Thursday, July 31, 2008
I wanted to start a thread here on the stock movement today. Anyone care to post some analysis or theories about what happened, will happen, might happen, etc?
Also, on a related note, Ive been curious and others have emailed me wondering to what degree it's possible to learn what institutional investors may be invested in Zenn. Any way of learning that through proper channels? Also, does anyone recommend a stock quote embedding widget? I've tried to add one here previously but could never find one that looked good.
Note: for this thread, I'm going to make sure it stays on topic by removing posts that may have better life elsewhere on the blog. Warning complete. -thanks!
UPDATE: within the comments thread, we have this link to a clip that aired this evening on BNN. Good discussion about Zenn's upside potential if EEStor pans out with a rarely recognized reality that even if it doesn't, Zenn has some downside protection.
1) Links to original press release and coverage
2) Follow on Interview with Richard Weir
3) Interview with Edward Golla, 3rd party reviewer
4) Zenn's subsequent press release
5) Some technical discussions of the release and related topics.
a) reader Mihkel
b) reader Zawy
c) Prof Randall
6) A charity I support
UPDATE: I'm getting emails that the picture in this post is of an EEStor cell that has "mysteriously" appeared on wikipedia. (i just linked to it) I've seen this before though..I dont think it is an EESU because it looks like it was made from powder that was way too impure to produce an EESU. :-)
Not a few people are uncomfortable with blog or forum formats such as these. Some people want everything on record and everyone accountable for everything they say. I can see the need for it in certain environments but in a blog, what we're all trying to do here at least is sift through information to arrange coherent narratives to make sense of EEStor and its potential impact on the world or us. Some speech is inherently theoretical even if not identified as such when uttered or written. On this blog, that is evident from the fact that people occasionally delete their comments later. Finally, to reiterate what's been said again and again: do not rely on information on this blog to make investment decisions--consult a professional. No information is offered here or should be construed to help you make decisions about investments. The author if this blog has no special relationship with Zenn or EEStor, has no relations with anyone who has a special relationship with Zenn or EEStor. The single unifying purpose of this blog has been only to centralize information about EEStor and facilitate discussion regarding EEStor and it's many proposed benefits and advantages over various battery markets.
Wednesday, July 30, 2008
We had a good conversation and covered related topics but Randall's views on anything other than the above will need to come from him unless he changes his mind. For the record, I politely as possible tried to repeatedly draw him into further discussion here. He understands that this is an open and ongoing invitation....which actually, since he declined is open to any and all.
I can appreciate Randall's situation and in general, anyone's apprehension with taking part in a blog forum such as this. I'm sure I share with many this similar apprehension.
But again, if you're a skeptic and think some information about EEStor is not receiving enough attention, don't be shy. contact me: firstname.lastname@example.org ....especially if you think you are the person Randall believes is "bang on."
Blogger: some people are wondering if your use of the term "milestone" in the press release relates to investment payments or investment milestones.
RW: No. Milestones of production and chemical purity.
Blogger: Why would you issue a press release on something related to purity prior to permittivity?
RW: It all leads to that. Everything we got there is the holy grail of everything we've worked for here. Permittivity, it seems to me people overconcentrate on it. Permittivity is a subset of getting these. If you dont get these, you dont get the permittivity. If you
get these, you get the permittivity and you can set it up at very high levels. This allows us to meet present specifications but more importantly or equally, it's the pathway for future advancement. In 2007, we made a conscious corporate decision to put in our advanced technologies. Of course, thats going to take a little longer! But we did that with very good reasoning behind it. As it states there, there are some mission critical programs out there that we wanted make sure that we could meet. Now what we had (prior to our advanced technology) could certainly meet alot of the programs. Putting our advanced technologies in place...this is why we are so happy.....because this shows the success of our advanced technologies. "
Blogger: Does that mean from a production standpoint that....
RW: We were [funded].....say this on the blog.....we were [funded] to put a production line in. So what we are putting in here is a production line. (production said slowly and with emphasis)
(note: Weir said "invested in" but probably reads better as "funded"?)
Blogger: Not a lab?
RW: No, we've already done all the R&D and preproduction on this a long time ago. Now our [funding is] to put a production line in. This press release was put out to tell the people of our production successes that we have had.
