June 27, 2010
Americas: Clean Energy: Energy Storage
Advanced Batteries: Light, but the tunnel is long; Buy ENS, HEV Neutral, AONE Neutral
Initiating coverage with a Neutral view
Catalysts
We initiate coverage of the advanced battery
industry with a Neutral coverage view. We find
more realistic growth expectations have
reconciled with valuation multiples to reflect what
we expect will be a multi-year waiting period prior
to clarity on plug-in hybrid and electric vehicle
mainstream market adoption.
Compared to the news flow driven nature of stock
price performance in 2009, changes in the relative
strength of alliances, funding and technology will
shape performance for lithium ion battery
manufacturers in 2010-2012.
Upcoming feedback cycle key to evolution
Alliances, funding and technology are the critical
success factors, in our view, with the announced
alliances more tenuous than they seem. We view
the upcoming feedback loop from vehicle
launches over the next 6-12 months as critical in
moving the plug-in market toward the next
evolutionary phase before consumer adoption.
We rate EnerSys Buy, Ener1 Neutral, and assume
coverage of A123 Systems at Neutral. Like its leadacid batteries, EnerSys is a solid but underfollowed
and underappreciated performer showing 30%
upside to our $29 6-month price target.
Mark Wienkes, CFA
(212) 357-1986 [email protected] Goldman Sachs & Co.
David Lefty
(212) 902-9429 [email protected] Goldman Sachs & Co.
The Goldman Sachs Group, Inc.
5th Annual AE5 – Clean Energy Conference
November 10-11, 2010, 200 West Street, NY, NY
GS Utility Conference, August 13, 2010, 200 West Street
RELATED RESEARCH
06/10 Japan: Automobiles: “GENBA Project 1: Nissan
battery factory visit; looking at latent value”
Risks
Near term: (1) shifting alliances, (2) technology
differentiation, (3) funding dynamics, and (4)
execution.
Medium-term: (1) faster or slower than expected
market adoption and (2) ability to gain share from
larger Asian competitors are the key risks.
Lead-acid market: (1) slower than expected
industrial recovery and (2) smaller than expected
margin gains present risk to our view.
Top Picks and Pans
UPCOMING EVENTS
06/10: “A123 Systems, Inc. Updating model following recent
management meeting”
05/10 Japan: Automobiles: “New era of mixed powertrains:
New alliances, same leaders”
05/10 China: Automobiles: “China Autos: Initiate coverage”
11/09 Initiation: “A123 Systems, Inc. – plugged in, but still
charging: launch at Neutral”
11/09 Global: Automobiles: “Identifying global long-term
winners”
06/09 Global: Technology: “Fully charged: Look for
undervalued winners in battery sector boom”
Upcoming vehicle launches
Think City BEV, 4Q10 - Ener1 24 kWh battery
Chevy Volt PHEV, 4Q10 - LG Chem 16 kWh battery
Nissan Leaf BEV, 4Q10 - AESC 24 kWh battery
Fisker Karma PHEV, 4Q10-2Q11 - A123 23 kWh battery
The Goldman Sachs Group, Inc. does and seeks to do business with
companies covered in its research reports. As a result, investors should
be aware that the firm may have a conflict of interest that could affect
the objectivity of this report. Investors should consider this report as
only a single factor in making their investment decision. For Reg AC
certification, see the end of the text. Other important disclosures follow
the Reg AC certification, or go to www.gs.com/research/hedge.html.
Analysts employed by non-US affiliates are not registered/qualified as
research analysts with FINRA in the U.S.
Global Investment Research
June 27, 2010
Americas: Clean Energy: Energy Storage
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
Valuation paths – exploring the potential evolutionary paths for advanced batteries
39 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 We would like to thank Lily Parshall, Ph.D. for her contribution to this report.
Goldman Sachs Global Investment Research
2
June 27, 2010
Americas: Clean Energy: Energy Storage
PM Summary – Initiating on Advanced Batteries: Light, but the tunnel is long
We initiate coverage of the Advanced Batteries industry with a Neutral coverage view. We believe that strong alliances,
funding and technology are the critical success factors for an electric vehicle battery company, and in our view the
announced alliances may be more tenuous than they seem. We view the upcoming feedback loop from plug-in vehicle rollouts over the next 6-12 months as critical in helping to move the industry through its second phase and closer to
mainstream consumer adoption.
We believe market share gainers and givers will emerge in concert with clarity into longer-term alliances. Uncertainty has
grounded growth expectations and valuation multiples, reflecting what we expect will be a multi-year period prior to clarity of
consumer adoption of plug-in vehicles, and financial returns. We view the industrial battery outlook more positively, with solid end
market demand enabling superior cost leverage.

Our top pick is EnerSys (Buy, $29 6-month price target). EnerSys, the lead acid alternative, offers more near-term upside:
the company effectively managed costs through the downturn and is now well-positioned to take advantage of a sharper
margin lift as the industrial recovery progresses, particularly in the forklift market, but also in the reserve power market.

We are neutral on A123 ($9 6-month price target) and Ener1 ($3.50 6-month price target). We see promise for vehicle
electrification, but would maintain a cautious attitude until commercial roll-outs of plug-in vehicles commence in 4Q10/2Q11,
providing better visibility on which battery-OEM alliances can deliver vehicles that can cost-effectively penetrate the market.
Where our view differs most from the Street

We believe the Street underestimates the margin upside on EnerSys, an underfollowed and undervalued stock.

We emphasize alliances, funding, and technology as the most critical success factors. With both A123 and Ener1 having
reached the technology performance threshold necessary to obtain funding for commercial production, we think the next
catalyst for the stock is feedback from a critical mass of plug-in vehicle owners that can be leveraged into the next round of
technology improvement and cost reduction. Companies’ funding status and success satisfying OEM partners are likely the
important near-term drivers that will help shape long-term opportunities and hence valuations for li-ion battery companies.
Exhibit 1: Advanced Battery comparative valuation analysis (Price as of close 6/24/10)
Company Name
A123 Systems Inc.
Ener1 Inc.
EnerSys Inc.
GS Yuasa Corp.
Saft Groupe S.A.
Valence Technology Inc.
Altair Nanotechnologies Inc.
Exide Technologies
Type
Li-ion
Li-ion
Lead acid
Diversified
Diversified
Li-ion
Li-ion
Lead acid
Ticker
AONE
HEV
ENS
6674
SAFT
VLNC
ALTI
XIDE
Rating
Neutral
Neutral
Buy
Neutral
Buy
NC
NC
NC
Stock
Price
9.19
3.62
22.23
¥625
26.99
0.85
0.40
5.22
Enterprise Market Cap LT Sales
Value (mn)
$mn
Growth
521
956
71%
527
507
109%
1,238
1,089
N/A
¥299,252
2,894
10%
773
821
6%
162
111
13%
25
42
138%
980
395
6%
2009A
5.7x
15.1x
0.6x
N/A
1.3x
9.6x
5.7x
0.4x
EV/ Sales
2010E
2011E
3.7x
1.8x
6.8x
2.6x
0.8x
0.7x
N/A
N/A
1.3x
1.2x
6.4x
5.6x
1.8x
0.7x
0.4x
0.3x
2012E
1.2x
1.6x
0.6x
N/A
N/A
N/A
0.4x
N/A
P/E (CY)
2010E
2011E
N/A
N/A
N/A
N/A
11.1x
9.5x
32.9x
27.6x
19.3x
16.7x
N/A
N/A
N/A
N/A
29.2x
10.6x
Source: Factset, Goldman Sachs Research estimates. For important disclosures, please go to http://www.gs.com/research/hedge.html.
Goldman Sachs Global Investment Research
3
June 27, 2010
Americas: Clean Energy: Energy Storage
Li-ion – Alliances are the keystone to build the evolutionary bridge to growth
In the near term – what we term Phase 2, or 2010-2012+ in Exhibit 2 – we view battery-OEM alliances, funding, and
technology as the key industry factors as manufacturers vie to cross the chasm to mainstream adoption (Phase 3) in the
medium term (2012-2020). The pace of vehicle electrification and alliances should become increasingly important for battery
makers in Phase 3, with more definitive winners and losers emerging. In the long term (2020+), the industry could evolve in
several directions, with a financial profile that seems likely to be more muted than consensus currently expects.
Evolution not
revolution
The ability to successfully bridge from Phase 2 to Phase 3 and thus participate in the emerging electric drive vehicle market requires
sufficiently strong alliances, funding, and technology. Our view is that a clear, achievable funding plan enables capacity expansion
and that substantial capacity is needed to form and retain alliances, with alliances functioning as the keystone completing the bridge.
Both A123 and Ener1 have leading technologies that have allowed them to reach the performance threshold necessary to obtain
funding, so we view this as a positive for the companies as they approach the chasm, with the risk that leapfrog technologies arrive
before the chasm is crossed.
Exhibit 2: We think the electric vehicle rollout remains in Phase 2, with customer feedback likely helping shape critical alliances over the next few years
Phase 1:
History
Phase 2:
Early Adoption
Phase 3:
Vehicle Electrification
Phase 4:
Maturity
Alliances
Initial alignments
Alliances = Keystone
Shifting alliances
Long-term agreements
Funding
Ad hoc
Government/equity
Transition
Traditional
Lithium-ion R&D
Performance & safety
Cost declines
Commoditization
HEV + truck/bus fleets
Light-duty launches
Plug-in adoption
Plural powertrains
Design and discussion
At home, 110 or 220V
New business models
Public fast charge, 440V
Technology
Vehicles
Charging /Utilities
Key to unlock the market
and cross the chasm:
Alliances
Funding
Consumer
Adoption
2010 — Fleet
announcements
– UPS, FedEx,
etc.
2009 — HEVs
1% of global
light-duty sales
1997 —
Toyota Prius
goes on sale
in Japan
2020+ — Most
consumers consider
BEV/PHEV when
purchasing a vehicle
4Q 2010 – 2Q 2011 —
Planned BEV/PHEV
launches for Chevy Volt,
Nissan Leaf, Fisker
Karma, Think City
2005-2008 — R&D on li-ion
batteries for auto applications
2010-2012 —
Early adopters
1996-2010
Large
market
2012-2020 — OEM-battery
alliances leverage learning
from launches, improving
driver experience, lowering
costs, and extending the
adoption curve
Large
Share
Tier 1 or
Takeout
The
Chasm
1996-1999 — GM produces
the EV1, first with a 2,590 lb
lead-acid battery pack, then
with a 1,050 lb NiMh pack
~2010-2012
Market Trajectory?
The Mainstream
BEV/PHEV Market
?
~2012-2020
2020+
Technology
Time
BEST
Outcome
Small
market
Small
Share
Large
Share
Squeezed
supplier
Niche
market
supplier
Moderate
revenue,
low
margins
Low
revenue,
high
margins
Small
Share
Failure
to cross
chasm
Ø
Source: Goldman Sachs Research.
Goldman Sachs Global Investment Research
4
June 27, 2010
Americas: Clean Energy: Energy Storage
E-commerce adoption offers a potentially useful analog for industry evolution
Broadband adoption
drove e-commerce
over the chasm into
the mainstream.
We think the adoption of e-commerce in the U.S. offers a potentially useful analog to the path that electric vehicle penetration has
an opportunity to follow in the coming years. Exhibit 3 details the standard S-curve adoption with enthusiasts and early adopters
driving the market to the chasm, known to some as the valley of death. At that point the product or service typically needs an
improved value proposition to reach mainstream consumers and ultimately win over some of the skeptics. E-commerce penetration
essentially followed this trend, albeit with a fairly sizable bubble and subsequent washout in the early adopter phase.
In our view, there is probably not a significant difference in the factors that could help plug-in vehicle adoption enter the
mainstream market versus what enabled e-commerce. Broadband penetration enabled e-commerce penetration to ‘cross the
chasm’ and enter the mainstream market as companies were able to offer a significantly more robust and higher quality user
experience around the key variables of price, service, selection, and ease of payment. Similarly, the availability of a wider variety of
electric drive vehicles at comparable (or better!) prices and performance levels, should ultimately drive plug-in vehicle penetration
into the mass market. We currently forecast this to occur in the period approaching 2020, with cost and performance the key
variables driving the pace of adoption.
Exhibit 4: Broadband’s better experience bridged the chasm for e-commerce
Exhibit 3: Standard S-curve adoption of new technology
E-commerce adoption in the U.S.
E-Commerce
adoption
Adoption
2004/ 2005— Innovations in digital
products and e-Commerce expand the
market opportunity; Price, service,
selection and quality all improve
Skeptics
2005 - 2010…Global expansion extends
the adoption curve as the mainstream
market moves online
2003/ 2004 — Broadband improves
the customer experience and enable ecommerce to cross the chasm
The
Mainstream
Market
1999 — Market enthusiasm
and excessive funding creates
a bubble
Early
Adopters
The
Chasm
The Mainstream
Market
The
Chasm
2002 — Companies’ strategies evolve
to cross the chasm; specific efforts in
improving the customer experience
Time
Technology
Enthusiasts
I
2000/ 2001 — A pause in grow th
as the market flushes out the
poorly funded and also-rans
1997/ 1998 — Technology
enthusiasts drive initial eCommerce adoption
II
III
Source: Goldman Sachs Research.
Goldman Sachs Global Investment Research
IV
Phase
1999
Next year P/E
EV/EBITDA
2000
2001
105x
2002
54x
2003
73x
2004
57x
2005
44x
24.9x
Time
2006
30x
17.4x
2007
30x
18.7x
2008
15x
7.5x
2009
25x
13.8x
2010E
17x
9.0x
Source: Goldman Sachs Research.
5
June 27, 2010
Americas: Clean Energy: Energy Storage
Next catalyst is market response to feedback from key upcoming vehicle launches
We think late 2010 EV rollouts will be the next significant catalyst for advanced battery manufacturers. The sentiment
surrounding Li-ion battery manufacturers has and continues to reconcile with what is likely to be a protracted period prior
to entering the mainstream market and even then, a sustained period of gradual adoption prior to mass penetration, in our
view. With the key technologies all sufficient to partake in customer trials, we think that receiving feedback from actual launches is
the next critical catalyst to shaping the industry’s path, and consequently, the role of an A123 Systems or Ener1 in that industry.
Exhibit 5 details the key vehicle launches that should spur increased press and awareness of plug-ins in late 2010 and 2011.
We expect most of the earlier datapoints concerning plug-in vehicle adoption are likely to relate to bus, truck and fleet vehicles first.
For cars, we think Europe will lead market penetration as (1) gas prices are higher, (2) auto taxes are much higher for non-electric
vehicle purchases, and (3) 220V service is standard (allowing for faster charging).
Vehicle Types:
HEV: Hybrid that uses
an electric motor to
complement an
internal combustion
engine, with a small
battery that charges
while the car is in use
PHEV: Plug-in hybrid
electric vehicle with
both an internal
combustion
engine(ICE) and an
electric drivetrain.
Battery is charged by
plugging in the vehicle.
Note that an extended
range electric vehicle
(E-REV) is a type of
PHEV
Exhibit 5: High-profile plug-in vehicle launches planned for 4Q 2010-2Q 2011 appear to be the next major industry catalyst
Vehicle range
Tesla Roadster BEV (2008)
Tesla Motor 53 kWh battery
220 mile electric range
More than
100 miles
Chevy Volt PHEV
LG Chem 16 kWh battery
40 mile electric / 300+ total
~$40,000 retail price
2011 sales target – 8,000
Fisker Karma PHEV
A123 23 kWh battery
50 mile electric / 300 total
$87,900 retail price
2011 sales target – 15,000
BMW Mini E BEV
E-One 35 kWh battery
96-156 mile electric range
Toyota Plug-in Prius PHEV
Panasonic battery
13 mile electric / 300+ total
Coda Sedan BEV
Lishen 34 kWh battery
90 – 120 mile electric range
~$35,000 retail price
Less
than 100
miles
Mitsubishi iMiEV BEV (2008)
Lithium Energy Japan
16 kWh battery
80 mile electric range
Think City BEV
Ener1 24 kWh battery
100 mile electric range
high $20,000s retail price
2011 sales target – 11,000
Volvo C30 BEV
Ener1 24 kWh battery
93 mile range
Tesla Model S
Tesla Motor battery
160 mile base electric range,
300 with larger, premium pack
Ford Focus BEV
LG Chem 23 kWh battery
Nissan Leaf BEV
AESC 24 kWh battery
100 mile electric range
~$32,800 retail price
BEV: Plug-in pure
electric vehicle
Time
Previously
launched
Plug-ins: PHEV + BEV
4Q 2010
2011
2012
User tests have revealed that actual vehicle ranges are often significantly lower than the published ranges shown in this exhibit, particularly in cold weather, at high speeds, or in
tough terrain.
Source: Greentech Media, company data, compiled by Goldman Sachs Research.
Goldman Sachs Global Investment Research
6
June 27, 2010
Americas: Clean Energy: Energy Storage
Stocks no longer trading simply on news flow, market awaiting proof points
A123 and Ener1 shares are exhibiting far fewer sustained reactionary price movements on news flow around supply
agreements, capacity expansion, or general industry developments than in late 2009/early 2010. The stocks now appear to
have internalized shifting industry alliances and timelines. We expect the next major catalyst for A123 and Ener1 to be plugin vehicle launches in 4Q2010-2Q2011.
Looking closer at the specific trading activity for the three stocks uncovers the following key observations:

