At the end of 2008, the Norwegian small electric carmaker known as Think was facing its demise. The 20-year-old company, formerly owned by Ford, had experienced two previous bankruptcies and was in the middle of its third. It was producing only about 10 cars a day before it laid off more than half its 250 employees and indefinitely extended its Christmas 2008 production shutdown. By March, the Wall Street Journal published Think’s obituary as “a cautionary tale about automotive start-ups” that require huge amounts of capital to succeed.

A few months later, US-based Ener1—the parent company of battery-maker EnerDel— gave Think another lease on life by first granting a bridge loan and then agreeing to invest about $18 million and convert $3 million in debt into preferred shares of the automaker. Ener1 now holds 31 percent stake in the company.

EnerDel and Think also agreed to enter into a new long-term battery supply agreement as part of the transaction. EnerDel received certain exclusive rights for the supply of batteries for Think’s current and upcoming new electric vehicle models. Other investors include Finland’s Valmet Automotive—which builds Boxter and Cayman models for Porsche, and will manufacture the Fisker Karma luxury plug-in hybrid.

Think Again

With those three pieces in hand—a vehicle, a battery pack, and a manufacturing facility—Think has moved production of the plastic-bodied Think City, capable of about 120 miles of range, to Valmet’s facility in Finland. The company is working to fill more than 2,000 orders of the car, and is aiming for annual production of 5,000 units—mostly for fleet customers. But this appears to be only the beginning of the big plans for the small electric car company.

Throughout much of 2009, Ener1 worked on a deal to find a US production facility, most likely in Indiana where Ener1 is headquartered. Think is promising to invest nearly $25 million in a new plant, and wants to build as many as 60,000 cars a year in the US.

There’s a ton of interest—and more importantly funding—for electric drive vehicles and lithium ion batteries in the US. In August, two weeks prior to completing the deal with Think, EnerDel received a $118.5 million federal grant to double the company’s capacity to produce lithium ion batteries in the Indiana. Think is applying for a US government loan for production of fuel-efficient vehicles, under the same program that benefited Tesla Motors and Fisker Automotive.

The Big Picture, Really Big

Many analysts see slow but steady growth in the US electric car market—but competition from Nissan, General Motors, and Ford will make it difficult for Think to compete. For example, if the Nissan Leaf sells for about $30,000, Think would be forced to offer the smaller Think City coupe at a lower purchase price that could be difficult to manage with small-scale production.

However, Ener1 is apparently looking at a much bigger picture than selling a few thousand electric cars. It’s aiming to be a major player in the entire new energy ecosystem of electric utilities, smart grids, electric cars, and batteries—for both stationary and vehicle-based batteries.

In early December 2009, the battery maker announced that it will manufacture the lithium ion batteries for five one-megawatt power systems to be used by Portland General Electric in Oregon. “It will be the first time that electric vehicles, stationary grid storage, solar power and rapid charging infrastructure are combined in a real-world operating environment,” EnerDel said. The system will perform the critical duty of managing peak demand and smooth the variations in power from renewable sources such as wind and solar. It could also create a market for used electric car batteries after they have lost some of their capacity.

EnerDel is working on similar projects in Japan and Austria. The Japanese project, scheduled to come online in March 2010, will convert a handful of Mazda vehicles to use a 24 kilowatt-hour battery pack initially design for the Think City.