Table of Contents
PM Summary – Initiating on Advanced Batteries: Light, but the tunnel is long 3
Li-ion – Alliances are the keystone to build the evolutionary bridge to growth 4
E-commerce adoption offers a potentially useful analog for industry evolution 5
Stocks no longer trading simply on news flow, market awaiting proof points 7
Industry Overview: Cost/weight ratio separates lithium ion from lead acid battery market 10
Near term critical success factors 15
Alliances are the keystone – but existing relationships more tenuous than they seem 16
Funding – Government financing essential to manufacturing expansion, but less is more 20
Technology – A123 and Ener1 are both leaders 23
Medium and longer term evolution 28
Electric drive vehicles – When, not if, but not now 29
Secular drivers – Oil imports the main concern, but electrification not the only solution 33
Infrastructure – Charging infrastructure not a gating factor, but utility cooperation needed 37
Valuation: Multiple possible trajectories from takeout to Tier 1 to zero 39
Valuation paths – exploring the potential evolutionary paths for advanced batteries 40
A123 Systems (AONE: Neutral, $9 6-month price target) 43
Ener1, Inc. (HEV Neutral, $3.50 6-month price target) 46
EnerSys (ENS, Buy, $29 6-month price target): Worth its weight 48
Financial Models 55
Appendices 68