The market does not seem to differentiate between AONE and HEV as the stock price correlation has steadily increased and
now stands at 0.88, as the stocks have drifted lower throughout 2010 (Exhibit 6)

AONE and HEV revenue multiples are already consistent with corresponding e-commerce multiples as of 2009, though we
would not be surprised to see a jump similar to that enjoyed by the Internet sector in 2004 given a faster than expected plug-in
vehicle penetration.

Short interest for AONE and HEV has steadily marched higher as the stocks have sold off

EnerSys shares have resumed trading on fundamental performance after a universally difficult late 2008.
Exhibit 6: Correlation between A123 and Ener1 has increased, reaching 0.88.
Exhibit 7: Battery manufacturer revenue multiples have converged quickly to
Internet and e-commerce multiples…for now
Internet basket includes AMZN, EBAY, ELNK, RNWK, and YHOO
Correlation: 0.88
(June 17)
20%
30x
29.2x
Internet P/Revenue
Advanced Battery P/Revenue
25x
Correlation: 0.78
(March 31)
0%
1.0
0.6
20x
-20%
19.4x
0.2
15x
12.0x
-40%
-0.2
10x
8.1x
-60%
-0.6
September 30, 2009 price = 0
A123 Systems: $21.32
Ener 1, Inc.: $6.92
-80%
09/30/09
11/30/09
-1.0
01/31/10
03/31/10
4.5x 4.4x
5x
0x
1998
6.7x
6.7x
5.4x
4.6x
3.8x
2.7x 2.1x 2.3x
3.2x
2.1x
1.9x 1.6x
2000
2002
2004
2006
2008
2010
2012
05/31/10
(A123 IPO closes)
A123 Systems
Ener1, Inc.
Source: Factset, Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
Correlation
Source: Factset, Goldman Sachs Research estimates.
7
June 27, 2010
Americas: Clean Energy: Energy Storage
Exhibit 8: Short interest in AONE marched higher as the stock fell
Exhibit 9: Ener1’s short interest remains elevated
Stock price and days to cover, 2009-2010E
$30
AONE
HEV
Short interest, days to cover
Short interest, days to cover
$25
$8
20
$6
15
$4
10
2
$2
5
0
$0
Oct-09
$15
4
HEV stock price
6
Days to cover
8
$20
AONE stock price
25
$10
10
Days to cover
Stock price and days to cover, 2009-2010E
$10
$5
$0
Oct-09
Nov-09
Dec-09
Jan-10
Feb-10
Mar-10
Apr-10
May-10
0
Nov-09
Dec-09
Jan-10
Feb-10
Mar-10
Apr-10
May-10
Source: Factset, Goldman Sachs Research estimates.
Source: Factset, Goldman Sachs Research estimates.
Exhibit 10: EnerSys has resumed an upward trend after the late 2008 sell-off
Exhibit 11: EnerSys shares mostly trade on fundamental earnings results
EnerSys stock price versus S&P500 and short interest as percentage of float
S & P Index
150%
30
Max price:
$37.14
6/19/08
ENS indexed price
$2.00
$3,000
Consensus Revenue Estimate (LHS)
$2,800
Price:
$24.32
25
(06/18/10)
Days to cover
Reported Revenue (LHS)
ENS maintains solid
earnings in 2009 and
2010 despite YoY
revenue declines
100%
0%
-50%
Price:
$12.84
09/01/04
Min price:
$5.96
11/20/08
-100%
15
ENS Revenue
20
6-mo
return:
13%
Days to cover
ENS stock price
$2,400
50%
$2,200
$1,800
0
-200%
Sep-06
Mar-07
Sep-07
Source: Factset, Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
Mar-08
Sep-08
Mar-09
Sep-09
EPS beats
guidance
2009
Stock impact +1 day prelim earnings:-14%
Stock impact +1 day final earnings: +9%
1-year stock return (06/08 - 05/09): -46%
$0.75
$0.50
$1,200
Mar-06
$1.25
EPS beats
guidance
$1,600
5
Sep-05
$1.50
$1.00
EPS beats
guidance
10
-150%
Mar-05
2008
Stock impact +1 day prelim earnings:+14%
Stock impact +1 day final earnings: +15%
1-year stock return (06/07 - 05/08): +74%
$2,000
$1,400
Sep-04
$1.75
EPS beats
guidance
GAAP EPS (RHS)
$2,600
ENS EPS
200%
2007
Stock impact +1 day prelim earnings: +6%
Stock impact +1 day final earnings: +6%
1-year stock return (06/06 - 05/07): +23%
$1,000
2010
Stock impact +1 day prelim earnings:+4%
Stock impact +1 day final earnings: +4%
1-year stock return (06/09 - 05/10): +26%
$0.25
$0.00
Mar-10
Source: Factset, Goldman Sachs Research estimates.
8
June 27, 2010
Americas: Clean Energy: Energy Storage
Exhibit 12: Industry and company news doesn’t seem to affect price action as much anymore
A123 price to news flow
10/2 - Prius
plug-in
previewed with
li-ion battery
Stock up 14%
11/24 - DTE, A123 land
$5mn research grant
Stock up 18%
1/15 - Fisker Karma supply
agreement announced
Stock up 2%
12/17 - Announce
JV with SAIC
Stock up 6%
$25
3/29 - Lock-up
agreement expires
Stock down 6%
2/2 - ABB to supply
robots for battery
assembly
Stock up 11% on 2/2
Stock down 9% on 2/4
5/5 - News article on battery
pricing concerns
Stock down 11% on 5/6
5/3 - Pres. Obama
references A123 in
speech on GDP
Stock up <1%
Price
$20
25,000
5/11 - 1Q Earnings Earnings miss, revenue
inline; also Eaton
announcement
Stock flat on 5/12,
Stock up 2% on 5/13
5/13 - Navistar FedEx
announcement
Stock up 11% on 5/14
$15
$10
9/30 - IPO is
priced at
$13.50 and
closes at
$21.32
11/19 - Announce
commercial operation of
12 MW grid storage in
Chile with AES
Stock down 1%
3/10 - 4Q Earnings - Revenue
beat by $4 mn and loss per
share inline; also Navistar
announcement and 200 MWh
capacity expansion
Stock down 2% on 3/11
Stock up 2% on 3/12
Positive analyst
comments
Stock up 4% on 4/7
Stock up 6% on 4/13
6/7 - Navistar supply
agreement signed
Stock down 6%
$5
$0
09/30/09
6/2 - Politician
visits A123
Stock up 6%
10/31/09
11/30/09
12/31/09
01/31/10
02/28/10
03/31/10
04/30/10
05/31/10
20,000
15,000
10,000
Volume
$30
5,000
0
06/30/10
10/19 - First analyst initiation
Source: Factset, Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
9
June 27, 2010
Americas: Clean Energy: Energy Storage
Industry Overview: Cost/weight ratio separates lithium ion from lead acid battery market
The lead-acid battery market is a mature niche market whereas li-ion batteries are currently undergoing commercialization
for vehicle and grid storage applications. AT Kearney estimates the auto market for li-ion batteries will reach $74 billion by
2020, and we estimate a $2 billion grid stabilization market within the same time frame. Although the total potential market
for li-ion batteries is over 10 times larger than the $6.6 billion lead-acid market, the pace of market growth and company
positioning remain uncertain in the 2010-2012 time frame. We expect greater market visibility following initial electric
vehicle launches during this period. The li-ion market seems likely to remain separate from the lead-acid market until at
least 2020 due to the distinction between low cost/high weight lead acid and high cost/low weight li-ion batteries.
Distinct battery markets for now, but potential convergence longer term
Separate today,
together tomorrow?
There is virtually no overlap between the industrial lead-acid and large-format lithium-ion battery markets due to the
tradeoff between cost and weight. Lead-acid batteries are used in electric forklifts and for reserve power, applications where the
weight of the battery is relatively independent of energy and power requirements. Lithium ion batteries are emerging as the leading
technology in cases where (1) additional weight meaningfully increases energy and/or power requirements, e.g. in an electric
vehicle where the battery adds to the weight that must be propelled and/or (2) high power is needed, e.g. in electric grid stabilization
applications. Recent advancements in thin-plate pure lead technology and cost reductions in lithium ion batteries open up the
possibility of both technologies competing in a shared end market for bulk energy storage, estimated by Sandia Laboratories to be
about 9X the size of the grid stabilization market in the U.S.
Exhibit 13: Virtually no market overlap between EnerSys and A123 Systems/Ener1, Inc.
Advanced battery sector diagram
Heavy
duty
Road
Going
Transportation
Light
duty
Ground
Vehicles
Grid
Stabilization
A123
future?
Ener1
Bulk energy
storage
Utility &
Merchant IPP
Stationary Power
future?
Non-road
Going
Electric forklifts
EnerSys
Reserve power
Commercial
& Industrial
FUTURE CONVERGENCE?
Plugged in vehicle batteries provide
power to the grid
Source: Goldman Sachs Research.
Goldman Sachs Global Investment Research
10
June 27, 2010
Americas: Clean Energy: Energy Storage
Battery weight and cost separate the lead-acid market from the lithium-ion market
Lead acid batteries are safe and inexpensive, but weigh 3X-4X more per kWh than li-ion batteries. In electric vehicles, batteries can
be a significant portion of the total weight. Ener1’s 24 kWh battery for the pure electric Think City weighs approximately 170 kg, or
about 15% of the weight of the car. A lead-acid battery with the same capacity would account for 50% of the car’s weight, or more
after accounting for the additional capacity needed to power a heavier vehicle.
Lithium ion batteries have superior energy and power density, two key attributes of advanced batteries
The amount of energy in the battery – measured in Watt hours (Wh) – determines the total distance a vehicle can travel at a
given speed, or, in grid storage applications, the length of time over which the battery can supply a particular amount of power
Think of energy density
as distance, and power
density as speed.
(measured in W). The energy density of li-ion batteries is about 110-150 Wh/kg compared with 30-50 Wh/kg for lead-acid batteries
and 40-120 Wh/kg for nickel metal hydride (NiMH).
Power density (W/kg) largely determines how fast a car can accelerate and can vary from less than 200 to more than 3,000 for
li-ion batteries depending on chemistry and usage patterns. This compares with 180-400 for lead-acid batteries and 200-1300 for
NiMH. Note that hybrid (HEV) vehicles require higher power density relative to their energy density: the 2010 Toyota Prius has a
prismatic NiMH battery with about 1300 W/kg power density, but just 44 Wh/kg energy density. Nanophosphate, A123’s proprietary
li-ion technology, has a higher power density than other li-ion chemistries
Exhibit 14 details the energy density map for the key battery technologies while Exhibit 15 is a fairly consensus view of the market
opportunity for EV battery manufacturers, in which we have relatively more confidence in the size versus the specific timing.
Exhibit 14: Li-ion offers higher energy density than lead-acid
Exhibit 15: Li-ion battery market poised for dramatic growth
Energy density versus cost
Li-ion and lead-acid market size, 2009-2020E
80,000
Lithium ion
$500-1200/kWh