Blogger: I hate to bring this up because I feel like I'm pretty clear on the information that's out there in regards to what you're saying about production. But still, alot of people still think that you haven't even got a prototype.
RW: We've have made prototypes of this and those have....they were made with technologies that we had at the time. And what I'm telling the people today is in 2007 we made a corporate decision to put in more advanced technologies which we now and this data shows that we hit a home run on these technologies. Prototypes have been built and prototypes have been tested.
Blogger: tested by 3rd parties?
RW: I'm just going to say that. They've been tested and the data has been reviewed by a lot of people.
Blogger: are you following any of the discussions on the web?
RW: [scoffing] I dont follow any discussions. I get to work, get my ass to work and get things done around here. What people say has no meaning to me. What we put out there I thought was dynamite and go from there. Anyway, that's all I can say. Thank you very much.
Blogger: .....one last question, people want to know if Moore's Law.... [phone click]
Thoughts? What's my take? I think someone smarter than me should piece this together. On the one hand, we have all the skeptics beating the permittivity drum with Weir saying essentially that he's focused on production issues not lab or R&D issues. You be the judge.
Tuesday, July 29, 2008
Word wraps removed (sorry for 2x post).
While considering solid state electrical energy storage device's (capacitor's) ability to store energy, maximal upper bound for volumetric energy density (energy per unit of volume) can be obtained knowing only operating device's dielectric's permittivity and (operating) electrical field strength. If we allow dielectric's material density (mass per unit of volume) to be known, we have one more energy storage characteristic: gravimetric energy density (energy per unit of volume).
So, formulae for both type of characteristics are:
volumetric: Uv = ε*E^2/2,
gravimetric: Ug = Uv/ρ = (ε*E^2/2)/ρ,
U - Energy density,
ε - actual permittivity of substance,,
E - Electric field,
ρ - material density.
ε and E can be calculated: E based on article and ε based on information known before. ρ can be obtained by encyclopedia lookup and making some assumptions. ε = εr*ε0 where εr (or k) is relative (to free space) permittivity of dielectric and ε0 permittivity of free space or the electric constant. Then take the voltage and divide it by the distance it was applied over (over dielectric's thickness) and you get E (E = U/l).
Now we can get computable formulae for a given dielectric considering source data available to us:
volumetric: Uv = εr*ε0*(U/l)^2/2,
gravimetric: Ug = Uv/ρ = (εr*ε0*(U/l)^2/2)/ρ.
I must emphasise we are considering only maximal bounds based on given numbers (not it's production feasibility) about dielectric. To ceramic capacitors, this bound depends only on dielectric's characteristics.
Let's get now source data. U = 350 V and l = 1 µm we take from the article. εr = ~18k has been stated before. For barium titanate, ρ = 6.02 g/cm^3 can be taken from Wikipedia, but we make a wild assumption here, that the actual material has the same density as barium titanate. ε0 can taken from any table of physical constants (ε0 = ~8.85 * 10^(-12) F/m).
Filling formulae with data and letting google's compute engine step into play, we have:
volumetric: Uv = ~2700 Wh/l
gravimetric: Ug = ~450 Wh/kg
Uv – http://www.google.com/search?hl=en&rlz=1G1GGLQ_ENXX252&q=18000*8.85*10^-12F%2Fm*(350V%2Fmicrometer)^2%2F2+to+Wh%2Fl&btnG=Search
Ug – http://www.google.com/search?hl=en&rlz=1G1GGLQ_ENXX252&q=(18000*8.85*10^-12F%2Fm*(350V%2Fmicrometer)^2%2F2)%2F(6.02g%2Fcm^3)+to+Wh%2Fkg&btnG=Search )
To put these numbers into perspective, consider enerergy density of current production lithium-ion energy storage: Uv = 270 Wh/l and Ug = 160 Wh/kg.
The key point to make such numbers available is EEStor's proprietary technology achieving dielectric material with outstanding properties, namely: Electrical field E = 350 V/µm (at production level) while maintaining permittivity εr (or k) = ~18k. At field 350 V/µm, one has to watch for two types of breakdowns: electrical and permittivity. 1st one occurs if dielectric (insulator) becomes conductor due to field's strength, 2nd one is the natural property (until EEStor proves wrong?) of high-k (high relative permittivity) dielectrics to loose their permittivity in high field strengths (orders of magnitude below 350 V/µm). I suspect the 1.1 kV/µm stated in the article is the lower one of the two.
