Norwegian based Think Global AS is in bankruptcy. We have heard this news before (four times actually). The company’s latest variation launched in Europe in 2010 and had the wholly owned subsidiary, Think North America manufacturing battery electric vehicles for the United States in Elkhart, Indiana. But last fall, it started to run into financial trouble.

Rumor has it that by the end of 2010, Think had about 500 of its BEVs, the City, unsold (which is low considering they announced production of 2,500 vehicles last October). By March 2011, production of the City had stopped in Finland, ending glider manufacturing for Think North America. If the rumor of unsold vehicles is true, then Think NA claiming that the production stoppage would have little impact on their operations was likely true. But in the end, it appears that the stoppage may have had more to do with a lack of funds than it did an excess of inventory (though too much inventory often leads to too little funds).

There has been a lot of press on the Think bankruptcy and Ener1’s losses. Think NA claims to be able to survive the bankruptcy (and since the company that has been through bankruptcy four times, they might know a thing or two about surviving it). However, I am skeptical. So, the question many are asking is whether this spells a broader trend in the plug-in vehicle world. In my opinion, there are definitely lessons to be learned from Think.

First, the size of the vehicle is important. Think’s City is a tiny car, even by European standards. For comparison, the vehicle is about a foot and half longer than a Smart ForTwo (123.7 and 106 inches, respectively) and about three feet shorter than a Ford Fiesta (160.1 inches). This spells trouble for Think NA, as this size of two-door vehicles is typically not as popular among Americans. In Pike Research’s reports on Plug-in Electric Vehicles and Hybrid Electric Vehicles for Fleets, I point out that electric vehicle segments often limit the appeal to both consumers and fleets. To add weight to this, I can point to a recent press release from GfK stating that they found that U.S. demand for compact cars (such as the Ford Focus or Honda Civic) grew to 18% in May 2011, while demand for subcompact cars (such as the Ford Fiesta or Honda Fit) remains flat at less than 4%. In other words, the compact car sized Nissan Leaf and Chevrolet Volt more appropriately match current consumer demand trends with lengths of 175 and 177.1 inches overall, respectively. Subcompact “city” BEVs will be relegated to very small niches simply due to their architecture.

The second challenge facing Think and many other start-ups is price. With a retail price of $36,495 (including destination charges), a quick, back-of-the-napkin calculation of total cost of ownership puts the Think City at about $38,095 before federal incentives over 120,000 miles, compared to $33,269 for the Ford Fiesta with 31mpg at $4/gallon gas prices. Assuming the purchaser qualifies for the full $7,500 incentive, the City would be less expensive, but it is not a huge savings when compared to the larger, four-door, Fiesta. Think’s prospects look even worse when compared to its larger BEV competitor, the Nissan Leaf.

And there’s the rub for new brands like Think. A niche vehicle that does not offer unique and compelling features or specific positioning in the marketplace is not likely to last long, particularly if that brand cannot offer savings over other BEVs. Being a “city” vehicle in and of itself is not a unique enough position in today’s market. The Tesla Roadster has done well because despite its price, it has a unique proposition in the market. The Nissan Leaf and Chevrolet Volt are both doing well because they have broader appeal and are more appropriately sized to reach a bigger market. Even these two are niche vehicles in the compact car segment, which had sales of over 1.4 million vehicles in 2010.

Think has financially failed despite sales of just over 1,000 vehicles since 2010 and what appeared to be solid financing. This should serve as a shot across the bow for other start-ups who need to clearly define their unique position in the North American or European markets.