1000
Iron Phosphate:
110 Wh/kg
800
70,000
Nickel manganese
cobalt: 150 Wh/kg
Nickel cobalt
aluminum:
150 Wh/kg
[Ener1] LMO / LTO:
70-80 Wh/kg
600
Nickel metal hydride:
$600/kWh, 40-120 Wh/kg
400
Nickel cadmium:
$400/kWh, 45-80 Wh/kg
200
[EnerSys]
Lead acid:
$150/kWh, 30-50 Wh/kg
0
[A123]
Nanophosphate:
140 Wh/kg
[Ener1] LMO /
Graphite or
Hard Carbon:
150 Wh/kg
Market size (million $)
Cost ($ / nameplate kWh)
1200
2009-2020E
102% CAGR li-ion light duty only
58% CAGR li-ion light duty + grid
0% CAGR lead acid
60,000
$76,000
Grid
stabilization
~$2,000
Light duty
vehicles
~$74,000
50,000
40,000
30,000
20,000
Grid
stabilization
~$465
10,000
Light duty
vehicles ~$32
$23,000
$497
0
0
20
40
60
80
100
120
Energy density (nameplate Wh/kg)
Source: Company data, Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
140
160
2009
2015
Lithium ion (light duty + grid stabilization)
2020
Lead acid (motive + reserve)
Source: AT Kearney (A123 Systems’ S-1), Lux Research, Goldman Sachs Research estimates.
11
June 27, 2010
Americas: Clean Energy: Energy Storage
Markets unlikely to converge in the near term
Excluding the potential longer term grid storage opportunities, neither technology is likely to cross over to compete in the other’s
market. Lithium ion battery companies do not have a near-term incentive to compete in traditional lead-acid markets since:
(1) These markets are small (<$7 billion) at less than 10% of the potential size of the automotive market;
(2) A global distribution network coupled with a wide array of product offerings is needed to capture share; and
(3) The performance advantage of li-ion does not yet justify the higher cost in applications where weight is not a key consideration.
Lead-acid battery companies like EnerSys have dabbled in Li-ion (and fuel cells) and may expand their Li-ion offerings to respond to
growing demand from reserve market customers for smaller, lighter, higher-power batteries. But, we do not expect EnerSys to cross
over into the automotive market (at least not organically, perhaps via M&A) since this would require significant new capacity, as
well as new business models built on automotive OEM relationships rather than retail sales networks.
Exhibit 16: EnerSys, A123, and Ener1 are focusing on different end markets
Battery market size and company sales (million $)
Battery Technology
Motive Power Market
Lead acid
2009 Market Size
CAGR
2012 Market Size
EnerSys Sales
FY2009 Sales
FY 2012 Sales
FY 2009 % of Sales
FY 2012 % of Sales
Electric
forklifts
Stationary Power Market
Transportation Market
Lithium ion
Other nonroad going
equipment
Light duty
hybrids
(HEV)
Light duty
plug-ins
(PHEV &
BEV)
Lead acid
Heavy duty
Heavy duty
Reserve
plug-ins
hybrids
power (PHEV &
(HEV)
C & I backup
BEV)
$2,900
Unknown
0%
$2,900
(N)either?
Lithium ion
Utility bulk
energy
(1)
storage
Utility grid
stabilization
$4,000
15%
$6,084
$465
15%
$707
Lead acid
Lithium ion
$6,600
0%
$6,600
$500+
480%
$8,700+
$1,973
$1,876
100%
100%
nm
nm
nm
nm
$927
$913
47%
49%
$112
$110
6%
6%
-
-
-
-
$934
$853
47%
45%
-
-
-
$91
$452
100%
100%
-
-
<$1
$23
<1%
5%
$4
$88
5%
19%
$34
$125
37%
28%
$46
10%
-
-
$11
$128
12%
28%
$41
$42
45%
9%
-
$35
$320
100%
100%
-
-
-
$26
$317
74%
99%
Uncertain
Uncertain
Uncertain
Uncertain
-
-
Uncertain
Uncertain
$9
$3
26%
1%
$32
530%
$8,000
$3,700
0%
$3,700
Other
(2)
(3)
A123 Systems
FY2009 Sales
FY 2012 Sales
FY 2009 % of Sales
FY 2012 % of Sales
Ener1, Inc.
FY2009 Sales
FY 2012 Sales
FY 2009 % of Sales
FY 2012 % of Sales
Notes: (1) Based on Sandia National Laboratories’ Research, the bulk energy storage market is 8.7x the size of the grid stabilization market in the United States. This factor was applied to the Lux Research estimate of the
global grid stabilization market to arrive at an estimate for the global bulk energy storage market, and the same CAGR was assumed. Lead acid and/or lithium ion batteries may compete in the bulk energy storage market.
(2) Other includes li-ion coatings and cells for consumer products, R&D services, and, for A123, royalties from the Gillette Licensing Agreement, and 2009 revenue associated with the Mercedes F1.
(3)A123’s Hymotion sales are included in light-duty PHEV & BEV.
Source: Company Information, AT Kearney, Lux Research, Sandia National Laboratories, Goldman Sachs Research estimates
Goldman Sachs Global Investment Research
12
June 27, 2010
Americas: Clean Energy: Energy Storage
Grid stabilization and storage may gray the lines in the long term
We expect the market for grid energy stabilization and storage to grow substantially over the next decade as more
intermittent, renewable sources of power come online and the cost of li-ion batteries decreases. We expect li-ion batteries to
be most competitive in grid stabilization applications that require high power and rapid discharge, with the main competition
coming from flywheels and pumped hydro. In the United States, the size of the grid stabilization market is small relative to bulk
energy storage, but battery companies are able to provide merchant IPPs with high-value-added services. A123 currently has a 32
MW grid stabilization project underway with AES and expects 30% of revenue to come from grid stabilization in the long term.
Ener1 has a 5 MW demonstration project with Portland GE and recently announced a memorandum of understanding with Russia's
Federal Grid Company to help develop new opportunities to use high-performance battery systems to improve the reliability and
performance of the Russian electricity system.
We expect the bulk energy storage market to develop slowly because the major customers will initially be regulated utilities
that must be able to rate-base purchases of battery assets. Bulk energy storage is most likely an opportunity for EnerSys and
other industrial battery companies because the value of the service per kWh is not high enough to justify investment in li-ion.
We also highlight the possibility that li-ion batteries in electric vehicles could eventually function as grid assets, discharging
power to the grid. We highlight the possibility for used li-ion batteries to compete in this market. Electric vehicle li-ion battery
capacity deteriorates 20%-40% after 10 years of use, assuming 1,500 charging cycles, but the 60%-80% remaining capacity could
have residual value in bulk storage. Significant hurdles to a two-way grid-vehicle energy interface include impacts on battery
performance, ownership and warranties; interconnection and integration challenges; and customer habits, tariffs and incentives.
Exhibit 17: Grid storage market may provide new opportunities for battery companies as costs decline, or for used batteries.
Utility Service
Power / Grid Stabilization Applications
Transmission Support
Electric Service Power Qualtiy
Wind Generation Grid Integration, Short Duration
Area Regulation
Electric Service Reliability
Voltage Support
Energy / Bulk Storage Applications
Electric Supply Reserve Capacity
Wind Generation Grid Integration, Long Duration
Renewables Capacity Firming
Load Following
Electric Energy Time-shift
Time-of-use Energy Cost Management
Renewables Energy Time-shift
T&D Upgrade Deferral 90th percentile (3)
(3)
T&D Upgrade Deferral 50th percentile
Transmission Congestion Relief
Electric Supply Capacity
Demand Charge Management
Substation On-site Power
Discharge
Duration
Capacity
(MW)
Benefit
($/kW) (1)
U.S. Demand
(MW, 10 year)
U.S. Market Size
(millions) (2)
2 - 5 sec
10 sec - 1 min
10 sec - 15 min
15 - 30 min
5 min - 1 hour
15 min - 1 hour
2 sec - 1 hour
10 - 100
.0002 - 10
.0002 - 500
1 - 40
.0002 - 10
1 - 10
0.2 kW - 500 MW
192
359 - 978
500 - 1,000
785 - 2,010
359 - 978
400
<$200 - $2,000+
13,813
9,209
2,302
1,012
9,209
9,209
44,754 MW
2,646
6,154
1,727
1,415
6,154
5,525
$23,621
1 - 2 hours
1 - 6 hours
2 - 4 hours
2 - 4 hours
2 - 8 hours
4 - 6 hours
3 - 5 hours
3 - 6 hours
3 - 6 hours
3 - 6 hours
4 - 6 hours
5 - 11 hours
8 - 16 hours
1 - 16 hours
1 - 500
.0002 - 500
.001 - 500
1 - 500
1 - 500
0.01 - 1
.001 - 500
0.25 - 2
0.25 - 5
1 - 100
1 - 500
.050 - 10
.0015 - .005
0.2 kW - 500 MW
57 - 225
100 - 782
709 - 915
600 - 1,000
400 - 700
1,226
233 - 389
759 - 1,079
481 - 687
31 - 141
359 - 710
582
1,800 - 3,000
< $50 - $3,000
5,986
18,417
36,834
36,834
18417
64,228
36,834
997
4,986
36,834
18,417
32,111
250
292,728 MW
844
8,122
29,909
29,467
10,129
78,743
11,455
916
2,912
3,168
9,838
18,695
600
$204,798
1) Lifecycle, 10 years, 2.5% escalation, 10% discount rate. (2) Based on potential (MW, 10 years) times average of low and high benefit ($/kW). (3) Benefit for one year.
Source: Sandia National Laboratories, Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
13
June 27, 2010
Americas: Clean Energy: Energy Storage
Exhibit 18: Company background and key financial metrics, FY2008-2012E
A123 Systems (AONE, Neutral, $29 6 month price target)

Founded in 2001 and built from the ground up, going public in November 2009

Manufactures li-ion batteries in the US and China with a proprietary chemistry

Supply agreements for diverse heavy and light duty vehicles in the US and Europe

$23 million investment in Fisker Automotive (United States) and JV with SAIC (China)

Presence in electric grid stabilization market through AES project in Chile

Largest market cap among U.S. li-ion battery companies, and 67% of the stock floats
Ener1 (HEV, Neutral, $3.50 6 month price target)

Established as Ener1 in 2000 and acquired li-ion unit of Delphi in 2004, forming
EnerDel

Acquired Enertech, a li-ion battery cell manufacturer in Korea, in 2008 and is building
US manufacturing capacity

32% equity stake in Think (Norway) and supply contract with Volvo for electric
vehicles

JV with Wanxiang (China) for heavy duty

Ener1 Holdings owns a controlling share, and 43% of the stock floats
EnerSys (ENS, Buy, $29 6 month price target)

Founded in 2000 and went public in 2004

Primarily makes lead-acid batteries

Has a leading (28%) market share in a $6.6 billion niche market

Market segments are motive power (primarily forklifts) and reserve power for
commercial and industrial applications

In FY2009, 47% of sales came from electric forklift trucks, a clean energy alternative to
internal combustion forklifts