This remains the point over which scientific community remains sceptical. EEStor seems to have resolved this problem some time ago and seems to deal with production issues.
To get some clue how these hypothetical maximum bounds relate to real world, one has to take into account that ceramic capacitors need also conductive plates sandwiched between dielectric layers. This makes Uv and Ug smaller, because you have to take plate material into account, which does not store energy. There are also packaging and structural materials, electronics, etc... They also use fields 350 V/µm instead of 1.1 kV/µm (as stated in the article) because of manufacturing process' mistakes and impurities in some points of dielectric material, which brings the electric field value for the two (possible) breakdowns down.
Imagine, if you can enhance the manufacturing process and rise operating electric field from 350 V/µm to somewhere higher? You get a nice boost in energy density, as it is quadratically (as seen from the formulae) proportional to electric field.
They have revealed a few tasty tidbits.
1) pure aluminum oxide (AlO3) coating of the pure 1 micron powdered composition-modified barium titanate (CMBT) allow "the **potential** to reach its target working voltage. " The 2 "sentences after that indicate that purity is needed for resistance to breakdown (catastrophic leakage).
2) the AlO3 coating and the closely-sized 1 micron CMBT "assists" in "meeting the energy storage stabilization over the temperature range"
3) the plastic PET matrix is key to physically turning the particles in a strong electric field to get the best polarization. Polarizing BT in a strong electric field while the material is still hot during manufacturing is standard practice, much the same way magnets are created by using a magnetic field while the metal is very hot. "Polarization along with other proprietary processing steps provides the **potential** of a polarization saturation voltage required by EEStor." The plastic matrix is unique and this may be the explanation I have been looking for. I believe i had guessed here before that better polarization was the reason for the PET.
to better explain polarization: the CMBT crystals work best when oriented in a certain way. That orientation is forced up the crystal by a very strong electric field as the last stage in manufacturing. However, it's not completely effective when the crystal are "bumping" against each other. This causes some "domains" (localized volumes) of the BT to be better oriented than others. However, using the plastic PET keeps the particles seperate so that they can achieve perfect polarization if the plastic is melted during the manufacturing polarization, with each 1 micron particle having a homogeneous single domain. The plastic also allows the domains to expand/contract more during use which allows more energy to be stored so that energy saturation is not reached. Being perfectly aligned also helps for greater expansion/contraction.
The press release states very clearly that either they DO NOT have any prototypes ... or ... DO NOT KNOW if they can achieve production of a high energy capacitor described in the patents by their use of the word "potential" in the following sentence:
"Polarization along with other proprietary processing steps provides the potential of a polarization saturation voltage required by EEStor."
"polarization saturation voltage required" means "energy storage" (high permittivity saturation) as the crystal is polarized during use and not to be confused with the polarization step during manufacturing which is the meaning of "polarization" in the first part of the sentence.
1,100 V/micron applies only to the AlO3 and not to the BT which is 350 V/micron. And "breakdown voltage" does not mean energy storage or maintaining high permittivity.
EEStor Announces Certification of Additional Key Production Milestones and Enhancement of Chemical Purity
Here is the press release.
Another link to the story.
Here's the link to the PRNewswire release.
Also, many people are trying to figure out what the significance of this press release is for interested parties. Among the other signficances discovered in this press release, let's not forget that it did already cause a moderate earthquake in Los Angeles, home to all those future electric vehicles.
Monday, July 28, 2008
Friday, July 25, 2008
Thursday, July 24, 2008
Wednesday, July 23, 2008
I was thinking about the future of this blog this morning and trying to figure out how much time I'll be able to spend on it. As a function of that, I started visiting some of the sponsors I get from Adsense. I came across the Electric Maxi-Scooter made by Vectrix, an American company. I'm not a motorcycle or scooter person but the specs on this electric scooter are pretty sweet for current battery technology, 60 mph top speed and 65mile range, charges in 2hrs. I think it will be interesting to assess the impact an EEStor EESU would have on a vehicle like this and in general all products that come out where EEStor could have an impact. In this case, Maxi uses a Nickel Metal Hydride battery. Help me with the science here, Mr. or Mrs Reader, but utilizing the EEStor chart, it looks like if the Maxi were switched to an EESU, it's battery would weigh 5 times less, be 4 times smaller, charge of course 10 times faster and cost half as much. So I guess if range were the optimal desire, then a Maxi with the same footprint EESU, could travel 260miles. Just what is needed in Beijing, if you've ever heard of the smog there.
