Norway-based electric carmaker Think received more than its share of buzz last week as the company announced plans to produce its small all-electric vehicle in the United States. But what the company wants is a share of the $25 billion in Department of Energy loans set aside to promote advanced technology vehicles. Before the company can build electric cars in the US or anywhere else, it needs funding to stay alive. The company is now in the Norwegian version of Chapter 11 bankruptcy.
Think CEO Richard Canny said the company will file an application for the DOE loan on March 31, but declined to say how much money the company will seek.
The Energy Department has already received 75 loan applications—seeking a total of $38 billion—and whittled down the pool to 25 for a second round of reviews. Money will only be given to companies that are considered “viable.” To demonstrate viability, Think’s announced that the company expects to start US production in 2010, with a first-year volume of 2,500 units going to demonstration fleets. They hope to build up to 900 employees and a capacity of 60,000 electric vehicles per year. Based on past performance, these plans are ambitious.
Ford poured more than $100 million into Think’s operation, when it owned the company from 1999 to 2003. Ford (and other automakers) fought against California’s mandate to sell electric cars during that period, and finally sold the company in 2003. Subsequently, Think spent about $120 million upgrading the Th!nk City—the same all-electric car that the company hopes to produce in the United States. Think was unable to produce and sell cars, or to otherwise generate enough working capital, pushing the company to the brink of extinction in December 2008. In Think’s entire history, it has produced fewer than 2,000 street-legal vehicles, according to Automotive News.
Since the end of Ford’s ownership, a number of investors—including General Electric, Novus Energy Partners, Kleiner Perkins, and battery-maker Ener1—have pumped money into the company to produce the Th!nk City. That car is a two-door model—slightly bigger than the Smart Car—with a driving range of about 100 miles and a maximum speed of about 60 miles per hour. Think and its investors are betting that there’s a market for an all-electric minicar with a maximum speed roughly equivalent to the slowest highway traffic—and selling for $20,000, its target price. The company also hopes to produce a four-door model in the next three to five years.
According to Ener1 CEO Charles Gassenheimer, Think needs as much as $40 million to get production going again—presumably in its Aurskog, Norway, plan where operations have been hold since December. Only about 400 Th!nk City cars were produced before operations were suspended.
Canny underplayed the significance of the DOE money, in an interview with Automotive News. “We’re still pursuing private investment,” he said. “The Department of Energy loan is not something we see as a substitute for capitalization, but a supplement that makes our operating plan going forward more effective.” He later told Wards Auto that “funding is a big part” of Think’s decision to pursue US operations.