ECOtality News 8/12/13 - DOE Stops payments

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Randy

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ECOtality trading has been halted with this news. The DOE has stopped EV Project payments, no more new DOE obligations....ECOtality acknowledges EVSE overheating as well....

http://breakingfinancenews.com/breaking/breaking-ecotality-halted-news-pending-ecty/2566/" onclick="window.open(this.href);return false;

(iv) The Company has been notified by the U.S. Department of Energy (“DOE”) that the DOE is suspending payments to the Company in
connection with the EV Project. In an abundance of caution on August 8, 2013, the Company notified the DOE that, even though the Company
continues to aggressively pursue certain options for additional financing and is exploring other alternatives, in the event additional financing is
not obtained, the Company may not be able to fulfill its operational obligations, including under the EV Project. In response, the DOE sent a
letter to the Company stating that it is suspending all payments under the EV Project while it investigates the situation and determines whether
the award should continue. This suspension has had a significant impact on receivables that were anticipated to be collected from the DOE, in
addition to remaining amounts anticipated to be invoiced and collected under the EV Project.

(v) In the August 8, 2013 letter, the DOE also notified the Company that the Company is not authorized to incur any new cost or obligation
under the award and that the DOE would not reimburse the Company for such costs during the suspension. Further, the DOE instructed the
Company to provide notices to its vendors and subcontractors of the suspension.

Further, the Company is facing some uncertainty regarding the resolution of a phenomenon occurring in some of the Company's previously installed EVSEs which causes overheating, and in certain rare cases melting, of the connector plug that connects the EVSE to the electric vehicle when charging. The Company, along with certain automotive original equipment manufacturers ("OEMs") and equipment suppliers, has been actively evaluating the issue in an attempt to determine the cause and to address the problem. Even though a root cause for the observed phenomenon is yet to be definitively verified, in the interim, on August 9, 2013, the Company commenced the reduction of the maximum power delivered by certain of the EVSEs, which reduction has been shown in limited laboratory test to reduce the temperature rise in the connector plug to acceptable levels. The Company continues to discuss with the parts supplier of the connector plug a plan of action which would require the parts supplier to pay to replace either all the connector plugs in its existing EVSE units or those connector plugs identified to be problematic. At this time, the Company cannot assure you that negotiations will result in the parts supplier agreeing to incur the cost of such remediation. Accordingly, the Company may have to incur such costs and expenses in the future. In addition, some OEMs have notified the Company that they are considering communicating to their customers and other parties to advise them not to use the Company's EVSEs because of the connector plug issue if the Company does not replace all connector plugs on its approximately 12,000 existing EVSEs in the market. The Company believes such a communication may have a material adverse impact on the near term cash flow and prospects of the Company.
 
Hopefully it can be allocated some place it can be used properly. They don't deserve this money.
 
Well they've failed to reach objectives like installing public infrastructure. But then they have achieved something towards that objective. I've met a couple employees and they're good people. The question is, would another company with better management have accomplished more with the DOE grant? A better question is, will the DOE award remaining funds to another company and will that company accomplish more? Or will the funds be reallocated to something like oil subsidies, and the existing Blink infrastructure decay?

I hope a good company acquires Ecotality's assets, obligations, grants, and its good people. <Edit: its "good" people, not its slackers and certainly not its top managers>
 
I don't think the issue is the majority of their employees but rather their management and culture as in most companies.
 
Added info to original message above from last paragraph of SEC filing about connector melting issues and the surrounding uncertainty....
 
Randy said:
Added info to original message above from last paragraph of SEC filing about connector melting issues and the surrounding uncertainty....

I think they could have swept this under the carpet had it not physically damaged car(s). Rema needs to fix this, but I suspect they won't.

There were so many issues with the company before this issue showed up (with cars that were more than 3.3kW chargers).

My letter to Ecotality March 2012:

It is time for the respective government agencies to ENFORCE the provisions of your government contracts. If your company cannot fulfill them, there are others who can. Government funds need to be frozen until such time as the terms of the contract are met, or those funds given to another company or companies who can successfully complete and comply with the terms of the government funding.


http://www.mynissanleaf.com/viewtopic.php?p=183008#p183008" onclick="window.open(this.href);return false;
 
EVDRIVER said:
I don't think the issue is the majority of their employees but rather their management and culture as in most companies.
Indeed. At least that's what I heard from ex-employees too.
 
This is what I've feared the most. That they would fail to create a going concern, a profit making company, and that we'd end up with an abandoned network that's good for nobody. We can only hope that some other entity is able to take over the network and keep it operating (and repair the overheating problems).
 
