EnerDel has more deals in the works

EnerDel will need more business than its existing relationships with Think and Volvo to justify the $237 million investment
it announced Thursday, and company officials hinted that they are close to unveiling new deals.

The startup company,
which supplies lithium-ion batteries for vehicles and other uses, said Thursday that it will match the $118.5 million federal
stimulus grant it received last summer and invest it in a new manufacturing plant in Hancock County at the Axcess 70 industrial
park. The investment will be made over the next several years and result in 1,400 new hires in the Indianapolis area, EnerDel
said in a press release.

In 2010 alone, the company will spend $60 million, it said. EnerDel intends to immediately
begin occupying more than 211,500 square feet of new space at Axcess70. It has a two-year option to buy the entire 423,000
square-foot facility, which is just north of the Interstate 70 interchange at Mount Comfort Road.

EnerDel’s plans
could accelerate if it lands a $480 million low-interest loan that it’s seeking from the Department of Energy. The company
currently has about 180 employees at its Hague Road headquarters and cell-production facility. Another 40 people work at the
battery assembly facility in Noblesville.

Under the plan announced Thursday, EnerDel’s first-stage expansion would
produce enough battery packs to supply 60,000 all-electric vehicles. At a cost of $17,000 per battery pack, that’s $1 billion
in sales.

The production increase will be steep. EnerDel currently produces 4,000 to 5,000 units a year, said Rachel
Carroll, vice president of communications for Ener1, the New York-based parent company. "We’re transitioning from prototype
to full-scale," she said.

But where will the business come from? The company is the exclusive battery supplier
for Norwegian electric-car maker Think, which has said it has a six-month backlog of 2,350 vehicles. And although EnerDel
will supply Volvo’s all-electric version of the C30, the Swedish car maker expects to produce only 1,000 vehicles a year.

Carroll said EnerDel is working on relationships with large European manufacturers and may supply fleet vehicles in
Europe. EnerDel recently opened a European office and expects 75 percent of its business to be on the other side of the Atlantic
between now and 2012, she said.

Ener1 CEO Charles Gassenheimer, who shared a stage with Indiana Gov. Mitch Daniels
in announcing the company’s plans, also hinted at future deals. EnerDel has 34 active programs, including supplying a military
Humvee, heavy-duty buses, and energy storage for power grids.

"These are all demonstration programs, but don’t
be fooled," he said. "These programs, once demonstrated, can get into very, very high volume."

EnerDel
first announced its plans to establish a manufacturing base in Indiana in 2008, but its projections now exceed the original
plan. The company recently struck a new tax-incentive agreement with the Indiana Economic Development Corp., based on its
plans to hire 1,400 people.  The state is offering EnerDel up to $21.1 million in tax credits and up to $200,000 in training
grants.