note: Strategic Alternative Review could be interpreted as Cobasys’s consideration of being sold to, or merging with, another company.]

What is the reason for a strategic alternative review?

We’re looking at the best way to help the company grow going forward.

Has that been a problem in the past?

No. Cobasys has been continually funded since our inception in 2001. We have not been, nor are we now, cash-starved as alleged. We are delivering batteries on a daily basis to our customers, for example, to General Motors.

Do you have any comments about the recall of 9,000 hybrid vehicles from General Motors?

It’s basically completed.

Was the problem a battery leak with Cobasys batteries?

There was a malfunction in the application. That’s really all I can say. It was done for customer satisfaction reasons. We don’t want to put out a product that doesn’t perform for the next 10 years.

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  • Anon Imus

    wow, defensive is right. Time for Mr. Neslage to hire people to handle the PR. His attitude and demeanor will not change public perception.

  • steved28

    Jeeez, this guy should run for office. What a BS artist. I think this company’s days are numbered.

  • Need2Change

    He’s not good enough to run for office. I didn’t believe a word he said.

    I think he should sell used cars.

  • Anonymous

    This is a no brainer he is trying to hype up the company to maximize a possible selling of the company.

    If I were GM I would look elsewhere because there seems to be big problems with current top management.

    Still don’t understand why they had funding problems?
    I laugh when I see all the oil TV ads saying their switching to other forms of energy.

  • GregT

    Imagine if they had the rights to all lithium batteries we would have never seen them in cars. Too much politics and games going on with this company. I get mad at the Big 3 for all of this. Whatever happened to diversification?

  • Boom Boom

    I like the comment about what other company that’s “put thousands of hybrids on the roads this year”. Based on the last hybrid dashboard, GM sold 1,091. I think that counts as a thousand. Honda 3,400. Ford (and Mercury) 1,200.

    If he’s stretching the truth on the facts that we can check, what do you think he’s doing on the facts that we can’t check up on? If this is the best the US can do….. we’re in trouble.

    Excellent interview, by the way. Not excessively pointed, but not a PR tool either.

  • manuel

    Hey give the guy a break . He is just defending his company .
    seems a lot of people been beating up on Cobasys lately …
    i wish them all the best . .hope they do sell a million batteries..

  • SteveC

    This is why American companies are going downhill.
    They can talk a good one and can’t deliver.
    They’re mostly smoke and mirrors. Get the investors, take the money, pay yourself a big salary, don’t deliver a quality product.
    Yep – The American Way.
    This guy is pitiful (but wealthy).

  • Jones

    I would not give Mr. Tom or Cobasy any break. In a positive statement I hope they do sell a million batteries but not for cars!

  • PW

    Neslage is a former oil guy from Texaco. You really get the feeling that Cobasys is being intentionally mismanaged to thwart development of EVs and Hybrids. And as for the $350 million, that’s chump change to Chevron, easily supported by the billions they are making in the Oil Industry.

  • mlhm5

    I have never read so much BS from a CEO of a company. His job is to simply stall and confuse anyone who has time to listen.

    They are losing $$. Impossible to believe if anyone was trying. Ever hear of licensing? Licensing for 50Kwh batteries, not 10Kwh. There is no way, even with an additional funding of $1 billion this company could ever meet the demand for 50Kwh batteries.

    Patent runs out in 2015 and there is no way this company will have any sales the day the patent runs out.

  • Anonymous

    You people make me sick. You’re nothing but a bunch of armchair quarterbacks with nothing to do but criticize something you’re not close to being familiar with.

    The Big 3 in Detroit fail to recognize trends in the automotive market for years (concerning the need for EV and hybrid battery technology development), they let the Japanese run over as if the industry as if it was Pearl Harbor, they try to catch up by pushing the only domestic supplier willing to stick it’s neck out to develop a competing first generation domestic product (against a Japanese supplied fourth or fifth generation product) in 2-3 years, and then they hang that single willing domestic supplier out to dry when a single technical problem occurs.

    Someone should be giving these folks at Cobasys some PR support, starting with their Big 3 customers who have no where else to go.

  • Dave T.

    They had the leading battery technology and messed things up bigtime. I can’t think how they will survive when the patent runs out.

  • herm

    with a 3 year development time for expansion, you would have to be crazy to invest in expansion.. who will be using this battery in a few years?.. no one.

    They starved for several years, and now there is flood of demand.

  • ron jeremy

    why do they have a 2008 budget, if they are funded month to month? shouldn’t they have a monthly budget?

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