I complained about mine a few months ago and sent them infrared measurements, and they came out and replaced it with a new one that runs stone cold... At the same time, they did a number of other hardware updates... But, no, at 3.3 Kw most all should be fine... I wanted to future proof mine...

DeaneG said:
Are the connectors generally OK at 3.3kW? Mine gets warm but not hot.
 
How does a company that gets 100s of millions from DOE and all they had to do was to install EVSEs needs bankruptcy protection ? Pathetic management, I guess.
 
evnow said:
How does a company that gets 100s of millions from DOE and all they had to do was to install EVSEs needs bankruptcy protection ? Pathetic management, I guess.
Probably, although it isn't very hard to come to grief in this sort of venture. Installing the EVSEs was the easy part (and it wasn't easy!). Installing the EVSEs, and then going away is no solution at all. There are no profits available in this business, at least not for years to come. In the meanwhile, the company still has to find money to expand, market, do maintenance, etc... Anyone wanting to jump in this early needs to have an solid plan for how they can survive a long time (10 years? more?) without a steady revenue stream. They seemed to simply grab cash from the DOE and their other partners, and live high until "Daddy took the T-Bird away". Sad.
 
evnow said:
How does a company that gets 100s of millions from DOE and all they had to do was to install EVSEs needs bankruptcy protection ? Pathetic management, I guess.

Churn and burn baby. I expected this to happen after my first experience with them.
 
My understanding of the DOE grant was that it was based on reimbursement of certain costs after EVSEs were installed. Maybe there was some markup on the charging hardware, since ECOtality made it (or subbed out the production to be more correct), but we have no information about how cheap or expensive the hardware was to manufacture. They might have lost money on those units with the relatively low volumes produced.

It's a tough business to make any money in, as we've discussed here before. When drivers consider $1 per hour too expensive to pay to charge, that's the writing on the wall for that business model...
 
Randy said:
It's a tough business to make any money in, as we've discussed here before. When drivers consider $1 per hour too expensive to pay to charge, that's the writing on the wall for that business model...
Yes - there is no money in that.

Ecotality should have approached it like a turnkey project - rather than some kind of long term business plan. They imposed very restrictive terms on private businesses and thus found it difficult to get sponsors. Poor execution and zero experience didn't help either.
 
So how has ChargePoint managed to succeed, at least so far? I think they are VC funded.

We had both ChargePoint and Ecotality come in to our company to present a plan for installing charging stations. One brought in two well-spoken marketing folks, had a slick presentation including a hardware demonstation, and the advantage of many of us having experienced the reliability of their public stations. And lots of options for how to bill users. The other had one guy who seemed unprepared and almost resigned to losing the bid, and the disadvantage of many of us having experienced the reliability *their* public stations. The pricing was basically the same. I'll leave it to you to figure out which was which.
 
leafedbehind said:
So how has ChargePoint managed to succeed, at least so far? I think they are VC funded.
ChargePoint, IIRC, sells the EVSE and the installation service. That is what I meant by turnkey project - just execute each project well and make your margin. There is no grand long term cash cow here (which is what ecotality thought they had).
 
Does this mean I should have called them sooner about "repairing" my hot J1772 cable.
I wrote them, telling them I needed one capable of charging my upcoming 6.6 Kw charger, and they said it would be fine, and that they were unaware of any issues with the Blink Units.

???
Was this an "untruth"

Seriously, am I screwed now?
 
leafedbehind said:
So how has ChargePoint managed to succeed, at least so far? I think they are VC funded.

We had both ChargePoint and Ecotality come in to our company to present a plan for installing charging stations. One brought in two well-spoken marketing folks, had a slick presentation including a hardware demonstation, and the advantage of many of us having experienced the reliability of their public stations. And lots of options for how to bill users. The other had one guy who seemed unprepared and almost resigned to losing the bid, and the disadvantage of many of us having experienced the reliability *their* public stations. The pricing was basically the same. I'll leave it to you to figure out which was which.

The deal that ChargePoint presents to hosts can be considered onerous if a host is looking to recoup costs. We saw a city municipality agreement that was posted awhile back and discussed on the forum. Something like 50 cents per transaction and 7 or 7.5% of the total revenue collected goes to ChargePoint...So the host really cannot recover all of their equipment, installation and operational costs on a deal like that. Plus, ChargePoint hardware is anything but cheap...

For a host to sign on with ChargePoint, the host must really be motivated and be willing to absorb costs in order to host charging equipment for customers or employees.
 
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