March 26, 2009 / 3:39 PM / 10 years ago

Zenn picks electric car manufacturer, stock drops

(In U.S. dollars unless noted)

By Susan Taylor

OTTAWA, March 26 (Reuters) - Zenn Motor Co Inc ZNN.V, which makes low-speed, short-range electric cars, said on Thursday that it has chosen a manufacturer to produce a highway-capable electric car it is developing, but will not announce the company until agreements are finalized.

Investors awaiting key performance data on a battery being developed by Zenn’s privately held partner EEStor Inc appeared dissatisfied with the news. Shares of TSX Venture Exchange-listed Zenn fell 3 percent.

“The significance of something like that would have been much more important six months or one year ago, when the market was expecting EEStor to come out with permittivity results,” said Versant Partners analyst Massimo Fiore.

Zenn has paid Texas-based EEStor $1.3 million under a $2.5 million exclusivity deal, pending two additional milestones. EEStor must provide so-called permittivity data, which demonstrates energy and power density, followed by delivery of a battery from EEStor production lines.

The new, highway-capable vehicle, called cityZENN, will be powered by an EEStor ultracapacitor, which has the potential to charge faster and be a fraction of the cost and size of traditional chemical batteries.

Zenn also has worldwide exclusive rights for use of the battery in vehicles under 14,000 kg (3,086 lbs).

“While Zenn recognizes the frustration of its shareholders with the timeline towards commercialization, this is something simply beyond the company’s control,” Chief Executive Ian Clifford said in a statement.

“EEStor is building what management believes will be a groundbreaking technology ... It simply cannot happen soon enough and we continue to ready our product offerings to rapidly incorporate the EEStor technology as soon as it’s available.”

Zenn, which stands for Zero Emissions No Noise, currently builds a small two-seat fully electric vehicle which can be charged through a standard electrical outlet. The car has a range of 50-80 km (31-50 miles) and a top speed of just 40 km/h (25 mph).

Because of its low speed, the vehicle is not allowed on public roads in many jurisdictions, or is restricted to low speed streets and controlled access areas such as gated communities or campuses.

The company said that its engineering staff have been working with a team from its chosen manufacturer to develop the new cityZENN.

The car, which is expected to have a top speed of 125 km/h (78 mph) and travel 400 km (250 miles) on one charge, is scheduled for initial introduction in late 2009, with commercial availability in 2010.

Zenn has also picked an equipment supplier for a four-seat, low-speed vehicle it is developing that will have a top speed of 40 km/h (25 mph). It has not yet been decided if the supplier will manufacture that vehicle, or Zenn will make it at its Quebec plant, which currently makes the two-seat vehicles.

Zenn shares fell 7 Canadian cents to C$2.11 on Thursday. The stock has lost about 30 percent of its value in the last 12 months and is down nearly 70 percent from its all-time high of C$6.89, set in July 2008.

$1=$1.23 Canadian Reporting by Susan Taylor; editing by Rob Wilson

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