The relatively minor deal just struck between Smith Electric Vehicles U.S. and Valence Technology may hold broader promise. The $1.4 million contract to supply the automaker with advanced batteries could be the shot in the arm Valence needs to survive among the likes of A123Systems, Johnson Controls-Saft and Panasonic.
Because the two companies designed their products to fit each other, Valence is a virtual lock for future orders, even if the agreement isn't explicitly exclusive. This puts the venture-backed company in a much better position going into 2010, a year that could be a melee of partnerships and supply deals between electric vehicle and hybrid makers and advanced battery makers.
With many EV and hybrid models set to be released next year and 2011, automakers are sure to be looking for battery suppliers with the cheapest, most efficient technology on offer. Panasonic, which has landed a deal to provide batteries for Tesla Motors' Model S, has snagged the top spot, especially following its acquisition of Sanyo. But A123Systems, which had a lucrative public exit in September, and just landed a contract to supply batteries to the Shanghai Automotive Industry Corporation, also stands to catch a lot of that business.
Valence hasn't snagged as many high-profile deals to date. While it sells electric vehicle batteries to truck makers in Europe, Segway is still by far its largest customer.
Its business with Smith U.S. will concentrate on the Newton, an electric delivery truck model. Somewhere between a FedEx panel van and a tractor trailer in size, the Newton has a 100-mile range and a top speed of 50 miles per hour. It recharges fully in six to eight hours.
Smith is a much bigger name in the U.K., where it has been building electric vehicles for 80 years, with several models currently on the road. It's U.S. division is young, having only launched a year ago, but it's already started shipping vehicles -- something many EV makers can't say yet.
Valence, headquartered in Austin, TX, has manufacturing facilities in China and sales offices in Northern Ireland. It will have production lines up and running in the U.S. by 2011, probably in Texas, the company says. To make this possible, it has applied for ore than $500 million in loans from the U.S. Department of Energy.
If 2010 is indeed a fat year for battery makers, with advanced vehicles becoming more of a reality, it couldn't have come at a better time. Both Valence and A123 have fallen on hard times recently, recording losses and failing to grow their markets. This is sure to improve next year -- the question is by how much.
Regardless, the fact that more than three credible, well-supported innovators are competing for green transportation contracts is a good sign in itself -- for the EV market, for battery makers striving for leaner, cheaper technology, and for end consumers who will soon have far more choices when it comes to affordable green cars.