Has completed 10 acquisitions since 2004

99% of the stock floats
A123 Systems (AONE)
Fiscal Year ended December 31
Revenue
Gross Margin
EBITDA
Operating Income
EPS (GAAP)
Free cash flow to the firm
Free cash flow per share
% of Revenue
Gross Margin
EBITDA
Operating Income
% change YoY
Revenue
Gross Margin
2008A
$69
(12)
(9)
(80)
(9.04)
(13)
(1.43)
2008A
(17.9%)
(13.2%)
nm
2008A
2009A
$91
(3)
(3)
(85)
(2.55)
(9)
(0.09)
2009A
(3.0%)
(2.8%)
(93.8%)
2009A
33%
nm
2010E
$141
(2)
(1)
(117)
(1.13)
(165)
(1.57)
2010E
(1.5%)
(0.8%)
(83.1%)
2010E
55%
nm
2011E
$282
34
(1)
(111)
(1.00)
(202)
(1.88)
2011E
12.1%
(0.4%)
(39.3%)
2011E
99%
nm
2012E
$452
104
(0)
(53)
(0.50)
(107)
(0.98)
2012E
23.1%
(0.1%)
(11.7%)
2012E
60%
207%
2009A
$35
4
(44)
(49)
(0.44)
(50)
(49.61)
2009A
11.7%
nm
nm
2009A
408%
86%
2010E
$77
12
(54)
(63)
(0.46)
(85)
(85.36)
2010E
14.9%
(70.4%)
(81.7%)
2010E
122%
183%
2011E
$199
36
(43)
(58)
(0.38)
(63)
(63.37)
2011E
18.0%
(21.5%)
(29.0%)
2011E
158%
212%
2012E
$320
53
(30)
(50)
(0.29)
(68)
(67.97)
2012E
16.5%
(9.3%)
(15.6%)
2012E
61%
47%
2009A
$1,973
413
192
142
1.66
1.92
181
3.28
2009A
21.0%
9.7%
7.2%
2009A
(3%)
8%
14%
19%
36%
35%
nm
nm
2009A
1.1x
9.5%
2010A
$1,579
361
159
114
1.28
1.44
108
1.87
2010A
22.9%
10.1%
7.2%
2010A
(20%)
(13%)
(17%)
(20%)
(23%)
(25%)
(41%)
(43%)
2010A
0.9x
7.4%
2011E
$1,856
450
215
168
2.13
2.15
79
1.32
2011E
24.3%
11.6%
9.1%
2011E
18%
25%
35%
47%
67%
49%
(27%)
(29%)
2011A
0.8x
10.2%
2012E
$2,007
515
247
187
2.41
2.41
90
1.63
2012E
25.7%
12.3%
9.3%
2012E
8%
14%
15%
11%
14%
12%
15%
23%
2012A
1.2x
10.6%
Ener1 (HEV), December 31 Fiscal Year
Fiscal Year ended December 31
Revenue
Gross Margin
EBITDA
Operating Income
EPS (GAAP)
Free cash flow to the firm
Free cash flow per share
% of Revenue
Gross Margin
EBITDA
Operating Income
% change YoY
Revenue
Gross Margin
2008A
$7
2
(32)
(34)
(0.51)
(17)
(17.01)
2008A
31.9%
nm
nm
2008A
EnerSys (ENS), March 31 Fiscal Year
Fiscal Year ended March 31
Revenue
Gross Margin
EBITDA
Operating Income
EPS (GAAP)
EPS (adjusted non-GAAP)
Free cash flow to the firm
Free cash flow per share
% of Revenue
Gross Margin
EBITDA
Operating Income
% change YoY
Revenue
Gross Margin
EBITDA
Operating Income
EPS (GAAP)
EPS (adjusted non-GAAP)
Free cash flow to the firm
Free cash flow per share
Ratios
Leverage Ratio
ROIC
2008A
$2,027
382
169
119
1.22
1.42
(21)
(0.84)
2008A
18.8%
8.3%
5.9%
2008A
2008A
2.4x
8.0%
Source: Company data, Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
14
June 27, 2010
Americas: Clean Energy: Energy Storage
Near term critical success factors:
Alliances, Funding, and Technology
Goldman Sachs Global Investment Research
15
June 27, 2010
Americas: Clean Energy: Energy Storage
Alliances are the keystone – but existing relationships more tenuous than they seem
To succeed longer term, we think domestic battery companies must build strong OEM alliances, leverage government
financing to expand capacity, and develop leading technologies with low production costs in the 2010-2012 timeframe.
Alliances will provide initial technology validation and largely determine each company’s ability to win volume production
contracts. A123 and Ener1 have weaker alliances relative to Japanese OEM-battery JVs, but their technologies are solid or
better, for now. Overall, A123 may have a seemingly superior technology and Ener1 may have a less-capital intensive
business model – but alliances are the keystone, and appearances may obscure an uncertain reality.
Exhibit 19: Strategic alliances are the key to initial technology validation, but many of these bonds are weak
3 Key Alliances
Takeaways:
1) Alliances not set in
stone
Battery
Companies
Very strong alliance
between Toyota and
Panasonic
Panasonic
(Japan)
NEC (Japan)
2) Key competition is
from Japan and Korea
JV or Equity
Stake
Panasonic
EV Energy
(Toyota 80%
Panasonic
20%)
OEM or Tier 1 Supplier
Toyota
Conversion
Battery
Companies
BYD
(China)
BYD Auto
Fuji Heavy
AESC
(Nissan 51%
NEC 49%)
Supply Agreement
BYD
alliance
unlikely to
be broken
Sanyo
(Panasonic)
VW
Nissan
Toshiba
(Japan)
Blue Energy
Japanese JVs
are strong
alliances
3) Tier 1 alliances are
important because
heavy duty likely to
lead auto market
(Honda 49%
GS Yuasa 51%)
Lithium
Energy Japan
GS Yuasa
(Japan)
(MMC15%
GS Yuasa 51%
Mitsubishi Corp
34%)
Evonik
Industries
(Germany)
Honda
Mitsubishi
Motor
Company
(MMC)
LG Chem
(Korea)
Hyundai
Ford
Deutsche
Accumotive
(Daimler 90%
Evonik 10%)
Hitachi
Vehicle
Energy
GM
(Chevy Volt =
LG Chem)
JCS
(Johnson
Controls /
SAFT)
(US)
BMW
Daimler
Chrysler (Fiat)
TeslaMotor
(Daimler 10%)
Samsung
SDI (Korea)
Other JVs are
moderate
alliances
SB LiMotive
(Bosch 50%
SDI 50%)
(Ener1 32%)
Ener1
(US)
Lishen
(China)
A123
(US)
Tesla
Bosch
Think
(Wanxiang 60%
Ener1 40%)
Wanxiang
(Tier 1)
(Coda 40%
Lishen 60%)
Coda
(A123 $23 mn)
Fisker
ATBS
(SAIC 51%
A123 49%)
SAIC
Joint Ventures and Equity Stakes
Better Place
BAE (Tier 1)
A123
(US)
Supply
agreements
are relatively
weak
alliances
Magna (Tier 1)
Eaton (Tier 1)
Navistar
Volvo
Ener1
(US)
Tata Motors
Electrovaya
(Canada)
Supply Agreements
Source: Automotive Technology, Company data, Goldman Sachs Research.
Goldman Sachs Global Investment Research
16
June 27, 2010
Americas: Clean Energy: Energy Storage
Battery-OEM alliances – state of the unions
We find most of the early industry alliances to be tenuous at best and expect a rendition of musical chairs over the next few years
for reasons listed below. The strongest alliances, in our view, are those solidified into a joint venture and largely involve the
Japanese manufacturers and OEMs, likely making it difficult for A123 or Ener1 to break into several larger OEMs in the near-term.
Most announced
alliances are shortterm.
Alliances have been formed for initial vehicle launches, but many early bonds will be broken. We think it is too early to assess
which of these alliances will stick, although we view the stronger Japanese JVs, as well as cases where battery companies have
taken an equity stake in their partners as more likely to endure. In a market where supply agreements are not take-or-pay and do not
guarantee long-term relationships, we expect to see more announcements similar to Daimler’s recent declaration that all lithium ion
batteries will go through its JV with Evonik by 2012. We also note that regardless of near-term positioning, the trajectory of industry
consolidation for battery companies, Tier 1 suppliers, specialty OEMs, and major OEMs could dramatically shift alliances in the
2012-2020 timeframe.
Battery companies want depth in alliances, but OEMs prefer breadth to avoid sole supplier risk
OEMS – and particularly those outside Japan – typically prefer to work with multiple suppliers and often choose different suppliers
for different vehicle models. Therefore, we view an announced supply agreement as a relatively weak bond, not as an indicator that
a long-term, exclusive relationship will develop between the OEM and battery supplier. But, we do view battery companies
represented in the upcoming round of plug-in vehicle launches as among the strongest competitors for long-term supply contracts.
We also expect to see push and pull between battery companies, which need strong bonds to secure financing and survive in a new
industry, and OEMs that want to avoid sole supplier risk and keep options open for new technologies.
Japanese companies
that have formed JVs
are less likely to
entertain switching.
In a recent note dated
June 25, our Japan
auto analyst estimated
the value of AESC,
Nissan’s JV with NEC,
could increase Nissan’s
valuation by 10% using
GS Yuasa as a
reference. AESC is wellpositioned to capture
share, not only with
Nissan, but also with
other OEMs.
Japanese alliances are stronger and benefit from supply chain proximity plus brand recognition
American battery companies start out at a disadvantage with respect to alliances because they must contend with strong JVs
between leading Japanese OEMs and more experienced Japanese battery companies. We highlight AESC, the 51/49 JV between
Nissan/NEC, as the leading competitor, with the pure electric (BEV) Nissan Leaf due to launch in December 2010 and Nissan’s CEO,
Charles Ghosn, aggressively promoting electric vehicles. We also highlight Panasonic EV, an 80/20 JV between Toyota/Panasonic
given Toyota’s leading position in the light-duty hybrid market and the long history between the two companies.
Consumers already associate Japanese brands – and particularly Toyota – with green vehicles.
In a recent Deloitte survey, 17% of consumers indicated they would be most likely to purchase an electric vehicle from Toyota, 15%
selected Honda, 12% selected Ford, less than 10% selected each of the other OEMs, and none selected Fisker. The survey reveals
that consumer perception is largely based on their knowledge of HEVs – Toyota, Honda, and Ford are HEV leaders – even though
these OEMs will not necessarily have the most competitive plug-in (or PHEV) offerings.
LG Chem and JCS/Saft are the principal competition for American OEM contracts
Japanese OEMs have traditionally stuck close to home when looking for partners, but the rest of the industry appears to be more
flexible. In the near-term, we expect American OEMs to be fickle partners, stoking competition for post-2012 vehicle models. LG
Chem, which reportedly beat out A123 for the Chevy Volt contract, has a good technology, but its principal advantage is
manufacturing scale and experience. JCS, a JV between Johnson Controls and Saft that reportedly received about $240 million from
a DOE ABMI grant, is the principal competition for A123 and Ener1 in the US. Although the company has size on its side, industry
sources indicate this is offset by lagging technology performance.
Goldman Sachs Global Investment Research
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June 27, 2010
Americas: Clean Energy: Energy Storage
Japanese JVs have the additional advantage of proximity to the supply chain.
Japanese suppliers
appear to have the
strongest alliances.
Most materials and electronics suppliers for li-ion batteries are located in Japan, and to a lesser extent Korea, the two countries with
the largest presence in li-ion consumer battery manufacturing. We do expect to see some component suppliers establish a presence
in the US to support companies like A123 and Ener1. For example, TSC Michigan, a subsidiary of Korea’s Techno Semichem
recently announced plans for an advanced electrolyte plant near Detroit.
Exhibit 20: Japanese and Korean alliances benefit from proximity to the supply chain
Lithium ion battery supply chain for the vehicle market
Materials
Japan
Equipment
Ube Industries
Furukawa Electric
Hitachi Chemical
Asahi Kasei
Nippon Denko
Toda Kogyo
Tanaka Chemical
Furukawa Sky
Kureha
Nippon Carbon
Tonen General
Stella Chemifa
Kanto Denka Kogyo
Cells
Battery Packs
Relationship*
OEM Partner*
Covered by Americas Clean Energy
Covered by other GS teams
*Does not include supply agreements. OEMs are in the same
country/region as battery partners unless otherwise noted. Only OEMs
that have a JV with a battery company or received a direct investment
are shown; many additional OEMs are developing plug-in vehicles.
CKD
Hirano Tecseed
Inoue Kinzoku Kogyo
NEC
Panasonic
GS Yuasa
Hitachi
Hitachi Maxell
Sanyo Electric
Toshiba
Korea
AESC JV
PEVE JV
Blue Energy JV
Lithium Energy Japan JV
Nissan
Toyota
Honda
Mitsubishi
Hitachi Vehicle Energy JV
L&F
SK Energy
Cheil Industries
Samsung SDI
LG Chem
China BAK
Lishen
China
JV
Coda (U.S.)
JV
Equity stake
Equity stake
JV
SAIC (China)
Fisker
Think (Europe)
Wanxiang (China)
Deutsche Accumotive JV
Daimler
BYD
E-One Moli
Taiwan
A123
US
Ener1
Tesla
JCI (U.S.) / SAFT (Europe) JV
Europe
Umicore
Canada
Evonik
Elecrovaya
Source: Goldman Sachs Research.
Goldman Sachs Global Investment Research
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June 27, 2010
Americas: Clean Energy: Energy Storage
A123 and Ener1 alliances must balance strength with diversity
Less diversified companies like A123 and Ener1 will need to balance strength with diversity as they line up alliances. We do not
expect either company to pursue an exclusive relationship with a single OEM.
Heavy duty market is a key source of diversity
We expect the heavy-duty truck and bus market for li-ion batteries to lead the light-duty auto market since fleet managers are more
sensitive to lifetime fuel costs and under greater pressure to reduce fleet emissions. The heavy duty market offers three benefits:
Heavy duty market
likely to lead light-duty
market
1.
Per pack revenue is several times higher for truck/bus batteries compared with light-duty vehicle batteries;
2.
A larger share of pack cost is systems versus cells, with the latter likely to become commoditized before the former; and
3.
Market access requires battery companies to build relationships with Tier 1 suppliers, which may become more important as
the industry both grows and consolidates.
An estimated 80,000 medium-duty and 20,000 heavy-duty hybrids will be sold in 2015. Eaton, which has announced a
demonstration-scale supply agreement with A123, is a leading supplier of hybrid electric drivetrains. Navistar, which has developed
one of the first BEV trucks and counts FedEx among its customers, recently announced a production agreement with A123.
A123 has greater diversity, particularly in the heavy-duty market.
A123’s stronger presence in the heavy-duty market and its relationships with a range of OEMs as well as component suppliers BAE,
Magna, Eaton, and Navistar give the company a near-term edge. But, Ener1’s recent entry into China through a JV with Tier 1
supplier Wanxiang signals its focus on building diversity across regions and vehicle classes.
Each company is aligned with a start-up OEM through an equity investment