Monday, July 21, 2008
I'm like everyone who reads this blog in the sense that I'd like to see some expedited effort towards getting a new battery technology into my ipod, blackberry, vehicle and a million other aspects of my life especially my pocketbook. On the one hand, we're waiting on EEStor to turn on the lights and start giving speeches. But on the other, we're to some degree waiting on each other. That is to say, as EEStor gains further attention around the world, it necessarily gains
additional prospective investors in ZENN which in turn acts as a gauge for EEStor's value. This perceived value makes it easier for EEStor to capitalize itself to grow and bring the benefits of the technology to the world faster. My personal opinion in studying this story is that Zenn Motors and EEStor have far more to gain from receiving attention of this venture whereas Kleiner Perkins CB gains more if it is kept secret. And to be blunt, I think we win more if KPCB wins less.
So, it's important to me as someone passionate about this topic, that we do things on this blog to hopefully accelerate the process. To that end and in light of Massimo's Fiore's recent analysis of ZENN's stock valuation, I am happy Tom Villar has agreed to update his own work on thinking of the value of Zenn stock as a catalyst for further discussion. So if you find EEStor fascinating, start talking with people about it--start asking for journalists to cover the story and keep the conversations going. Email a link to a friend and get this on the radar
Back on July 2nd, 2008, b was nice enough to allow me to post an analysis on what I thought ZENN Motor Company (ZMC) would be worth which you can read here. My very amateur analysis put the value of ZMC at US $15 billion in 2012. Since then a lot has happened and there are even a couple of professional analyst starting to follow the company. One in particular caught my attention, Massimo Fiore of Versant Partners as he has produced two reports, one from March 2008 and a very recent one published July 18, 2008 which you can purchase here. Fiore's March 2008 estimate appears to have valued ZMC at roughly US $350 million for 2012 which is considerably less than my estimate of US $15 billion. At this point I'm thinking I must be way off and this is why I am an amateur and Mr. Fiore is a professional.
But then a curious thing happened. As mentioned above a second report was released just last week with startling different numbers assuming EEStor delivers as promised. Although the new numbers are still below my original estimates, Fiore is now suggesting a roughly ten fold increase in his valuation. I will not say anymore about Versant Partners report as they are a business that makes money off selling information and it wouldn't be fair for me to blab all over the web for free what took them considerable effort to produce. If you are thinking about making a sizable investment in ZMC, you would be an idiot to rely solely on free info like this when professional information is available.
For those wanting to convert a company's valuation to a stock price, simply divide the valuation by the number of fully diluted shares. For ZMC this is roughly 36 million shares. To give an example using my original estimate of US $15 billion we get a stock price of:
$15,000,000,000 / 36,000,0000 shares = $416 / share.
In the real world and assuming EEStor delivers to spec, the number of shares will be diluted as ZMC issues additional shares to raise working capital. A number like 45 to 50 million shares is probably more realistic.
Now on the surface these valuations seem ridiculous as returns of 6,000% only happen in the movies. About the only time an average investor has been able to get returns of this size was with a company like Microsoft where stock purchased in the mid 1980s for $0.10 and sold near the peak of $58 would show a return of 5,800% before inflation. So what is going on here? I see a couple of possibilities:
- I am clueless and haven't the foggiest idea what I am talking about, a distinct possibility
- Professional analyst want nothing to do with EEStor as the risk of looking like an idiot if the company doesn't deliver is too high
- ZMC allows retail investors to get ownership in EEStor under nearly the same terms as the big Venture Capitalist (VC) firms.
If I'm right about the last point it is truly unique and unheard of as far as I know. As I mentioned above, returns of 6,000% don't happen, but actually they do, just not for retail investors. Returns of this size are necessary for successful VCs to justify all the risk they take as a lot of start ups flop and don't return a dime. ZMC's 3.8% stake in EEStor (soon to be 6.2%, see page 13 in the link) is partly what gives ZMC such upside potential.
