PowerGenix scores supply deal, funding

San Diego-based PowerGenix announced an agreement today to supply its non-toxic, rechargeable nickel-zinc batteries for use in electric bikes, with this latest contract coming as the company makes moves toward an initial public offering.

Under the agreement, PowerGenix will supply its battery cells for the entire product line offered by Houston-based Veloteq, the North American partner of Shanghai PowerEagle International, a Chinese manufacturer of electric bikes. PowerGenix plans to start shipping its battery cells in 2009, with millions of cells expected to be shipped over the course of the three-year contract.

The batteries will also be incorporated into future products, including a highway-speed electric motorcycle. The financial terms of the three-year deal were not disclosed, but PowerGenix said it has pulled in a total of over $75 million in contracts with today's agreement.

Dan Squiller, CEO of PowerGenix, told the Cleantech Group that the contract followed another big milestone at the company.

"About a month ago we closed a significant round of financing that will take us through an IPO," he said. Squiller said the details of the financing, which includes new investors, will be disclosed in the next 30 days.

PowerGenix has previously taken in $30.8 million in three funding rounds from backers including the Angeleno Group, Advent International, Braemar Energy Ventures, Granite Ventures, OnPoint Technologies and Technology Partners.

Squiller said an IPO likely won't come for at least another year.

Founded in 2000, the company has about 60 people working in San Diego and another 40 in Shenzen, China. A year ago that number was about 65 or 70 total.

Earlier this year, PowerGenix announced that its rechargeable nickel-zinc batteries met the European Union's requirements for the Reduction of Hazardous Substances as well as the EU's 2006 Battery Directive (see PowerGenix non-toxic batteries coming to market).

The company's batteries contain no lead, cadmium or mercury, which it said offers a cleaner environmental alternative to lead-acid and nickel-cadmium, or NiCd, batteries.

With today's deal, PowerGenix batteries will be showing up in two kinds of low-speed electric bikes — power-on-demand bikes, which do not require pedaling, and power-assist bikes, which require pedaling, but can be assisted by the electric motor. In North America, the bikes have a maximum speed of 20 miles per hour.

PowerGenix said that its batteries are smaller and lighter than standard systems, allowing riders to travel 40 miles on a single charge.

The company already has two of its batteries shipping in high-volume, and expects to have a third product, a D-cell, shipping soon.

"We've got supply deals now in power tools, lawn and garden equipment, consumer double-A," said Squiller. "This fall, actually within 60 days, you'll be able to buy nickel-zinc rechargeable double-A batteries in some main outlets."

The company is also looking at some military applications, including batteries for communications and other equipment carried by troops, as well as for military aircraft and land vehicles. But the next big application could be hybrid electric vehicles.

Squiller said it's not a huge jump from light vehicles like scooters to larger systems.

"We're going to be optimizing this D-cell, probably even coming out with a larger version of it," he said. The bigger "F-cell" will be almost the size of two D-cells end to end.

"We have converted a Toyota Prius to nickel-zinc. It's running on the D-cells that we have and we're collecting good data showing that our nickel-zinc pack outperforms the nickel-metal-hydride pack that comes from Toyota."

The company has had discussions with some of the large battery and auto companies, Squiller said they want to see the performance data over 20,000 to 40,000 miles before any deals can be made.

"So later this year and into early next year we'll be having substantive discussions with the auto companies and the battery manufacturers that are based around three-ring binders of performance data and real-live testing and driving."

And Squiller said there's a lot more performance-wise that can be done with nickel-zinc.

"We're already on the second generation of that D-cell." The first version was 6.5 amp-hours. The upcoming version is 8 amp-hours. "That's a pretty significant jump." By next winter, Squiller said that D-cell is likely to take another jump in capacity.

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