We view A123’s investment in Fisker and Ener1’s investment in Think as necessary to gain entry into the light-duty auto market in
time for the first round of vehicle launches in 2010-2011, but do not expect to see either make similar investments in the future.
Initial light-duty
contract wins required
equity stakes
A123 invested $23 million in Fisker, an American start-up that stated an expected launch of the plug-in hybrid Karma in the US in
4Q 2010. Fisker’s investors include Kleiner Perkins, and the company expects to receive a $468 million DOE loan to supplement a
recently-closed $189 million funding round. After initially selecting Ener1 for the battery, in January 2010, the company shifted to
A123. Aside from any performance issues, the beautifully-designed Karma faces two main challenges: lack of brand recognition and
a higher price point (around $88,000 before tax credits) relative to competitors. The pure electric Nissan Leaf and plug-in hybrid
(extended range) Chevy Volt are also due to launch in 4Q 2010, but are priced at $32,800 and $40,000 (before tax credits)
respectively. Also, based on our conversations with industry contacts, we believe the Karma launch is likely to be delayed until at
least mid-2011 with a production forecast smaller than the originally-announced 15,000 vehicles. We expect the Karma’s
performance to affect A123’s ability to win additional light-duty vehicle contracts.
Ener1 owns 32% of Think, a Norwegian OEM that emerged from bankruptcy in 2008 and is launching the pure electric Think City
in 4Q 2010. In 2010-2011, most of Ener1’s revenue will come from Think sales in Europe, and we expect the company to remain
focused on the European market. The Think (which may eventually be re-branded), is intended for urban commuters and will launch
in the US at a price point of $27,000-$30,000, putting the price potentially sub-$20,000 depending on local incentives. Other
announced contracts – such as the pure electric Volvo C30 – will not enter volume production until 2013. We believe Ener1’s
alliances are currently fairly strong, but would be tested by a weak Think launch.
Goldman Sachs Global Investment Research
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June 27, 2010
Americas: Clean Energy: Energy Storage
Funding – Government financing essential to manufacturing expansion, but less is more
A123 and Ener1 require substantial manufacturing capacity, and therefore capital, to be able to compete with the Japanese
and Korean manufacturers. Each company is in the midst of a government-sponsored US expansion, plus less-capitalintensive expansions in Asia. We think less is more, and that Ener1’s smaller DOE grant – and thus smaller match –
combined with its capital-light JV with Wanxiang may offer a returns advantage over A123, which is consuming measurably
more in cash per year and building up a comparatively much larger fixed asset base.
2 Key Funding
Takeaways:
A123 and Ener1 rely on government funds for US expansion
(1) Ambitious
expansion plans will
be implemented 20102016
(2) Government
funding is essential,
but strings are
attached
Both companies have capacity expansion plans that are ambitious relative to their current contract wins, but ample near-term
liquidity to support their goals owing to government funding. The companies are burning through cash to achieve their goals, but
they claim no viable alternative in that they cannot win volume contracts without proven capacity. We note that A123 has
significantly more cell capacity on hand today, but that Ener1’s planned capacity expansion is both more ambitious and less capitalintensive relative to A123, particularly if Ener1’s capacity through its Wanxiang JV is included in its total. Both companies are
vertically integrated across cells and packs, and we do not expect pack assembly capacity to be a hurdle for either company.
Exhibit 21: Both companies have ambitious expansion plans
Country
US
Korea
China
Japan
Europe
Total
Kilowatt hours (kWh) of cell capacity
A123
Ener1
A123
current (2)
total planned (3) total planned (4)
3,120,000
2,954,700
30,000
some
119,000
some
169,300
1,040,000
169,300
30,000
169,300
4,279,000
3,124,000
Ener1
current (1)
Estimated capex to support cell capacity expansion
Total new capacity requiring capex (6)
3,209,000
$310
Manufacturing capex/kWh ($)
$995
Total estimated capex (million $)
Ener1
current
1,250
1,250
A123
current
some
7,000
7,000
Light-duty pack equivalent (5)
Ener1
A123
AESC
LG Chem
total planned total planned total planned total planned
130,000
123,000
200,000
250,000
5,000
some
1,875,000
43,500
7,000
65,000
120,000
178,500
130,000
385,000
2,125,000
2,954,700
$350
$1,034
(1) Ener1’s current capacity in China is 390,000 kWh through its JV with Wanxiang, but we do not expect this capacity to be available for Ener1 contracts in 2010. (2) A small portion
of A123’s current 169,300 capacity is in Korea, with the exact amount unknown. (3) Ener1 expects to have 3.12 mn kWh of capacity in Indiana by 2016. All China capacity is through
the JV with Wanxiang. (4) A123 has announced capacity of 760,000 kWh for 2011. At the time of the IPO, management indicated a goal of 3,124,000 kWh by 2012, and we assume
this plan remains in place. (5) Light-duty pack equivalent assumes an ~24 kWh pack, with numbers rounded. (6) Ener1 capex plan excludes Wanxiang since the company has said the
1,040,000 kWh of cell capacity will not require capex, although pack production will require some capex.
Source: Company press releases, Goldman Sachs Research estimates
Goldman Sachs Global Investment Research
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June 27, 2010
Americas: Clean Energy: Energy Storage
ABMI grants are enabling A123 and Ener1 to build manufacturing capacity
Under the Electric Drive Vehicle Battery and Component Manufacturing Initiative (ABMI), A123 received $249.1 mn and Ener1
received $118.5 mn, sizable sums relative to the size of their respective balance sheets. The ABMI grants require a 50% equity match,
so significant strings are attached, and we think Ener1’s smaller match requirement is an advantage. Ener1 initially started to raise
this capital via spot market offerings of equity. Ener1, Inc. cancelled the plan after receiving a $65 million equity injection from Ener1
Group, an investment vehicle of Boris Zingarevich with a 51% stake in Ener1, Inc. (Exhibit 22). A123’s primary source of matching
equity remains funds from its September 2009 IPO. The DOE applied a vigorous vetting process to grant and loan applications,
providing some initial validation of each company’s technology.
Exhibit 22: Ener1 ownership structure
Bzinfin, S.A.
(Boris Zingarevich)*
Charles Gassenheimer has
option to purchase 10% stake
100%
100%
51%
Ener1 Group
Common Float
ITOCHU
100%
43%
EnerDel
(core battery business)
Ener1,
Inc.
(HEV)
100%
32%
EnerFuel
NanoEner
Th!nk Global AS
94%
6%
EnerTech
TVG Capital
Partners
6%
(Korea)
Source: Company data, Thomson Reuters, Goldman Sachs Research.
Goldman Sachs Global Investment Research
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June 27, 2010
Americas: Clean Energy: Energy Storage
Both Ener1 and A123 expects to receive a DOE loan through the ATVM
Each company applied for an Advanced Technology Vehicle Manufacturing (ATVM loan and are negotiating an initial term sheet.
We expect loans to be approved by early 2011 but note that companies must first spend their ABMI grant money before they are
able to draw on the loan.
Exhibit 23: US Government funding programs support Ener1 and A123 as they begin commercial-scale battery production
United
States
Type
Description
Grant requiring
$2.4 bn for U.S.-based manufacturers authorized under the American
50/50 equity match Recovery and Reinvestment Act, of which $1.5 bn is for battery
manufacturers, $0.5 bn is for electric drivetrain manufacturers, and
$0.4 bn for charging stations; administered by the US Department of
Energy
Low-interest loan Provides loans to auto and auto part manufacturers of advanced
requiring 80/20
technology vehicles to establish U.S. manufacturing facilities;
equity match
authorized by Section 136 of the Energy Independence and Security
Act of 2007 and administered by the US Department of Energy
Ener1
$118.5 mn award
amount
A123
$249.1 mn award amount
~$275 mn expected
~$233 mn expected
Advanced Research Projects Agency Energy (ARPA - E)
R & D grants
Funding for transformational energy research; battery companies
eligible for grants aimed at technology innovation to improve
performance and reduce cost
n/a
Miilitary Research and Development
R & D grants
Funding for Army research on combat vehicle and automotive
technologies authorized by the Federal Defense Appropriations Bill
for FY2010 and administered by the Army Tank and Automotive
Research and Development and Engineering Center (TARDEC)
Financing available to advanced battery
National Electric Drive Vehicle Battery and
Component Manufacturing Initiative
Advanced Technology Vehicle
Manufacturing Program
State Incentives for Local Manufacturing,
Subnational Job Creation, and Clean Energy
Primarily tax
Incentives often tied to capex spending and/or job creation
credits, also lowinterest loans and
grants
(1) $4.4 mn for a collaboration
with Applied Materials, Inc.
(2) $5.0 mn for a collaboration
with MIT
$1.3 mn awarded in $3 mn, pending full
September 2009
Congressional approval
Package from State (1) Package from State of
of Indiana worth $79 Michigan worth up to $140 mn
mn
(2) $5 mn forgivable loan from
State of Massachusetts
Source: Company data, Goldman Sachs Research.
China offers low-cost manufacturing in return for technology transfer
A123 and Ener1 both have a presence in China, which offers a low-cost manufacturing base and access to one of the largest
potential markets for electric vehicles in return for technology transfer, but not without IP risk. A123 has taken extraordinary steps to
protect its IP, for example by separating cell manufacturing from pack manufacturing to prevent any individual employee from
becoming familiar with the entire production process. Ener1’s presence in China is through its alliance with Wanxiang, which will
require capex for pack assembly, but not for cell production.
Goldman Sachs Global Investment Research
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June 27, 2010
Americas: Clean Energy: Energy Storage
Technology – A123 and Ener1 are both leaders
A123 and Ener1 both have leading lithium ion technologies relative to their competitors. We believe excellent power density
and high usable energy may give A123 a technology edge over Ener1, but Ener1 could benefit from the ability to offer
customers a choice between chemistries. Both companies are vertically integrated across electrodes, cells, battery packs,
and electronics, allowing close collaboration with OEMs to develop customized packs, which could help to solidify alliances.
4 Key Technology
Takeaways:
1) A123 and Ener 1
are technology
leaders
2) A123 may have a
technology edge over
Ener1
Prismatic lithium ion batteries have emerged as the leading technology choice for light-duty plug-in hybrid and electric vehicles
because their energy and power density exceeds lead acid, nickel metal hydride, and other alternatives. Each li-ion chemistry has
safety, life, and performance trade-offs. Key metrics include (1) energy density, (2) fraction of nameplate energy that is usable, (3)
power density, (4) safety, (5) durability, (6) performance in extreme temperature, and (7) lifetime measured as the number of charge
cycles.
Exhibit 24: Key characteristics of competing battery technologies
3) Current costs are
$700-800/kWh
4) Costs expected to
fall 40-50% over next
5 years
Nickel Manganese
Cobalt (NMC)
[Ener1]
[Ener1]
Lithium Manganese
Lithium Manganese Spinel (LMO or mixed
Spinel & Lithium
oxide with graphite or
Titanium (LMO/LTO) hard carbon anodes)*
Nickel Cobalt
Aluminum (NCA)
Lithium Iron
Phosphate (LFP)
[A123]
Nanophosphate
Lithium Iron
Phosphate
Energy Density
150 Wh/kg
60-80 Wh/kg
150 Wh/kg
150 Wh/kg
110 Wh/kg
140 Wh/kg
Power Density
High
High
Medium
High
Poor
Excellent
3.6
2.5
3.7
3.5
3.3
3.3
Voltage
Efficiency
Good
Poor
Good
Good
Medium
Good
Safety
Medium
Excellent
Good
Poor
Excellent
Excellent
Durability
Medium
Good
Poor
Good
Poor
Excellent
Low Temperature
Medium
Good
Medium
Medium
Medium
Medium
HEV 80%
EV 80%
PHEV 50%
HEV 35%
EV 80%
PHEV 50%
HEV 35%
EV 95%
PHEV 70%
HEV 60%
EV 95%
PHEV 70%
HEV 60%
Usable Energy
Raw Material Cost
Key Battery Cell
Developers
EV 80%
PHEV 50%
HEV 35%
Medium
(1) Blue Energy
(GS Yuasa/Honda)
(2) SK Energy)
(3) Hitachi Vehicle
Energy
High
(1) Ener1
(2) Altairnano
(3) Toshiba
Low
(1) Ener1
(2) Lithium Energy Japan
(GS Yuasa/Mitsubishi)
(3) AESC (NEC/Nissan)
(4) LG Chem
(5) Sanyo
(6) SB LiMotive (Samsung
SDI/Bosch)
(7) SK Energy
(8) Hitachi
Medium
(1) JCS (Johnson
Controls/Saft)
(2) PEVE
(Panasonic/Toyota)
Low
(1) Valence Tech
(2) BYD
Low
(1) A123
Source: A123 Systems, Compiled by Goldman Sachs Research.
Goldman Sachs Global Investment Research
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June 27, 2010
Americas: Clean Energy: Energy Storage
A123 may have better technology, but the near-term value of technology differentiation unclear
We believe that early technology differentiation has somewhat separated the leaders from the rest of the pack, but that the extent
and value of differentiation between the current leaders is less critical than the status of their alliances and funding. However, we
believe the ability to achieve technological improvements that can improve performance and/or drive down costs will be critical. We
highlight four attributes of A123’s technology that may provide an edge, but believe that Ener1’s technology is also competitive.

