December 12, 2008 / 8:19 PM / 10 years ago

Electric car maker Zenn sees growth environment

OTTAWA (Reuters) - As hope endures for a bailout to salvage the struggling U.S. auto sector, Canadian electric car maker Zenn Motor Co may once again find itself in the right place at the right time.

After a rescue package failed in the U.S. Senate, the White House said on Friday it may dip into a $700 billion bank recovery fund to stave off an auto industry collapse.

As part of its recovery plan tied to funding, troubled auto makers have pledged to accelerate development of cleaner, more fuel-efficient vehicles - from gas-electric hybrids to fully electric cars.

The Chief Executive of Zenn (Zero Emission No Noise) said that green push may spark big demand for his tiny company.

“It’s an absolutely massive opportunity for us,” Ian Clifford told Reuters in an interview. “The potential is quite staggering.”

It could be a substantial payday from Zenn’s $2.5 million investment in energy storage developer EEStor Inc for an exclusivity deal that Clifford credits to timing and presence.

Low-profile EEStor is working on a kind of super-battery called an ultracapacitor, which promises a host of advantages over traditional batteries. It can be charged within minutes rather than hours and is a fraction of the cost and size of chemical batteries, Clifford said.

Zenn has exclusive rights to the technology, slated for commercial production in 2009, in mid-sized vehicles weighing up to 1,400 kilograms (3,086 pounds).

“We basically will joint venture with any and all auto makers around the world,” Clifford said. “Zenn is very, very well positioned to take a dominant role in the electrification of vehicles.”

The Toronto-based company, which has paid EEStor $1.3 million of its $2.5 million commitment, pending additional milestones, also has exclusive rights to convert vehicles with internal combustion engines to electric.

Zenn currently sells a low-speed vehicle for $15,995 with a top speed of 40 kilometers per hour (25 mph), but has promised to launch a highway-capable car by the end of 2009.

Powered by EEStor, the new car is expected to have a top speed of 125 km/h (78 mph) and travel 400 km (250) miles on one charge.

“I hope, from our perspective, we’re growing the next Research In Motion,” Clifford said. “We do see this very much as a technology challenge.”

Produced in Quebec, Zenn’s tiny, two-door sedans are approved for sale in 46 U.S. states, but only allowed on public roads in two Canadian provinces, and only in low-speed areas.

The company, which has abut 40 staff, has sold 350 vehicles, which are mostly aimed at short-range urban use, or for campuses, parks or other controlled-access areas.

Clifford, a former photographer and technology entrepreneur who began Zenn in 2001 “when cars were big and gas was cheap”, said demand has not declined alongside petroleum prices.

Sales stability along with growing activity in the electric car sector demonstrate rising interest and demand, he said.

General Motors Corp is well-known for its development work on the Chevy Volt, while Mitsubishi Motors Corp and Subaru-maker Fuji Heavy Industries Ltd are testing electric vehicles, for example.

Shares in Zenn, which has not yet turned a profit, added 7 percent on Friday to C$2.57 on the TSX Venture Exchange. The stock has dropped about 36 percent over the past year.

($1=$1.24 Canadian)

Reporting by Susan Taylor; editing by Rob Wilson

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