Obviously this is an optimistic vision of what could happen if EEStor is able to deliver Energy Storage Units (EESUs) to ZMC. Professionals such as Massimo Fiore have to be more conservative as their responsibilities are to factor in all the things that can go wrong instead of focusing on what can go right. It is my hope the truth lies somewhere in between.
Finally since the professionals get to update their analysis, I thought I'd freshen mine up as well with some of the recent news and thoughts from the last two weeks. Below is an update to what was published in July 2, 2008.
Although EEStor and its technology are the main focus of this blog, neither EEStor nor its main equity partnerKleiner Perkins Caufield & Byers are publicly traded. The only equity partner publicly traded is ZENN Motor Company Inc. (ZMC) which paid USD $2.5 million in 2007 for a 3.8% stake in EEStor. This gave EEStor a theoretical market cap of US $66 million but if EEStor is for real, a true value of the company will need to add more than a few zeros to the end.
Since ZMC is the only way for retail investors to invest in EEStor, the question becomes how much will ZMC be worth when EEStor begins delivering product? To answer this question (or more accurately take a wild guess) I think three items need to be quantified:
- profit margin on EEStor's Electrical Energy Storage Unit
- EEStor valuation
- ZMC primary line of business valuation
1) EEStor's Electrical Energy Storage Unit (EESU)
Assuming EEStor's original business plan from 2002 is still relevant we come up with two specifications that differ based on production volumes:
Energy density (Wh/L)
Specific energy (Wh/kg)
Price ($ US / kWh)
Since EEStor has been working on a production factory since 2006 the mass produced specifications should be closer to what ZENN gets in late 2008, but recent information calls this into question as it seems the first production line is more a proving line than a typical production line. Therefore in this analysis I've decided to go with the Low Volume column and we further assume the cost figures are the EESUs production cost, not the wholesale price.
ZMC estimates a 52.2 kWh EESU will cost them C $5,200 which works out to a selling price of US $100 / kWh. Assuming the C $5,200 price includes the buck boost converter and other misc parts, we put the profit margin for automotive sized EESUs at approximately $20 / kWh.
2) EEStor valuation
The disruptiveness of EEStor's technology is obvious in so many sectors, the task of valuing this company with any degree of accuracy is limited to providing lower limits. Trying to forecast best case scenarios would be akin to estimating the impact of the personal computer in 1972, something only a time traveler could have done with any level of accuracy. Therefore estimates are mostly limited to major sectors with known production volumes and where it is relatively easy to determine the cost of switching to EEStor technology. The major sectors assumed to be significant are:
a) Transportation - Automotive
c) Li-Ion Battery Market
2.a) Transportation - Automotive
From Dick Weir's and Carl Nelson's patent filed April 12 2001 is is pretty obvious the initial application was seen as a way to enable Electric Vehicles (EV) to replace Internal Combustion Engines (ICE) vehicles. With gas prices hovering around US $4.00 / gallon in the United States and much higher in most of Europe the incentive to switch to an electric power source with 1/8 the cost of gasoline is undeniable assuming any additional one-time cost are reasonable. Since an EESU + electric motor + misc parts are roughly only a few thousand dollars more than all the pieces required for an ICE, there should be no one-time cost impediment to buyers. Thisworksheet attempts to estimate EEStor's profits over a 5 year period using the above assumptions.
Warfare will be transformed by the new types of weapons EEStor will make possible. Railguns, lasers and other direct energy weapons will obsolete many of today's aircraft and missile systems causing massive shifts in expenditures within the coming decade. Of course there is also the mundane existing battery systems that will also be phased out as time permits. EEStor's unique technology allows EESUs to be built to almost any size and shape so undoubtedly the first uses will be nothing more than plug and play replacements for existing battery systems.
No serious attempt is made to qualify the types of systems that will be effected. Instead this worksheet is a SWAG based on a percentage of total US military expenditures in the areas that could reasonable expect to benefit from EEStor's technology. Use by militaries other than the US are not included as it is unknowable the degree to which export controls will be imposed on the technology for military purposes.
