EEStor, the ultracapacitor company that has produced more obscure technology milestone announcements than evidence of a working energy storage unit, may have an implied market value of more than $1.5 billion.
The secretive startup in Austin, Texas, claims to have developed a new kind of capacitor that can store enough energy to propel an electric car 300 miles on a single charge. The company is not publicly traded, so investors who want to speculate on its "breakthrough technology" claims have only one way to get in on the action: Zenn Motor Company (ZNN: CA) That publicly traded Canadian firm, which first made an equity investment in EEStor in 2007, has upped its stake at each key milestone, culminating in a 10.7% ownership stake today. As a result, investors in effect get a small investment in EEStor as part of the deal.
Recent developments, however, raise a question as to whether investors care about anything but speculating on EEStor. The stock skyrocketed more than 100 percent in April when EEStor announced (.pdf) that its “Composition Modified Barium-Titanate Powders have met and/or exceeded a relative permittivity of 22,500.”
This achievement may be an important step, but it isn't sufficient proof that its product actually works.
On July 14th, with a stock buoyed by speculative exuberance, Zenn raised another $9,275,000 (Canadian), in part to pay for it final milestone payments and additional equity investment in EEStor. Shortly thereafter, the company announced it was abandoning its core car manufacturing business to focus entirely on the EEstor technology and drivetrain integration for other automakers. A precipitous decline in revenue from sales of its cars may have helped encourage this shift of focus.
Zenn CEO Ian Clifford told the Toronto Star, “"The way things have really changed over the last year – there have been such dramatic shifts and focus on electric vehicles – it doesn't make a lot of business sense for us to go into the distribution and sale of the vehicle"
This change in strategy represents a moment of clarity for Zenn – recognition that the entire value of the company lies with its speculative bet on EEStor’s game changing technology claims, and not with the expected value of its now abandoned car business.
Which means that if you attribute today's $169 million (USD) market capitalization of Zenn Motor Cars entirely to its 10.7% stake in EEStor, the secretive and mercurial startup can announce another questionable milestone: an implied value of more than $1.5 billion.
Darryl Siry was the chief marketing officer of Tesla Motors from December 2006 until December 2008 and is a special advisor to Coda Automotive.
Photo: Flickr / mtsofan
