Lower-than-expected demand for lithium-ion batteries and the loss of its biggest customer has finally caught up to Ener1. The battery maker filed for Chapter 11 bankruptcy today in New York.
The company isn't closing, at least that's not the company's intent. Ener1 has already agreed to a "pre-packaged" restructuring plan with its lenders that not only will reduce its debt, but deliver another $81 million in capital from its investors. The restructuring plan, if approved by the court, would allow Ener1 and its subsidiary businesses EnerDel, EnerFuel, NanoEner, Emerging Power and Ener1Korea, to continue its operations.
It was only a few years ago that investors, venture capitalists and the government put their hopes of U.S. manufacturing rebirth (and money) into the burgeoning battery industry. Ener1 has enjoyed support from both the Obama and Bush administrations.
The company received a $6.5 million advanced-battery grant from the Energy Department back in 2007; a $4 million federal research and development contract from the Department of Defense in 2008; and $3.3 million for a cost-share research project on lithium-ion battery safety in 2009 under the DOE. By far the biggest injection of government money was a $118.5 million federal grant funded under the stimulus package. The funds were to help Ener1 double its production capacity and create 1,700 new jobs at a factory in Indiana. The company has received $55 million of that federal grant so far.
But as Ener1 CEO Alan Sorokin noted in today's statement, "the marketplace did not evolve as quickly as anticipated. Our business plan was impacted when demand for lithium-ion batteries slowed due to lower-than-expected adoption for electric passenger vehicles."
Ener1 cut costs and shifted it focus, Sorokin said. But their problems were exacerbated by the June 2011 bankruptcy of electric car maker Think Global, a major customer that Ener1 had invested millions into.
This post was originally published on Smartplanet.com