Clean energy start-up AllCell Technologies has been ahead of its time, but the market is quickly catching up.
So much so that AllCell is shifting its focus from revenue growth to profitability, said Said Al-Hallaj, co-founder and chief executive of the company. Being profitable will make the company more attractive to investors and lenders so it can raise the capital it needs for further expansion. We have been very lucky in the past six months, but now we need to hire more people, he said.
AllCell, launched in 2001 with technology developed at Illinois Institute of Technology, offers a patented phase-change material technology that absorbs the heat generated from lithium batteries, making them safer and doubling their lifespan, Al-Hallaj said. The batteries are currently being used to power electric scooters and bikes, but soon will be in electric and plug-in hybrid automobiles and trucks, he said. The company has been selling to the military since 2008 and currently is working with top automakers, he said.
AllCell Technologies also has developed the battery-pack technology for solar-powered electric vehicle charging stations being used by the city of Chicago to power a fleet of electric cars with energy from the sun. It worked with Carbon Day Automotive, a two-year-old Midwest distributor of Coulomb Technologies’ electric charging stations.
Carbon Day Automotive understands what it’s like to be slightly ahead of the market. Few people currently drive electric cars, yet to get others to do so will require charging stations in convenient locations, said Brian Levin, vice president.
If there’s one thing you can bet, electric vehicles will be hitting the streets more than leaving the streets, Levin said. “By 2012, every major automaker [will have] ¦ announced plans to roll out [electric] vehicles.”
For businesses that want to go green, installing a charging station that workers can use to charge their cars while they work makes a lot of sense, Levin said. What’s more, tax incentives are encouraging their adoption. Companies that purchase and install a charging station can get 50 percent back in tax savings, Levin said, while consumers who purchase electric cars can get $7,500 back in a tax credit.
The tax credit brings the Tesla Motors’ plug-in electric Roadster down to a base price of $101,500, while the Model S starts at about $50,000. Still, prices are coming down, Levin said. The Nissan LEAF will start at about $25,000 after the tax credit when it debuts later this year.
To prepare for the demand, Carbon Day last month installed the first two of three electric stations planned for Millennium Park garages. It hopes to have 500 changing stations installed in the Chicago area by the end of the year, Levin said, and has been teaming up with shopping centers, parking-garage operators, property owners, municipalities, utility companies, architecture and planning firms. Besides conventional electric and solar-powered units, it recently installed a wind-generated charging station at an office building in Highland Park, Levin said.
With 100 million vehicles on the road in the United States, converting even a portion each year to plug-in hybrid would make a significant impact on oil dependence and emissions, said Robert Anderson, chairman of Hybrid Electric Vehicle Technologies, a Chicago start-up specializing in development of hybrid and plug-in hybrid electric vehicle systems and components.
The company uses technology developed by IIT professor Ali Emadi to convert existing vehicles, such as the Ford F-150 truck to a plug-in hybrid, doubling the fuel efficiency and cutting about 4,500 pounds of carbon dioxide, Anderson said. While the company’s prototypes are proving the technology works, finding the capital to grow the business has been tough, he said. It’s one thing to say, ˜I think it’s a great idea. It’s another to say, ˜Here’s $50,000 or $500,000.
Anderson is looking for about $5 million to expand beyond prototypes to fleet applications. The company is exploring strategic partnerships with auto manufacturers and suppliers, as well as venture capital funding, foundation money or government grants. We’re in discussions with a number of groups and a number of mechanisms to do what it takes, he said.
When the economy plummeted in 2008, AllCell diversified its business model to generate revenue by providing engineering services and research and development to manufacturers that wanted to produce electric vehicles but didn’t have the technology in-house, said Al-Hallaj, who stepped down as a chemical engineering professor at IIT in 2008 to run AllCell full time.
We focus on coming up with high-tech engineering solutions for customers who need batteries, rather than us driving the market, he said.
The shift in strategy was the right decision given the economic climate. Companies started to know us and our technology, which won an industry innovator award at the Society of Automotive Engineers Congress 2010 show in April, Al-Hallaj said. We started growing, and we’re hopeful to break even this year, he said.
The company generated nearly $1 million in revenue last year, Al-Hallaj said, despite the tough economy. It is targeting $100 million in annual sales in 2015, but will need funding to achieve it, Al-Hallaj said.
The company has received $2.2 million in two angel funding rounds during the past four years, plus a $200,000 loan through the state Department of Commerce and Economic Opportunity’s Participation Loan Program, Al-Hallaj said. Now it’s looking for more investment dollars or a loan to expand. We have purchase orders from customers who are saying, ˜When can you deliver to us? Al-Hallaj said. We have to ask them to give us time. We have to figure out how to finance these orders.
A version of this story first appeared in the Chicago Tribune’s Business section on June 28, 2010.