With Government Money Spent, ECOtality Files For Bankruptcy

4 years ago by Jay Cole 23

Wonder How Much One Of These Fast Chargers Are Worth At Auction?

Wonder How Much One Of These Fast Chargers Are Worth At Auction?

Having spent all of the DoE’s $99.8 million grant to develop the “EV Project,” or at least as much as they could before the Department cut them off last month, and facing an investor class action suit, as well as a threat from major OEMs to make public critical flaws in their charging stations, ECOtality filed for Ch. 11 bankruptcy protection on Tuesday.

Ecotality Reported In Early August Their Relationship With The DoE Was Over And They Were At Risk For Bankruptcy

ECOtality Reported In Early August Their Relationship With The DoE Was Over And They Were At Risk For Bankruptcy (via Yahoo! Business)

Ecotality is now looking to sell its assets through an auction next month, pending bankruptcy court’s approval.

That auction, of which the failed charging company says there is 8 companies looking to scoop up…something, is tentatively planned for October 9, with a closing to occur within two days.

Interestingly, Nissan has agreed to provide a “delayed draw loan” to ECOtality for up to $1.25 million dollars to keep the company operational until that auction happens.  Naturally, a credit and security agreement is in place, so Nissan looks to make out fairly well in the deal.

According to ECOtality’s 8-K filed Tuesday:

Subject to the provisions of the Credit Agreement, Lender agrees to loan to Borrower in the amounts (each, an “Advance”) and on the dates following: (i) At closing of the Credit Agreement – $500,000, (ii) On September 25, 2013 – $250,000, (iii) On September 30, 2013 – $250,000, and (iv) On October 7, 2013 – $250,000.

...not so much

…not so much

So, why did ECOtality go bankrupt?

That is besides having no viable business model, and featuring defective products both now (ECOtality was forced to turn down charge rates to avoid overheating and fires) and in future (Minit Charger lineup was postponed due to R&D failures), and having lost $9.6 million in 2012 after losing $22.5 million in 2011?

We will let them explain some of their current woes from Tuesday’s Ch. 11 brief:

Item 2.04Triggering Events that Accelerate or Increase a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement.

Nissan Will Lend Up To $1.25 Million To Blink To Keep The Company Operation For Now

Nissan Will Lend Up To $1.25 Million To Blink To Keep The Company Operation For Now

The Bankruptcy Filing described in Item 1.03 above, which is incorporated by reference into this Item 2.04, constituted an event of default, and triggered repayment obligations of the Company and certain of its subsidiaries and/or gave rise to certain other rights and remedies, including termination rights, of counterparties. The Company believes that any efforts to enforce such payment obligations or rights and remedies are subject to limitation by, and automatically stayed as a result of, the Bankruptcy Filing and the applicable provisions of the Bankruptcy Code. The Bankruptcy Filing and/or related circumstances constituted an event of default or otherwise triggered rights and remedies of counterparties under the following instruments, agreements or arrangements:

(a) The Bankruptcy Filing described under Item 1.03 above constituted an event of default with respect to $5,000,000 in aggregate principal amount of unsecured indebtedness under the Company’s 5.05% Convertible Note due March 13, 2015 (the “Note”). The Note is senior to the Company’s preferred stock and common stock. Under the terms of the Note, when the Company or any significant subsidiary commences a case under any bankruptcy law, the holder may require the Company to redeem all or any portion of the Note by delivering written notice thereof.

(b) The Company previously executed several EV Pilot Program Master Agreements, also referred to as National Account Agreements, under which the Company installed Level 2 chargers and DC Fast Chargers in connection with the EV Project with the Department of Energy. Under the terms of those agreements, the Company’s filing of a case under the Bankruptcy Code qualifies as a cause for termination of those agreements, under which the Company could be required to remove installed chargers at its own expense. The extent to which the Participants in the agreements may request early termination for cause and the amount of de-installation expense that would be incurred under that scenario cannot be reasonably estimated at this time.

(c) As previously reported on a Current Report on Form 8-K, filed with the Securities and Exchange Commission on August 12, 2013, 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 was suspending all payments under the EV Project while it investigates the situation and determines whether the award should continue.

Under the EV Project agreement, ECOtality is required to immediately notify the DOE of the occurrence of any of several events including the Company’s filing of a voluntary case seeking liquidation or reorganization under the Bankruptcy Act. Upon the occurrence of the filing of a voluntary case seeking liquidation or reorganization under the Bankruptcy Act, the DOE reserves the right to conduct a review of the Company’s award to determine its compliance with the required elements of the award (including such items as cost share, progress towards technical project objectives, and submission of required reports). If the DOE review determines that there are significant deficiencies or concerns with the Company’s performance under the agreement, the DOE reserves the right to impose additional requirements, as needed, including (i) changing of payment method; or (ii) institution of payment controls.