Power density: A123’s proprietary Nanophosphate technology is built on nanoscale materials initially developed and
subsequently licensed from the Massachusetts Institute of Technology. Battery power exceeds other existing li-ion
technologies and is comparable to ultra capacitors.

Usable energy: Ener1’s batteries have a higher energy density, but A123 batteries maintain their power and safety at higher
and lower states of charge, so the usable portion of nameplate capacity exceeds the competition. Therefore, A123 can achieve
equivalent vehicle range and acceleration with a smaller and lighter battery.

Safety: A123 batteries are reportedly more resistant to failures and rapid disassembly (i.e. explosions) that can result from
overcharging, overheating, and physical damage. Also, the active materials do not contain nickel or manganese compounds,
which the US Environmental Protection Agency (EPA) classifies as toxic, and a portion of the battery materials can be recycled.

Cycle life: Repeated charge cycles and exposure to high operating temperatures reduces battery capacity over time, but the
pace of degradation is reportedly slower for A123 batteries relative to competitors.
Exhibit 25: A123 batteries provide more usable energy than competing chemistries ]
Energy density (Wh/kg)
150
150
140
112
90-113
75
LG Chem (1)
Ener1 (2)
Usable
A123 (3)
Unusable
(1) LG Chem PHEV prismatic cell, May 2009 DOE presentation
(2) Ener1 18.5Ah cell, February 2009 presentation
(3) A123 20Ah prismatic cell
Example shown based on USABC requirements for a PHEV.
Unusable energy is due to impedance growth, power at low state of charge (SOC) or calendar life loss at high SOC.
Source: Company data.
Goldman Sachs Global Investment Research
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June 27, 2010
Americas: Clean Energy: Energy Storage
A123 and Ener1 costs are inline with the industry average
We estimate production costs are about $700-$800 per nameplate kWh for leading companies. Battery companies do not
share their costs, but Ener1 expects to break even on EBITDA with a revenue of $187 mn in 2011 at a run-rate of 11,000 24 kWh Think
packs per year. This corresponds to $700/kWh once volume production is achieved, and assuming no markup/margin. We believe
industry per-kWh costs for hybrid (HEV) and heavy-duty vehicles currently are about $2000/kWh, of which about 50% ($1000/kWh) is
cells. We believe PHEV pack costs are $700-$800/kWh, with cell costs of about $550/kWh, and BEV packs costs are approaching
$700/kWh, of which about 65%-70% is cells. Nissan has said that its packs for the pure electric Leaf cost $750/kWh.
Currently, both companies are able to offer OEMs leading technologies at reasonable prices. As the industry matures and
OEMs scale production, cost will weigh more heavily in the battery selection process. A123 and Ener1 face the risk that Asian
companies with more manufacturing experience will be able to scale up production and implement cost savings more quickly.
Lithium is a small portion of cell costs, and global lithium supply/price is not a concern
Contrary to some articles, we do not think lithium supply and price are likely to be an issue for battery companies since lithium is
not scarce or expensive and accounts for just 5% of battery cost. Although batteries are 25% of the end market for lithium and
automotive applications are the largest source of demand growth, but we not foresee a near or medium-term scenario in which
lithium supply becomes tight. We note that SQM of Chile is the largest producer (25% market share), followed by FMC Lithium,
Chemetall, and Talison, and the recent announcement of significant reserves in Afghanistan should help cap any pricing pressure.
Exhibit 26: Cells account for ~70% of the cost of a light-duty plug-in electric (BEV) battery system
Cost breakdown for a light-duty automotive battery system.
Components
20%
Cell
50%
Module
25%
Pack
5%
13%
100%
14%
4%
80%
14%
60%
11%
32%
40%
20%
7%
5%
0%
Lithium
Other active Purchased
materials
parts
Labor
Depreciation
R&D
Scrap
Markup
Source: Company data, BCG, Goldman Sachs Research
Goldman Sachs Global Investment Research
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June 27, 2010
Americas: Clean Energy: Energy Storage
Cost reductions remain a key focus
Consumer Li-ion
battery cost reductions
demonstrate a
promising path.
Li-ion battery costs are approximately 30%-50% of the cost of a light-duty EV, a key gating factor for vehicle electrification.
Today, battery systems cost $500-$1200 per nameplate kWh, including markup. The United States Advanced Battery Consortium
(USABC) is targeting $500 per kWh by 2012 and $300 per kWh at volume production by 2014. The long-term goal is $250/kWh, the
current cost of the least expensive li-ion consumer batteries (e.g. laptops). Although the cost of consumer Li-ion batteries declined
by 80% from 1995-2006, we view the timing for similar EV battery cost reductions as aggressive. Rather we see costs more likely to
be in the $500 range by 2014, and cost to an OEM of $300 per kWh for prismatic automotive batteries in the 2020+ timeframe.
As OEMs become more comfortable with electric vehicles, average battery size - and thus total battery cost – should fall.
Current batteries tend to be oversized since OEMs constrain the range of charge to obtain a wide safety margin. As OEMs gain
comfort with battery performance, the usable portion of the battery’s energy should increase, reducing total battery cost. Since
smaller batteries tend to have smaller systems costs per kWh, this should amplify cost reductions. Batteries for heavy-duty vehicles
and other large-format applications (e.g., grid storage) are likely to remain more expensive per kWh than light-duty systems due to
higher pack costs, which can be up to 50% of the system cost in these applications.
Cell costs should fall faster than pack costs. In light-duty automotive applications, li-ion cells are about 70% of the battery system
cost, with pack costs accounting for the remaining 30%. On the cell side, volume production will substantially reduce fixed costs. On
the pack side, R&D is required to achieve reductions, with companies exploring ways to reduce mechanical and electrical parts costs.
If pack costs drop to $300/kWh, and cells remain about 70% of the cost, then this implies cells would decline close to $210/kWh.
Exhibit 27: Li-ion battery prices per kWh to drop 40%-50% over next 4-5 years
Exhibit 28: Li-ion consumer battery prices dropped by 80% over 1995-2006
Battery cost forecast in $/nameplate kWh
Li-ion consumer electronics 18650 battery prices
$2,000
160
$2,000
250
140
$1,500
120
200
$1,500
150
100
$1,000
$1,070
$940
80
$1,000
$810
100
$680
60
$550 $510
$470 $430
$393 $359
$328 $300
$500
40
$500
50
20
$0
0
2009
2011E
2013E
2015E
2017E
2019E
0
$0
1995
1996
1997
Price ($/kWh, LHS)
Unit price ($/kWh, LHS)
1999
2000
2001
Unit cost ($/kg, RHS)
2002
2003
2004
2005
2006
Energy density (Wh/kg, RHS)
Energy concentration (Wh/kg, LHS)
Source: Deloitte, Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
1998
Source: Goldman Sachs Research estimates.
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June 27, 2010
Americas: Clean Energy: Energy Storage
Some Asian leaders in consumer batteries will capture a share of the automotive market
Automotive batteries are referred to as large-format batteries to distinguish them from li-ion batteries used in consumer products,
and the trend is toward increasing deployment of prismatic (flat) rather than cylindrical cells because they reduce the size and
weight of battery systems. Although li-ion 18650 cells are a mature technology for powering consumer electronics such as cell
phones, laptops, and household tools, these cells typically lack the safety and cycle life performance required in automotive
applications. Nonetheless, we expect some top manufacturers of consumer batteries, including Sanyo Electric and Samsung SDI, to
be aggressive competitors in the automotive market. But we also expect some companies that have only a small (or no) presence in
consumer products – e.g. NEC and GS Yuasa – to be amongst the leaders in the auto market.
Leapfrog technologies – competition or complementary
A123 and Ener1 face the risk of leapfrog technologies. Many start-ups and university labs are researching new battery
chemistries, battery management system (BMS) software, and lower-cost manufacturing processes, and Greentech media recently
identified 20 battery start-ups to watch (see the Appendix). Since the industry is young – Ener1 and A123 commenced automotive
battery R&D within the past 5 years – competition from start-ups could easily erode their position as technology leaders.
A123’s history as a university spin-off might attract current innovators with complementary technologies. Of the ten DOE
ARPA-E battery awards announced in April, two listed A123 as a partner, an indicator that universities and entrepreneurs view their
technologies as potentially complementary, rather than competitive, with A123. For the full list of ARPA-E Batteries for Electrical
Energy Storage in Transportation (BEEST) awards, see the Appendix.
Technology pairings, such as battery-fuel cell hybrids, could improve vehicle performance. Low-power fuel cells with a high
energy density can increase vehicle range without adding much weight. Ener1 has a small fuel cell R&D program and recently
announced development of a 5 kW fuel cell that can add 40 kWh and extend the vehicle range to 300 miles in certain conditions.
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Medium and longer term evolution:
Plug-in Vehicles Outlook, Secular Drivers, Supporting Infrastructure, Valuation paths
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Electric drive vehicles – When, not if, but not now
We expect to see many alternative fuel vehicle models launch between 2012 and 2020, but believe the majority of vehicle
miles travelled will continue to be powered by an internal combustion engine. We think plug-in hybrid and electric vehicles
can cross the chasm during this period if OEM-battery alliances are able to leverage consumer feedback into technology
product improvements and price reductions. We also view the period as a time when some of the current battery leaders
will emerge as clear winners.
2 Key electric vehicle
industry takeaways:
Li-ion batteries allow plug in vehicles to approach the chasm
1) Plug-ins are the
core li-ion market
opportunity
Light-weight, safe, and high-performing li-ion batteries are a key difference between today’s plug-in vehicle launches and
previous experiments with electric vehicles. GM introduced the EV1 in 1996 with a lead-acid battery, at a time when large format
2) Market is evolving
toward plural
powertrains
li-ion batteries were not yet available. But, the battery alone is not enough to cross the chasm: OEMs must (1) make long-term
commitments to production programs that leverage learning from initial vehicle launches and (2) continue to aggressively market
the vehicles long after the buzz surrounding launches has died down. We think the level of OEM commitment – and the auto
industry’s response to secular drivers – will largely determine whether a solid, niche industry or a transportation revolution awaits
batteries companies that can cross the chasm.
Exhibit 29: Li-ion batteries allow a greater degree of vehicle electrification
Energy Source
Powertrain
Gasoline, Diesel
Biofuels, CNG
Hydrogen
Direct Fuel Consumption + Electricity
Combustion Engine (ICE)
Hybrids (2 Powertrains)
Electricity
Hydrogen
Electric Powertrain
Regenerative Braking
Electric drive vehicles
Technology
Start-stop
Mild Hybrid
Full Hybrid
Plug-in hybrid
(w/ regenerative
(ICE support)
(parallel)
(serial)
(HEV)
(PHEV/ E-REV)
braking)
Electric
Battery
(BEV)
[battery-fuel
cell hybrids]
Fuel
Cell
Plug-ins
100%
Degree of
Electrification
Core li-ion battery
opportunity
0%
Source: Goldman Sachs Research.
Goldman Sachs Global Investment Research
29
June 27, 2010
Americas: Clean Energy: Energy Storage
Hybrids have paved the way for plug-in penetration
Consumers have come to appreciate the fuel efficiency advantage of HEVs, providing a springboard for plug-ins (PHEVs and BEVs).
The HEV market is also important to the plug-in industry because (1) historical HEV penetration rates provide some visibility on the
rate at which the plug-in market may initially develop and (2) li-ion batteries are expected to capture a growing share of the HEV
battery market.
Light-duty hybrids achieved a 1% market penetration (% of sales) in 2009. The HEV market crossed the chasm in 2004, about 7
years after the launch of the Toyota Prius in 1997. Hybrid shipments increased dramatically between 2004 and 2009, a time period
over which oil prices rose from $30 per bbl to $145 per bbl, before dropping back down to their current level of around $75/bbl. We
note that the HEV market is maturing and has now reached the point at which growth is no longer correlated with oil prices.
We expect hybrids to be 12% of light-duty vehicle sales in 2020. Our Japan auto team forecasts 0.9 million light-duty HEV sales