2.c) Li-Ion Market
Although Li-Ion batteries have made some in roads into the transportation automotive market, the penetration is very recent and does not account for a significant percentage of existing production although this is changing rapidly. EEStor's technology will obsolete all Li-Ion batteries within 2 to 3 years although existing manufactures will face sudden and dramatic deterioration of their revenue as customers wait for the new UltraCap EESUs to become widely available. This market is only about $1 billion per year although the margins will be much higher than the transportation sector. EEStor can expect and additional $400 million / year profit from this sector by the time all Li-Ion manufactures have ceased operation.
3) ZMC primary line of business valuation
ZMC has targeted four main areas of operations:
a) Electric Drive Train (ZENNergy Drive)
b) Highway Capable Vehicle (cityZENN)
c) Low Speed Vehicles (ZENN)
d) EV Conversion Kit
3.a) Electric Drive Train (ZENNergy Drive)
The ZENNergy Drive is ZMC primary focus and best hope for becoming a major OEM supplier to the major automotive OEMs. ZMC has exclusive rights from EEStor as reported in ZMC's 2007 Annual Information page 10:
FGCI has entered into an agreement with EEStor dated August 24, 2004 (with subsequent amendments dated November 26, 2004, September 30, 2005, August 8, 2006 and January 22, 2007) (collectively, the "EEStor Technology Agreement" or "Agreement" in this section) to acquire in perpetuity the worldwide exclusive rights to use EEStor's EESU in the following markets:
- all-electric 4-wheeled personal transportation uses up to 15 kW (continuous output) drive system
- for vehicles with a curb weight up to 1,400 kilograms, net of the battery weight,
- for golf carts and similar-styled utility vehicles, and
- the aftermarket conversion of any internal combustion passenger vehicle to electric drive.
The exclusivity does not include high performance sports cars with a drive system of 100 kW(continuous output) or greater.
This exclusivity granted to ZMC locks up a significant portion of the world wide vehicle market as close to 50 million of the 70 million cars produced in 2007 would fall under the 1,400 kilogram (3086 lbs) limit. Although significant portion of these cars would be in the US market, EEStor technology will allow a return of much larger and heavier cars which have been a trademark of US automobiles for decades. Therefore I assume ZMC will not be able to stifle adoption of EEStor technology in the North American Market as manufactures can simply side step ZMC and concentrate on EESUs in larger heavier vehicles. Of course the world vehicle market is so large this shouldn't be an issue and the following worksheet gives profit estimates for the ZENNergy Drive for the next five years.
3.b) Highway Capable Vehicle (cityZENN)
In many ways cityZENN is an advertisement for ZMC's ZENNergy Drive as it will demonstrate how the ZENNergy can be combined with the body of a traditional passenger vehicle. This worksheet assumes ZMC meets sales forecast for the cityZENN over the next five years.
3.c) Low Speed Vehicles (ZENN)
Although this vehicle concept is near and dear to ZMC's founder Ian Clifford, the vehicle itself is more golf cart than car and simply not suitable to the US market in large volumes. This Kelly Blue Book review sums up the toy car feel of this vehicle. Hopefully ZMC is planning to market this outside North America. I am assuming no significant profit from the ZENN.
3.d) EV Conversion Kit
Although the concept of converting existing vehicles is sure to warm the hearts of treehuggers as it is always seems better to recycle something than make something new, the complexities on converting existing vehicles is daunting. Modern vehicles have a web of interconnected devices from dashboard displays, heaters, and power brakes. Mess with one system and all the other require changes as well. This will limit conversions to large fleets which makes this operation difficult to manage and time consuming as each vehicle type will need it's own conversion kit. We hope for no net profit from this operation as it could easily turn negative if mismanaged.
A final worksheet summarizes total gross profits for both EEStor and ZMC. I'm estimating a new valuation of ZMC for 2012 of $36 billion with a stock price of $600 / share.
Of course if others see the same numbers I'm seeing, it raises the question of whether one of the majors will try to buy ZMC so they can get the exclusive rights to the EEStor's technology. Even if EEStor releases excellent test results, it will take time for any of the majors to figure out what the technology is really worth. But once ZMC can successfully start selling cityZENNs and ZENNergy drive trains, then I expect a bidding war to develop for ZMC. What ZMC is worth at that point is any one's guess and of course whether Ian wants to sell will have some impact on this but at least some the majors are going to see the potential of getting a lock on a huge percentage of global production for at least the next 5 to 10 years.