(d) On June 28, 2013, the Company entered into a lease agreement upon expiration of its existing lease with Railroad Properties, LLC under which the Company occupies facilities in Phoenix, Arizona which provide approximately 30,000 square feet for office, warehousing, and test facility functions. The five-year lease, set to expire on June 30, 2018, provides for monthly base rent payments of approximately $13,700 and 3% annual increases in monthly base rent. The lease contains options to extend the lease for two additional twenty-four (24) month periods. Under the terms of the Lease, becoming a debtor under the Bankruptcy Code is deemed a breach of the agreement that entitles the lessor to various remedies, including termination.

(e) The Company is party to a Master Lease Agreement (the “Lease”) with Cisco Systems Capital Corporation (“Cisco”) for equipment totaling approximately $314.0 thousand. The terms of the Lease provide for monthly payments of approximately $9.5 thousand and obligate the Company to $341.0 thousand of total lease payments. The Lease is scheduled to expire on November 30, 2014.

Shares in ECOtality ended the day off 31% at .16 (real time quote can be found here).  ECOtality’s 8-K filing can be found here.

Added thanks to Michael R on this story.

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23 responses to "With Government Money Spent, ECOtality Files For Bankruptcy"

  1. vdiv says:

    Frack! Only if I stayed on the blink an extra hour last Saturday…

  2. Huffster says:

    Sounds like a distressed asset buying opportunity for one of the other players at pennies on the dollar. Charge Point? Tesla? GM? Other? After legal hell of course.

  3. Tom K says:

    So……are the Blink EVSE stations operational?

    1. Assaf says:

      The article says they’re operational at least till the auction next month, thanks to Nissan’s loan.

  4. Bonaire says:

    I’d like to see the payroll payments to the employees over the course of the past 3 years. I bet they rocked the expense accounts doing business travel for all the charging station ribbon cuttings.

  5. scottf200 says:

    Their charger in my house was acting up with several interface errors and finally could not get passed the touch screen setup. Timing was “perfect” as I the bad announcement a few weeks back happened when I was supposed to get serviced. After a couple weeks it finally did. Fix? Replace a connecting wire between the main board and user interface. As well to take apart a couple splices and redo them. Poor quality parts/work apparently at factory. They must spend a lot of money in service calls! P.S. They did give me the latest software (micro SD). Not sure what it fixed but I suspect if I had a RAV4 EV my draw would have been limited. Not a prob on the Volt since the draw is so small. Would be an issue on a future Model X but I think that may just get directly plugged into a 14-50.

    1. io says:

      Also had my home Blink EVSE serviced, to swap the SD card. I was told that the reason this was done was because some old ones (a specific model/batch which I happened to have) were known to cause problems.
      The tech also unplugged or removed the RFID reader, which happened to be installed in mine but is obviously never used for residential units.
      Btw, the inside looks unnecessarily complex, but otherwise properly built. Clean solders, etc.

      No problem since — nor before, for that matter. That EVSE has been serving me well for almost 2 years now, I’m very happy with it.

      Yes, it still provides 30A if asked. J1772 EVSEs cannot identify the vehicle, just whether one is connected and requests power, so there’s no way to restrict output for a specific model.
      Those stations’ firmware can be updated remotely, and have been several times, so if Blink had wanted to change that, it’d be done already.

  6. Nelson says:

    The DoE should help Tesla build out its “FREE” Supercharging network as long as they include four L2 spots for non-Tesla cars.

    NPNS!
    Volt#671

    1. ItsNotAboutTheMoney says:

      No it shouldn’t.

      Tesla is building a proprietary network of chargers with no fee at the point of use, for long trips, which long-range BEVs need.

      Not an open public network.
      Not for emergency charging.
      Not as an alternative to home charging.
      Not for long stay.
      Not for opportunity charging.

      All of those other uses and have other solutions that shouldn’t involve Tesla and aren’t necessarily applicable at the sites Tesla is targeting.

      1. Aaron says:

        Not to mention all the added complexity of adding all those other standards to the charging station. Given that solar panels produce DC current and the Teslas are being charged using DC, having to invert that DC to AC just so we could have L1/L2 chargers is simply ridiculous. Even the variable voltages different EVs charge with DC current, it would be technically difficult to provide fast DC charging for everyone.

        1. ItsNotAboutTheMoney says:

          I believe he meant adding 4 more spaces with separate L2 chargers. I just think that’s an entirely separate set of problems and one not well matched with Tesla’s roll-out.

          1. kdawg says:

            It wouldn’t make sense to have L2 chargers where the Tesla Superchargers are located. L2 chargers need to be in places where the car will sit for 2+ hours. L3 for 30 minute charging.

