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.