Now if anyone is thinking they should immediately invest their life's savings in ZMC (ticker symbols ZNN.V andZNNMF.PK) because of the analysis they've just read, then click this link for some very important information you absolutely need to know before making your stock purchase. If you didn't click the link then keep reading.
As a total outsider to everything you've seen discussed here is at best back of the napkin estimates and at worst a misleading stinking pile of poo. Personally I have invested in ZMC up to my limit for speculative stocks and will not be increasing my holdings for the foreseeable future.
When ZENN made the deal with EEStor it was 2004 and gas was selling for around USD $1.80 a gallon. At that price using EESUs for EVs is very very marginal and conversion kits make no sense at all. If prices fall anywhere under $3.00 then things aren't nearly as rosy and anything under USD $2.00 and ZENN is kaput. This dynamic could also explain why EEStor was willing to give ZENN such a great deal as at that time the compact EV market must not have looked very promising to EEStor.
Another caution is the price of electricity. Unlike gas and diesel, electricity isn't fungible. There are areas in the US where the price of electricity can be as much as 50% over the national average such as in the North East. Of course there are also areas that can be 50% below the average such as in parts of the Mid West and Great Plains states. If EVs prove to be a viable solution for ground freight, it will be interesting to see if there is an increase in migration of manufacturing businesses and jobs to states with low power cost.
Final tea leaf reading to consider:
ZMC is obligated to make a USD $700,000 payment to EEStor on third-party confirmation of permittivity testing of production units and another USD $500,000 upon delivery by EEStor of a production quality EESU. Successful permittivity testing also triggers an equity funding round where existing equity partners can purchase additional shares in EEStor. ZMC can increase its ownership to 6.2% of EEStor for USD $2 million. On May 30th ZENN received gross proceeds of CDN $15,225,000 after issuing and selling 4,060,000 shares.
Saturday, July 19, 2008
Friday, July 18, 2008
In April of 2008 in Cedar Park, TX, Richard Weir called a meeting together to brief key investors and stakeholders about the progress of EEStor to date, according to sources familiar with the event. The purpose of the meeting was not to talk about the Permittivity milestone, because "the science" of that milestone had been completed as early as September of 2007. What Weir wanted to talk about was the next milestone for EEStor Inc, which is the construction of a new facility with 6-7 production lines to join the one that is now either fully completed or nearing completion. A key difference between the current production line and the future ones is in the instrumentation attached to gather metrics as the EESU's are created. It should come as no surprise that the confidence in EEStor's ability to pass a 3rd party permittivity test (largely trumpeted by Zenn Motors in the context of their confidence at receiving production EESU's in 2008) has significantly to do with how Weir and team have set up their first production line. The idea is that they can already run the permittivity tests and know now and for quite some time that the permittivity tests are old news. So, what's behind the delay in announcing this milestone publicly?
Two things: (1) Before Weir lays the Permittivity tests on the table which would to some degree subject them to a degree of uncontrollable public attention and more importantly, possible insights for competitors, he wanted to protect his intellectual property by filing an additional 21 patents. Its this work on patents that has largely been behind the delay in announcing permittivity. While Zenn Motors is bound by non-disclosure agreements with EEStor, it is also bound by being a public company with a perceived obligation to disclose any material facts about the company such as whether or not there are any issues with passing permittivity. And according to sources familiar with EEStor's status, Zenn is not announcing that because presumably they know well that things are going well. With their additional investment, Zenn Motor will own 6.4% of EEStor although it's been reported elsewhere that that figure could go over 10%...which is not likely to happen since Kleiner Perkins and other investors can excercise options for further funding. It would be highly unusual (although not impossible) for EEStor Inc, to announce permittivity AND not receive a sizeable influx of additional capital capping Zenn's investment at no more than 6.4%.