        2. Not quite, Aaron. The Superchargers are connected to the grid, which is AC, even if the both the solar panels and Supercharger outputs are DC.

          Yes, all the solar power produced is converted to AC, then it goes to the grid and to 9 or 12 Tesla AC powered chargers (each pulling 36 amps at 277 volts AC for 10kW) to output 90kW or 120kW total (at about 400 volts DC).

          One unlikely, but possible exception, is that solar DC goes directly to storage batteries on site, but I seriously doubt it.

        3. io says:

          1) As Tony said.
          When no car is charging, the solar panels output should go somewhere — so is fed to the grid.
          Chargers are expected to operate regardless of the time of the day, so they pull their power from the grid (they need way more power than the panels can provide anyway).

          Also, the voltage/current at which the panels are most efficient keeps changing (depending on lighting conditions, temperature…). It would almost never match what’s needed to directly charge a car, so some custom DC-DC converter would be required between the two.
          That’d be adding quite a bit of complexity, for very little gain. Merely adding a panel or two, or using slightly more efficient ones, would be cheaper and more beneficial.

          2) The batteries of the Model S, Leaf, i-MiEV all develop comparable voltages. Basically, for this class of vehicles, the whole industry seems to have converged around a hundred cells in series, 400-some VDC (SOC dependent).
          A charger for one could be used for the other almost directly, by merely translating the control signals, so not that big a deal really.

          The CHAdeMO adapter Tesla announced will do exactly that.

        4. Bonaire says:

          Solar DC at night?

  7. Blind Guy says:

    OK, so now we should know how not to do it, right? I hope I don’t have to “splain” this mess if anyone asks me about it at the local National Plug-in event coming up on the 29th.

    1. vdiv says:

      Just play dumb: “Blink who?” 😉

  8. Ocean Railroader says:

    I think we should throw some of these little bums who ran this place into the ground in jail for stealing tax payer dollars. And after we do that we can cut up this giant tuna fish’s system of chargers and sell them to people who know how to run a charger system.

    1. Bonaire says:

      Then wouldn’t we have to put a lot of politicians away also?

  9. George B says:

    I met some former eTec engineers in Phoenix last year, and they did not have a very favorable opinion of ECOtality, to put it mildly. Their company was acquired by ECOtality so that the combined entity could compete for the EV Project more effectively. Sadly, the DOE not only awarded them the project, and paid all the funds, they apparently still don’t find anything wrong with ECOtality’s work. If this company was a little bit better managed, listened to their engineers more instead of making them quit, and did a better job overall, it would have had a tremendous positive impact. Instead, many people are left with a bitter taste in their mouth, and this bankruptcy reflects poorly on this nascent market, and EVs in general. Yet another bankruptcy is not what we needed.

  10. Maybe at some future date we’ll learn where all the money went? Besides ~$100 million from Dept of Energy, host sites paid over ~$100 million (50% share of equipment/installation costs). Over the past three years of the project ECOtality accumulated an additional $500 million of debit on $50 million of assets.

    For all this cash 87 of 250 DC quick chargers were installed, a majority of those over 18 months late. Of ~8000 Level 2 AC EVSE, all are limited to delivering just 3.3 kW/h of the 6.6 kW/h 3-year old spec from 2009. To remain in operation, each EVSE will need testing in next year. To restore full power (6.6 kW/h) the EVSE will need upgrading. Over 50% of EVs on US roadstoday are capable of charging at above 6 kW/h, so effectively the Blink Network is already outdated.

    TAKE-AWAY: The EV Project demonstrated many ways of HOW NOT TO build EV infrastructure for the first 100,000 EVs. Building for a future-proof window of at least 5 years, oversight, performance milestones, and multiple vendors is a critical starting point. Hopefully the many LEASONS LEARNED don’t go to waist… and infrastructure bullt for the next 500,000 EVs is around when the 1,000,000 EV is registered in a few years!

  11. Bill Howland says:

    So $200,000,000 for how many nondescript charger docks? Sounds like alotta big wigs got alotta Golden Parachute retirements. And there friends which they probably had to invent new titles for:

    CVO – Chief Voltage Officer.

    CCO – Chief Charging Officer

    CBO – Chief Billing Officer

  12. Justin H says:

    Sounds like my agreement with Ecotality is Null and Void…Good news for me that I dont have to be consistantly checking the poor wifi connection on the device. But never a issue with the EVSE to date, I may change out the J1772 handle and extent the cord now to make it reach the parking pad and other side of the garage. Sad story but glad to hear CarCharging Group has taken them in tow to repair the damage and improve with their reliable ChargePoint network.