in 2010, increasing to 2.8 million in 2015 and 12.4 million – or 12% of light-duty sales – in 2020. HEVs have paved the way for plugins, so we do no think it unrealistic that the plug-in market could reach the chasm by 2012, with market demand steadily rising
between 2012 and 2020.
We expect plug-ins to be about 4% of light-duty vehicle sales in 2020. Our Japan auto team forecasts an increase in PHEV sales
from 10,000 units in 2010 to 2.0 million in 2020, 2% of global light-duty sales, and an increase in BEV sales from 20,000 units in 2010
to 1.7 million in 2020. We caution that plug-ins are still approaching the chasm, with the timing, level, and pace of adoption
uncertain.
Exhibit 30: HEVs have crossed the chasm…..
Exhibit 31: Paving the way for gradual plug-in penetration
Hybrid sales and crude oil prices
(000 Units)
1997-2003:
1,000
900
Light-duty auto sales
2003-2007:
The other side of the chasm
Correlation with oil prices
HEV early adopters
No correlation with oil prices
2007 and beyond:
Maturing market
No correlation with oil
Feb 2009 —
Honda Insight
launched
HEV Sales Volume
800
Oil Price (WTI)
700
600
May 2009
— 3G Prius
launched
$/bbl
150
(000 units)
120,000
130
100,000
110
80,000
90
60,000
70
40,000
50
20,000
30
0
500
400
300
10
1997
1998
1999
2000
2001
2002
Source: MarkLines, Datastream.
Goldman Sachs Global Investment Research
2003
2004
2005
2006
2007
2008
2009
2010
Internal combustion engines
Hybrids (HEV)
Plug-in hybrids (PHEV)
2020E
2019E
2018E
2017E
2016E
2015E
2014E
2013E
2012E
2011E
2010E
2009
2008
2007
2004 — 2G Prius
launched
0
2006
2009 — HEVs 1% of
global light-duty sales
100
2005
1997 — Toyota
Prius goes on
sale in Japan
2004
200
2000— More powerful 1G
Prius launched for US market
Plug-in electric (BEV)
Source: Global Insight, MarkLines, Company Interviews, Goldman Sachs Research.
30
June 27, 2010
Americas: Clean Energy: Energy Storage
Li-ion will take share from NiMh for HEVs, but plug-ins are the core market opportunity
Our Japan battery team forecasts 25% of HEVs to have li-ion batteries by 2014, but the plug-in market opportunity for li-ion batteries
dwarfs the HEV opportunity since each plug-in battery is more than 10X the size – measured in kWh – of an HEV battery. Light-duty
HEVs typically have a battery of <2 kWh (the Prius has a 1.3 kWh NiMh battery) versus 16 kWh for the PHEV Chevy Volt, 24 kWh for
the BEV Think City, and 34 kWh for the BEV Coda sedan. Therefore, the bulk of the opportunity for li-ion batteries will be in lightduty PHEV/BEVs, not in hybrids. For the same reason, the heavy-duty plug-in vehicle market – where batteries are typically 50 kWh
or larger – could be a significant source of revenue at a relatively low penetration rate.
Exhibit 32: Even though HEVs will outnumber PHEVs and BEVs...
Exhibit 33: Plug-ins are the core market opportunity
HEV, PHEV, and BEV sales forecasts
Li-ion battery demand for light-duty vehicles, 2009-2014
(MWh)
(000 units)
14,000
4,000
3,500
12,000
3,000
10,000
2,500
8,000
2,000
6,000
1,500
4,000
1,000
2,000
500
0
0
2009
2010E
HEV (NiMH battery) units
2011E
2012E
HEV (Li-ion battery) units
Source: Goldman Sachs Research estimates.
2013E
PHEV units
2014E
EV units
2009
2010E
Hybrids (HEV)
2011E
2012E
Plug-in hybrids (PHEV)
2013E
2014E
Plug-in electric (BEV)
Source: Goldman Sachs Research estimates.
OEM support is consistent, though expectations of timing vary
By 2020, Ford expects that up to 25% of its global annual sales volume will be an EV of some sort versus about 2% of its total fleet
today. The company estimates hybrids will dominate its EV fleet at 70% of total, with 20% to 25% plug-in hybrids and the rest allelectric vehicles. Comparatively, Nissan plans to launch the Leaf in December 2010 and expects EV’s to comprise over 10% of its
fleet. As of mid June 2010, Nissan had already received about 14,000 reservations for the all-electric hatchback.
Goldman Sachs Global Investment Research
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June 27, 2010
Americas: Clean Energy: Energy Storage
Electric drive to penetrate high-income countries first, but China market will grow rapidly
We expect hybrid and plug-in market growth in high-income regions to precede growth in emerging markets. Public concern over
dependence on foreign oil coupled with the perception that US gasoline prices are unlikely to ever again settle below $2.00, are
driving consumer interest in electric drive vehicles. Our Japan auto team forecasts that by 2020 electric drive vehicles (HEV + PHEV +
BEV) will be 45% of sales in Japan, 38% of sales in the US, and 20% of sales in Western Europe.
The main emerging market opportunity will be China. Key secular drivers for vehicle electrification in China include rising oil
imports and urban air pollution, but lack of an HEV market, stronger price sensitivity, and a less mature auto industry will likely slow
penetration. Our Japan auto team expects electric drive vehicles to be less than 1% of sales in 2015, but grow to 12% of sales – or a
total of 1 million vehicles per year – by 2020. Note that China has the fastest-growing auto market: IHS Global Insight estimated that
China accounted for 22% of light-duty vehicle sales in 2010, up from just 10% in 2006, and that China’s share of global sales will
increase to 36% in 2010.
Industry evolving toward plural powertrains
Serial powertrains are
likely just an
intermediate step in
the market evolution.
The transportation sector is evolving from the dominance of the internal combustion engine and petroleum-based fuels to plural
powertrains, where electric drive vehicles will coexist with increasingly efficient ICE vehicles. We do not expect to see complete
transportation electrification anytime soon owing to the higher energy density of oil, the ability to address oil concerns with other
alternatives such as biofuels and natural gas, and lack of reliable electricity grid infrastructure in many emerging markets. In the
long-term, as li-ion battery technology improves and consumers become more comfortable with plug-in vehicles, we expect to see a
decline in PHEV growth, and thus serial powertrains, relative to BEVs since the 2 powertrains in PHEVS substantially increase
vehicle parts and weight, and thus cost.
Goldman Sachs Global Investment Research
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June 27, 2010
Americas: Clean Energy: Energy Storage
Secular drivers – Oil imports the main concern, but electrification not the only solution
In our view companies that have the alliances, funding, and technology in place will be best placed to compete in the
growing hybrid and electric vehicle industry. We see strong secular drivers for vehicle electrification supported by a growing
number of specific consumer tax credits and subsidies around the world, with European markets likely to lead the way. Two
key sources of uncertainty remain: the timing and pace of electric vehicle adoption and the mix between electric vehicles,
other alternative fuel vehicles, and internal combustion vehicles.
Strong long-term secular drivers for vehicle electrification
Policy goals with respect to clean transportation differ across geographic market segments. In the United States the primary goal is
to reduce dependence on foreign oil; in Europe, the goal is to mitigate climate change; and in emerging markets – and particularly
China – the goal is to balance rapid growth in consumption with urban air pollution and other environmental impacts. Government
funding for clean technology innovation and commercialization is supporting these goals. Customer incentives for vehicle
purchases are also in place, but their impact remains largely untested. Many countries have set specific targets for plug-in hybrid
and electric vehicles but, to the extent defined, most policy mechanisms target 2020 and subsequent decades for key milestones.
Reduce dependence on foreign oil: Volatility in oil prices, escalating exploration and production costs, and the transfer of dollars
to oil-producing regions (some more politically stable than others) are driving policy support for alternatives to petroleum-based
transportation, particularly in the U.S. Despite political coalescence around this goal, policy movement will likely remain slow given
the superior energy density of oil, the industry’s strength, lack of immediate scarcity, and consumer/infrastructure inertia.
Mitigate climate change: Global support for climate change mitigation is strengthening, with Europe leading the way. In the United
States, political support for climate change legislation has increased, but public pressure is less aggressive than before the
economic downturn. Consensus view is that a climate bill with a carbon price is unlikely to be passed in 2010. We also note that
although transportation accounts for about 25% of energy-related CO2 emissions globally, most proposals focus on point-source
emissions from the industrial and power sectors. Unlike compressed natural gas (CNG) and biofuels, electrifying transportation
would shift emissions from vehicles to power plants, with actual reductions depending on the carbon intensity of the power supply.
Balance development goals, access to energy sources, and environmental impacts: In emerging markets – of which China is
the largest – lower-cost conventional vehicles support economic development goals. We expect urban air pollution, and to a lesser
extent, rising oil imports and China’s stated goal of reducing the carbon intensity of its economy to be the main drivers for electric
vehicle penetration, but view weaker drivers along with lagging grid infrastructure to be gating factors in emerging markets.
Support domestic manufacturing and jobs: In the United States, advanced battery companies have received lucrative funding
packages from federal and state programs intended to support a domestic manufacturing base and create jobs. In the May 2010
American Power Act, the clean energy manufacturing tax credit was expanded by $5 billion.
Goldman Sachs Global Investment Research
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June 27, 2010
Americas: Clean Energy: Energy Storage
Exhibit 34: Many countries have set plug-in vehicle targets for 2015 or beyond, with European targets most aggressive relative to
the number of cars on the road
Announced national plug-in vehicle targets
Country
Australia
Target
Date of announcement or
report
Source
2012: first cars on road
2018: mass adoption
2020: 20% production
2050: up to 65% stock
2018: 500,000
June 2009
Project Better Place Energy White
Paper (referencing Garnault Report);
Mistubishi Australia
June 2008
Government of Canada's Canadian
Electric Vehicle Technology Roadmap
April 2009
Natinal government; McKinsey & Co.
Denmark
2011: 500,000, including hybrids
2030: 20-30% market share
2020: 200,000
France
2020: 2 million
October 2009
Germany
2020: 1 million
November 2008
Ireland
2020: 250,000
2030: 40% market share
2011: 40,000 EVs
2012: 40,000 - 100,000 Evs annually
2020: 50% market share next-generation
vehicles
2015: 10,000 stock in Amsterdam
2040: 100% stock in Amsterdam
(~200,000)
2020: 5% market share
2040: 60% market share
2010: 2,000
2014: 1 million
April 2009
Jean-Louis Borloo, Minister of
Ecology
National Strategiekonferenz
Electromobilitat
Houses of the Oireachtas
September 2008
Project Better Place
July/August 2008
Prime Minister Yasuo Fukuda
May 2009
Marijke Vos, Amsterdam council
member
October 2007
Prime Minister Helen Clark
Canada
China
Israel
Japan
Netherlands
New Zealand
Spain
Sweden / Nordic countries
Switzerland
United Kingdom
2020: 600,000 in Sweden and 1.3 million
in Nordic countries
2020: 145,000
ENS Denmark
February 2009 (2010 target); July Instituto para la Diversificacion y
2009 (2014 target)
Ahorro de la Energia; Industry
Minister Miguel Sebastian
May 2009
Nordic Energy Perspectives
July 2009
Alpiq Consulting
October 2008
Department for Transport "High
Range" scenario
United States
2020: 1.2 million EV stock
2020: 350,000 PHEV stock
2030: 3.3 million EV stock
2030: 7.9 million PHEV stock
2015: 1 million PHEV stock
January 2009
President Barack Obama
Global
2020: 5-10% market share
October 2008; June 2009
McKinsey & Co; Carlos Ghosn,
President of Renault
Source: IEA.
Goldman Sachs Global Investment Research
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June 27, 2010
Americas: Clean Energy: Energy Storage
Regulations and consumer incentives are indirect drivers
Government regulations are encouraging adoption of fuel-efficient vehicles, but we view industry regulations as a secondary – and
indirect – driver of electric vehicle technology adoption. For example, in the US, the Corporate Average Fuel Economy (CAFE)
standard will increase to a fleet-wide average of 35.5 mpg by model-year 2020, an incentive for OEMs to invest in fuel-efficient
vehicles. But battery companies benefit only indirectly – i.e., if OEMs decide the most profitable way to comply with this regulation
is through electric vehicle sales.
Gasoline prices a stronger driver than regulations, particularly during consumer adoption phase