In addition, sources have said that Kleiner Perkins would likely exercise all of their options for the next round of funding. There were rumors that Kleiner even pressured Weir to reduce or take Zenn out of the picture but Weir rebuffed those efforts to stay loyal to his early backers at Zenn. For their part, Kleiner Perkins clarified what they told me earlier regarding EEStor not being on their website. Originally, what Bill Joy's secretary said was "if a company is not listed on Kleiner's website, then it is not an investment of Kleiner's." This week, she clarified by saying, "if an investment is not listed on the website, it is policy not to comment on it. " Attempts to reach Bill Joy, who presumably manages the EEStor investment failed. Apparently he travels constantly and has no near term public speaking engagements.
And what about that second reason behind the delay in announcement of Permittivity? Marketing. Although it does not appear to me to be a carefully crafted set of plans, it does seem fair to say that a key reason for the EEStor's secrecy has been to whip up additional attention. An idea summed up well by paraphrasing the Toa of Steve, "we're attracted to that which repels us." While it's true, EEStor has an interest in protecting it's intellectual property properly and with great care and thus are not foolish enough to share key aspects of their breakthroughs too soon, I have learned from a source within EEStor that the secrecy serves a dual purpose. I even know who claims to be the architect of that strategy but I agreed not to say so in this article.
There may be at least 5 entities ready to take part in a second round of funding. Kleiner, Zenn, an investment arm within Lockheed Martin, Mort Topfer and a mystery billionaire in Austin, TX. One source was bound not to mention the name of the theoretical investor. A second source flat out said, "the rumor is Michael Dell may be ready to invest at the advise of Mort Topfer." It's important to note that that piece of information is an unsubstantiated rumor. Messages left for Mort Topfer have so far been unanswered.
In addition to the briefing in April, Weir provided an updated tour of the facility he has now. On one end of the facility, there are raw chemicals. At the other end is a printing facility. They print the capacitors 24inches round and then cut them to spec as at an Integrated Circuit Fabrication Plant. What Weir is building is a blueprint of a fully integrated, fully automated production line. This is a "no touch" production line from start to finish. The idea for expansion is to custom modify the production line for the application in question and license the results. The production line is mobile in the sense that it could be assembled at the site of the licensee. For example, at a Toyota Prius or GM Volt assembly line. One source said that the rumor is Weir removes one thing from the plant floor prior to a tour: the printer heads.
A source familiar with the April gathering said it was very probable that EEStor would not simply announce permittivity results but would also announce the new patents, turn on the website and start talking to financial analysts and investment banks on a much wider scale. (A source within EEStor confirms their website design is almost complete) It would seem logical that as we near delivery of production EESU units for Zenn, EEStor would have a plan to maximize visibility to gain capital to expand rapidly. Once their business goes into the public arena, one thing that would set them apart from competitors is an enormous infusion of capital. For now, the Zenn-EEStor-Kleiner stance with regard to publicity is a case study in conflict. Zenn needs publicity to sell cars. EEStor needs publicity to drum up additional funding but publicity too soon would enable or simply embolden competitors. For Kleiner, publicity of EEStor means additional competition from other investment sources. Thus, as you probe around for information, you get alot of different interpretations about what can be revealed and talked about and what can't. All of this creates problems for traditional journalists attempting to cover the story given their obligation to substantiate facts, another factor in the mystery surrounding EEStor.
On a related note, I spoke to a person who has attended various meetings with EEStor involving various investment entities. A sort of pattern seems to have emerged: NDAs are signed, a large financial firm flies their Subject Matter Expert to Cedar Park and a group of people gather in a conference room. The SME starts firing off questions designed to trip up Weir, catch him on some aspect of the science that he should be aware of. These meetings often end up being the SME and Weir going back and forth with everyone else having a dumb look on their face. Then the SME invariably starts to get a smile that he/she can't get rid of and it often stays with them out into the parking lot and all the way to the airport. And on a related note, I've learned that all of the provisions related to succession are now in place, eg, what if Weir gets hit by a bus, etc. The IP is protected then on multiple fronts.
Finally, I'll end with a new application concept: vacuum cleaners. A source within EEStor shared with me a possible application of an EESU to illustrate a point. "Take a vacuum cleaner. Today, you have to drag around a cable and keep plugging/unplugging the unit as you move around the house. With our technology, that would be unnecessary as you would simply charge the unit and be able to vacuum pretty much as much as you wanted with no worries about running out of juice. That's the kind of technology that would cause housewives to send us Christmas Cards each year. "