Ex-Arizona company Ecotality near collapse

2013-09-10T00:00:00Z 2013-09-10T08:20:06Z Ex-Arizona company Ecotality near collapseBy Ryan Randazzo The Arizona Republic Arizona Daily Star
September 10, 2013 12:00 am  • 

Ecotality, the former Arizona electric-car-charging company that moved to San Francisco after being awarded $115 million in federal stimulus help, is near collapse.

The company disclosed an array of problems, including defects that cause some of its chargers to melt, in a regulatory filing last month.

It said the Department of Energy stopped making payments to the company. The stimulus funds were part of a program called the EV Project. The program’s goal was to help Ecotality and a variety of industry partners deploy electric-car charging stations across the country and study the most cost-effective way to roll them out as electric vehicles gain popularity.

The program has faced its own struggles, but Ecotality’s problems extend far beyond that line of business. The company also conducted testing for government agencies and has a line of electric forklifts and other service vehicles.

Among the problems disclosed by the company, a new product called the Minit Charger 12, part of its industrial line of electric vehicles, has “exhibited unacceptable performance shortfalls” and won’t be released this year as planned.

The company also disclosed it agreed to pay $855,000 in back wages and damages to settle Labor Department claims it violated the Fair Labor Standards Act and Davis-Bacon Act. The company had an additional $89,000 in payroll taxes due because of the payments.

The company also said that some of the electric-car chargers it has installed are overheating and melting the connection to the vehicles. The regulatory filing said it is unclear how much the issue will cost, and it may be forced to replace 12,000 of the chargers installed.

It also can’t find financing to supplement its cash flow, meaning it might not meet its current financial obligations, it said.

Former CEO Jonathan Read formed the company in 2006 by restructuring a company called Alchemy that was focused on cleaning products. He worked to purchase small energy companies, which formed Ecotality. Read left the company last year.

In 2007, Read’s Ecotality bought a successful Phoenix company called Electric Transportation Engineering Corp., which was formed by former executives from Arizona utilities in 1996.

ETEC developed and tested battery power for cars, service vehicles and even boats and was the division within Ecotality that worked on the $115 million EV Project. The latest government data indicate about $96 million in stimulus funds had been spent on the project.

The stimulus funds were used to provide free home-charging stations for thousands of people who bought electric vehicles, who are required to share their user data with Ecotality and the government. The money also covered several thousand public charging stations for cars in Phoenix, Tucson, San Diego, Los Angeles and other locations.

In 2010, Read moved the Ecotality headquarters to San Francisco, but maintained the Phoenix operation formerly known as ETEC.

In the regulatory filing, which preceded at least six law firms announcing they are suing or examining claims against the company, Ecotality officials said they are “exploring options for a restructuring or sale of the entire business and/or assets,” but may need to file bankruptcy “in the very near future.”

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