Ener1 Takes $73 Million Loss on Think Investment, Returns Shares

By · May 12, 2011

Think Elkhart Plant

Battery-maker Ener1 has announced that it is returning its stake in Think and will write off a $73 million loss on the investment it made in the Nowegian EV-maker back in 2007. In a conference call, Ener1 CEO Charles Gassenheimer told the public that his company had been disappointed by Think's inability to raise further capital and by the plug-in vehicle market in general.

According to Gassenheimer, Ener1 launched a strategic assessment of Think and the emerging EV market as a whole last year, concluding that “after much buildup around the industry, the reality was that EV adoption would be slower than predicted. Many observers believe that high costs and a slow build-out of charging infrastructure are critical obstacles."

Ener1's investment in Think amounted to a 31 percent stake in the company, which has been widely reported to be short on cash—a factor which may have contributed to the interruption of production of the Think City at the Valmet Automotive factory in Finland last month. Think has a long history of financial troubles stretching back through much of its 20-year existence, but with plans to open stores in three American cities by the end of this year—not to mention a promises to increase employment at its Elkhart, Indiana facility from 25 workers to more than 400 by 2013—this latest setback comes at a critical time for the company.

Under the initial agreement, Ener1 was supposed to sell about $70 million worth of batteries for Think by this year. Thanks to production delays—and perhaps a higher-than-expected production cost for the car—that didn't happen.

In a conference call this week, Gassenheimer re-affirmed Ener1's enthusiasm about the long-term outlook for plug-ins, telling reporters that the company will continue to hold a minority stake in Think as it attempts to recapitalize. Still, the carmaker will have to look elsewhere for an emergency influx of cash. “No additional funds will be provided to Think by Ener1,” Gassenheimer plainly stated.

Plugincars.com reached out to Think in an effort to find out more about how Ener1's decision might effect its marketing or production plans for the City. So far we haven't heard back—and as far as we can tell, neither has anybody else—which is not a good sign for a fledgling company with financial challenges. Hopefully, we'll get a call back and report that Think has once again turned a corner.

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