Quantum Fuel Systems Technologies Worldwide Inc. is looking to a new business model and the coattails of Fisker Automotive Inc. to erase years of financial pitfalls.
The company, which makes hybrid powertrains for the military and automakers, is jumping on the solar bandwagon.
Quantum is in the process of gutting its Irvine headquarters and converting it into a plant for producing solar panels. The company expects to produce enough panels each year to generate 45 megawatts of electricity, which can power 20,000 to 40,000 homes.
Initial panel production is set to start early next year.
At capacity, the plant has the potential to generate $100 million in yearly revenue, according to Quantum officials.
That would be a big jump for a company that had 2009 sales of $23 million.
“This is going to change the financial metrics of this company,” Chief Financial Officer Brian Olson said.
The solar panel push “will turn the company to profitability,” Chief Executive Alan Niedzwiecki said.
Since starting in 2000, Quantum has tinkered with many business lines beyond its primary revenue source—the engine, transmission, and other parts that make hydrogen hybrid vehicles go.
The company has developed propulsion systems, energy storage devices and alternative fuel technologies, among others.
So far, Quantum’s biggest hit appears to be a deal with Fisker, which is working on a hybrid sedan and other cars. Fisker has started production and is expected to ramp up business next year, which should boost Quantum.
Quantum is trying to parlay its work for Fisker into other deals with hybrid auto- makers, which have benefited from the Obama administration’s green energy funding initiative.
Fisker itself received a $528.7 million Energy Department loan for the development of two plug-in hybrid vehicles. Palo Alto-based Tesla Motors Inc., which debuted its hybrid Roadster in early 2008, received a $465 million federal loan.
For now, Quantum only has the Fisker deal to hang its hat on. The company is developing powertrains and solar power roofs for Fisker’s much-hyped Karma sedan. Production is under way on 15,000 sedans to meet pre-orders.
Investors remain skeptical. Quantum’s stock has a market value of $80 million, down 40% in the past 12 months. Its shares have traded below $1 for much of 2010, putting the company in jeopardy of being delisted from Nasdaq for not meeting minimum financial requirements.
Solar Panels
Now Quantum is venturing into a growing and increasingly crowded solar panel market, a gamble for a company that hasn’t found a true niche yet.
That’s a concern for some industry watchers.
“These guys are all over the place,” said Jon Hickman, director of research at MDB Capital Group LLC, a Santa Monica-based investment bank. “Why don’t they focus on one thing and be good at that?”
Executives are pinning their hopes on making solar panels at their 90,000-square-foot Irvine building.
“The demand for energy is growing leaps and bounds,” Niedzwiecki said. “There’s a multibillion untapped market here.”
That’s a familiar refrain among solar advocates, who see dollar signs in the gold-rush-like market.
Quantum gutted its Irvine headquarters and transferred more than 100 employees to its Lake Forest buildings to make way for the plant.
At capacity, the Irvine plant is expected to employ more than a hundred workers in three daily shifts. For sales, the company is targeting government agencies, hospitals, commercial buildings and panel installers.
Eventually, Quantum wants to sell supply kits capable of generating 5 kilowatts of power for home use.
It also plans on using some of the panels to power a subsidiary, Schneider Power Inc., a Canadian solar and wind power generation company it bought earlier this year.
Rival panel makers include Seal Beach-based Amonix Inc., San Jose-based SunPower Corp. and China’s Suntech Power Holdings Co.
The installation of solar panels is booming in Orange County, generating hundreds of needed jobs for the construction sector and fueling startups by the month.
But the cost of solar is high. Solar projects for homes can top $50,000. Large commercial projects can eclipse seven figures.
For now solar power is a small, niche industry catering to businesses and wealthy or environmentally conscious homeowners.
“It will take more time and innovation to bring down the cost curve,” said Niedzwiecki, who is as bullish as anyone in the solar industry.
“That is our path to profitability,” he said.
MDB’s Hickman isn’t convinced of that yet.
“If they’re successful in selling panels they can make a lot of money,” he said. “But it’s a very crowded marketplace.”
CORRECTION – Sept. 20, 2010
The original story on Quantum Fuel Systems Technologies Worldwide Inc. should have said the company resumed regular quarterly filings with the Securities and Exchange Commission earlier this year.