In Europe, higher gasoline prices are the primary reason for small, more efficient vehicles.

In most parts of the US, the cost per mile of electricity is below the cost per mile of gasoline ($0.02 per mile versus $0.12 per
mile on average), but fuel costs are just one of many factors in consumer purchase decisions. Other factors include vehicle
size, safety, brand, and price point.

Even consumers who do factor in the fuel cost differential may not own the vehicle for as long as the payback period, which
Nissan estimates is about 6 years for the Leaf, compared with a conventional hatchback. In the auto industry, a payback of less
than 2 years is usually needed to achieve mainstream market penetration.

Nonetheless, now that higher gasoline prices seem here to stay, we expect American consumers to increasingly factor fuel
costs into vehicle purchase decisions, which should help to drive market growth during the consumer adoption phase. We note
that our Integrated Oil team forecasts an oil price increase to $82 in 2010 and $100 in 2011.
Exhibit 35: BEVs can reduce fuel costs by 80% compared to conventional vehicles
Mileage per gallon
Mileage from gasoline
Mlieage from electricity
Cost of gasoline ($/gallon)
Cost of electricity ($/kWh)
Size of battery (kWh)
Percent usable
Usable capacity
Gasoline cost per gallon
Electricity cost per gallon equivalent
Cost per gallon
Cost per mile
Annual vehicle miles traveled
Gallons of gasoline
Total gasoline cost
Total electricity cost
Total cost
Fuel cost savings
Conventional
25
25
0
$3.00
$0.10
$0.00
$3.00
$3.00
$0.12
12,000
480
1,440
1,440
0%
HEV
40
25
15
$3.00
$0.10
1.5
100%
1.5
$3.00
$3.00
$0.08
12,000
300
900
900
-38%
PHEV
43
38
5
$3.00
$0.10
16
50%
8
$3.00
$0.80
$3.80
$0.09
12,000
282
847
226
1,073
-25%
BEV
0
0
100
$3.00
$0.10
24
90%
22
$0.00
$2.16
$2.16
$0.02
12,000
259
259
-82%
Note: PHEV assumes a 340 mile total vehicle range and an 8-gallon gasoline tank, similar to the Chevy Vollt specifications. Also, note that PHEV fuel cost savings will be higher if the
vehicle battery is frequently charged. I.e., if the battery is charged every 40 miles (the electric range), then gasoline consumption is reduced to 0 and fuel cost savings would be inline
with a plug-in BEV.
Source: Company data, Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
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June 27, 2010
Americas: Clean Energy: Energy Storage
Tax credits and subsidies reduce vehicle price, but will be only one of many factors influencing consumer decisions.
Tax credits and subsidies will bring down the price point of some vehicles by as much as 50%. For example, the Nissan Leaf is
priced at $32,800 in the US before federal and local tax credits, but the estimated cost is $20,000-$25,000 in some states after
incentives. Although the reduced price point is important, most early adopters will be more sensitive to vehicle design and
performance – including safety and range – than price. Also, despite the incentives, the purchase price of similarly-sized gasoline
vehicles is still well below electric vehicles.
Exhibit 36: The United States offers tax credits for alternative vehicle purchases whereas most other countries offer subsidies
United
States
Consumer tax credits and subsidies for plug-in (PHEV and BEV) and parallel hybrid (HEV) purchases
Plug-in
Tax credit $2500-7500 federal tax credit (depending on battery size) for plug-in vehicles of <14,000 pounds that have
National
at least a 4 kWh battery; amount of credit declines after the manufacturer has sold at least 200,000 vehicles
[ARRA 2009, Section 1141]
Parallel
hybrid
Tax credit Tax credit authorized under the Energy Policy Act of 2005 for vehicles purchased by Dec. 31 2010, with the
amount varying by fuel economy and the weight of the vehicle and phased out after the manufacturer has
sold 60,000 eligible vehicles; $3400 is the maximum credit that has been assigned to a vehicle model
All xEV
Tax credit Starting in 2009, the Alternative Motor Vehicle Credit, including the tax credit for purchasing hybrid
vehicles, can be applied against the Alternative Minimum Tax
Conversion Tax credit Equal to 10% of the cost of converting a vehicle placed in service after Feb. 17, 2009 to a qualified plug-in
from HEV
electric drive vehicle, up to a maximum of $4000; conversion must be done by Dec 31, 2011
to PHEV
Plug-in
Tax credit Up to $5,000 tax credit on top of the federal credit in certain states, including California, Georgia,
SubTennessee, and Maryland
national
Japan
National
Plug-in
Subsidy
Subsidy = 0.5*(EV price - base car price)
Tax benefit 100% of automobile weight tax until 3/2012
China
Europe
Subsidy
Kanagawa subsidy = 0.25*(Evprice - base car price)
Subsidy
Tokyo subsidy for smaller firms = 0.25 * (EV price - base car price)
Parallel
hybrid
Subsidy
Subsidy of up to 50,000 Rmb ($7300) for an HEV; subsidies apply in 20 cities and cover only publicly-used
passenger vehicles (e.g., taxis)
Plug-in
Subsidy
Subsidy of up to 60,000 Rmb ($8800) for an EV; subsidies apply in 20 cities and cover only publicly-used
passenger vehicles (e.g., taxis)
Plug-in
Subsidy
Additional subsidies offered by select cities, including Chongqing, Shanghai, and Shenzhen
All xEV
Subsidy
Subsidy for individual purchase of an alternative energy vehicle of up to 60,000 Rmb ($8800)
Germany
Plug-in
Subsidy
Subsidy of €3000-5000 ($3800-6300) for the first 100,000 units sold in 2012-2014
France
All xEV
Subsidy
Subsidy of €5000 ($6300) for the first 100,000 units sold by 2012
UK
All xEV
Subsidy
Subsidy of £2000-5000 (budget of £0.25bn, starting 2011)
Subnational
Plug-in
Subnational
Source: Government websites, Goldman Sachs Research.
Goldman Sachs Global Investment Research
36
June 27, 2010
Americas: Clean Energy: Energy Storage
Infrastructure – Charging infrastructure not a gating factor, but utility cooperation needed
In the early adoption phase, most people will charge at home; as the industry evolves, charging infrastructure will keep
pace. The total amount of electricity consumed will be relatively minor at first, but could grow to be a significant portion of
utility sales. We believe utilities recognize the opportunity as being greater than the challenge, but will move at their
customarily slow and cautious pace. For battery companies, charging patterns and infrastructure could affect performance,
and therefore warranties. Battery swap programs present an opportunity for additional sales.
Charging infrastructure not a gating factor
Most consumers who purchase a plug-in vehicle during the 2010-2012 round of launches will charge at home. Purchasers of
PHEVs with smaller batteries are likely to charge on a standard 110V outlet, but we expect BEV drivers to purchase Level 2 charging
stations so they can fully charge their batteries overnight. Nissan’s Level 2 charger was developed by Ecotality and is priced at
$2,200, but in some states (e.g., California), a tax credit of up to $2,000 is available to offset this expense.
Public charging infrastructure will expand during the post-2012 consumer adoption phase. In the near-to-medium term, public
charging infrastructure will be limited to demonstration-scale projects in select cities. For example, Coulomb has announced it will
install 4,600 of its networked charging stations in nine early-adoption cities. Of these, about half will be installed in public places –
primarily curbside – and the rest will be offered to consumers who purchase a Ford, GM, or Smart USA electric vehicle.
Exhibit 37: Most existing charging infrastructure is in California
Exhibit 38: Charging companies have announced dramatic plans
There are around 550 Level 2 and 3 chargers, of which 422 are in California
Planned charging stations – ECOtality and Coulomb account for 95% of total
20,000
450
Top 10 Cities
Los Angeles, CA - 49
Sacramento, CA - 31
San Francisco, CA - 21
Vacaville, CA - 13
Portland, OR - 12
Santa Monica, CA - 12
San Diego, CA - 9
Long Beach, CA - 7
Pasadena, CA - 7
Davis, CA - 6
Other cities
in California
400
350
300
250
Washington
Other
15,000
Oregon
10,000
200
California
150
San Francisco
100
Sacramento
Los Angeles
50
Other cities
in Oregon
Lincoln City
Portland
5,000
Spokane
Houston
Seattle
0
0
CA
OR
Source: US DOE, Goldman Sachs Research.
Goldman Sachs Global Investment Research
WA
TX
Other
Current
2015E
Source: US DOE, Goldman Sachs Research.
37
June 27, 2010
Americas: Clean Energy: Energy Storage
Utilities will view the opportunity as being greater than the challenge
We expect utilities will have time to adapt their business models to support plug-in vehicle charging, and will ultimately profit from
this high-margin opportunity, particularly if they can effectively incent night-time, off-peak charging. However, we also highlight
challenges for utilities including the impact of the added off-peak load in concentrated locations – and particularly the impact on hot
summer nights when utilities rely on low night-time loads to allow transformers time to cool off – and questions over charging
station tariffs and regulations.
Charging may add significant load to distribution transformers
Charging a BEV with a 100-mile range on a 110V/15A standard outlet takes about 16 hours, so utilities expect consumers to use 240V
outlets and charge at either 15 amps (around 8 hour charge time) or 30 amps (around 4 hour charge time). With a 15A charger, the
additional load is about 3.3 kW. With a 30A charger, the additional load is about 6.6 kW, larger than the average summer peak load
of most single-family homes in the Pacific Gas and Electric (PG&E) territory in California.
Market will evolve away from home charging toward public fast charge
The biggest advantage of home charging is widespread availability, but disadvantages including longer charge time, the upfront
cost of a Level 2 station (which we anticipate most consumers will eventually want), and the impact on utilities as charging becomes
prevalent in neighborhoods that may not have sufficient electricity distribution capacity to support it. We expect charging will
eventually move toward Level 2+ and Level 3 charging in public locations – e.g. curbside and/or retail locations.
Exhibit 39: Most early adopters will charge at home until public fast-charge infrastructure develops
Level 2+
220-240V
30 amps
6.6 kW
Details
Standard plug available in all homes
Sufficient to charge a PHEV with a 40-mile range overnight
Can be installed in homes and offices
Sufficient to charge a BEV with a 100-mile range in 8 hours
Can be installed in homes and offices, or in other public locations
Cuts charging time in half versus 15 amp charging
Level 3
~400-440V
100 amps
50 kW
Fast charge appropriate for gas-station-style public charging infrastructure
Level
Volts
Amps
kW
Level 1
110-120V
15 amps
1.1 kW
Level 2
220-240V
15 amps
3.3 kW
Source: Argonne National Laboratory, Goldman Sachs Research.
Goldman Sachs Global Investment Research
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June 27, 2010
Americas: Clean Energy: Energy Storage
Valuation:
Multiple possible trajectories from takeout to Tier 1 to zero
Goldman Sachs Global Investment Research
39
June 27, 2010
Americas: Clean Energy: Energy Storage
Valuation paths – exploring the potential evolutionary paths for advanced batteries
As the advanced battery market matures in the coming decade, we think the manufacturers’ path evolves into either:
Scenario 1: Takeout or Tier 1 supplier status (the manufacturer enjoys a large share in a large market)
Scenario 2: Supplier to Tier 1 (small share in a large market)
Scenario 3: Niche market operator (large share in a small market)
Scenario 4: Ø – Market never evolves to sufficient scale and/or disruptive technology renders them obsolete
Tier 1 status or takeout offers the highest return, but must be balanced with other potential scenarios
Advanced battery companies are targeting EBITDA margins of 20% on the assumption they will be able to capture a significant
share of a large, fast growth market for li-ion batteries. We ascribe about a 10% chance of this scenario playing out on the expected
timeline. If the market is smaller than anticipated, or if A123 and Ener1 are unable to capture a significant share, then they are more
likely to have long-term margins in the range of typical auto parts suppliers, which average 9.2% (using EBITDA). We believe there is
a small, 10% chance that the market never evolves to sufficient scale to lower battery costs and/or disruptive technologies emerge,
rendering A123 and/or Ener1 obsolete. Exhibit 40 is a simple valuation tree allowing for a scenario analysis given multiple outcomes.
Exhibit 40: Evolutionary pathway depends on market size and share, we think the implied scenario weightings seem fair
75%
Large market
A123
90%
Company is
relevant
$9.00
10%
Less relevance:
small market &
small share
25%
Small market,
niche supplier
$0.00
Expected
value
75%
$1.67
Expected
value
12%
Large share,
Takeout or
Tier 1 status
$2.03
Expected
value
88%
Small share,
supplier to
Tier1
$5.35
Expected
value
$0.32
Expected
value
12%
Large share,
Takeout or
Tier 1 status
Large market
Ener1
90%
Company is
relevant
$3.25
10%
Less relevance:
small market &
small share
25%
$0.79
Small market, Expected
niche supplier
value
$0.00
88%
Small share,
supplier to
Tier1
$2.07
Expected
value
Expected
value
Source: Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
40
June 27, 2010
Americas: Clean Energy: Energy Storage
Valuing the advanced battery companies as if they are call options on the industry
Another way to evaluate the valuation of A123 and Ener1 shares is to apply an option valuation. We utilized the Black-Scholes
option pricing model with the key inputs of volatility matching the trailing 3 month actual volatility, and exercise price equal to the
cash per share. Interestingly, the model returns option prices in the same neighborhood of the current market price. (Exhibit 41)
Exhibit 41: Black Scholes model implies current market prices approximate option value
Market implied option value
A123
HEV
Current price
Expected life
Exercise price
Risk free rate
Volatility
Dividend yield
$8.76
5.0
$3.50
3.0%
60%
-
d1
d2
N(d1)
N(d2)
1.4664
0.1248
0.9287
0.5497
Option value
$6.48
Current price
Expected life
Exercise price
Risk free rate
Volatility
Dividend yield
$3.59
5.0
$1.00
3.0%
60%
-
d1
d2
N(d1)
N(d2)
1.7353
0.3937
0.9587
0.6531
Option value
$2.88
$6.48 Implied option value
$2.47 + 2010E Net cash/share
$8.95
Current fair value
$2.88 Implied option value
$1.00 + 2010E Net cash/share
$3.88
Current fair value
Source: Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
41
June 27, 2010
Americas: Clean Energy: Energy Storage
Ultimate industry margin profile likely more modest than hoped for
Assuming there is a 90% chance that the outcome is not the optimal outcome of achieving Tier 1 status or sale (e.g. rather one of
the other 3 scenarios), we believe realized margins in the sector will be below the 20% targeted range. In this case, the industry is
likely to experience a level of consolidation to achieve manufacturing scale and/or to maintain technology differentiation. In fact, the
battery manufacturers that survive the consolidation phase may begin to look and act like traditional auto parts suppliers, i.e.
around 9% EBITDA margins and mid-teens earnings multiples.
Exhibit 42: Multiples for auto parts suppliers are below the 20% EBITDA margins targeted by advanced battery companies
Company
A123
ArvinMeritor
BorgWarner
Dana Holding
Federal-Mogul
Johnson Controls
Magna International
Standard Motor Products
TRW Automotive Holding
Tenneco
The Goodyear Tire & Rubber Co.
Saft
GS Yuasa
Panasonic
Min
Average
Max
Ticker
AONE
ARM
BWA
DAN
FDML
JCI
MGA
SMP
TRW
TEN
GT
S1A.PA
6674.T
6752.T
2010
Revenue
$139
4,694
5,234
5,618
5,891
34,395
21,599
753
13,179
5,443
18,318
578
JPY 250,000
JPY 7,417,980
Gross
margin
3.9%
10.5%
18.5%
9.5%
17.1%
15.4%
10.1%
25.1%
10.4%
14.6%
17.6%
29.3%
22.9%
28.0%
9.5%
17.6%
29.3%
EBITDA
Capex / Rev
margin
(54.6%)
97.4%
5.0%
2.1%
13.2%
5.0%
8.8%
2.9%
10.5%
3.4%
7.2%
2.2%
7.7%
3.5%
6.8%
1.6%
10.6%
2.4%
8.9%
3.0%
7.9%
5.8%
18.6%
11.4%
8.0%
8.8%
6.4%
5.2%
5.0%
1.6%
9.2%
4.4%
18.6%
11.4%
EV/EBITDA
P/Sales
-7.8x
8.2x
6.7x
2.7x
5.2x
8.6x
3.8x
4.7x
3.2x
4.5x
4.1x
6.9x
13.0x
6.2x
2.7x
6.0x
13.0x
6.7x
0.2x
0.8x
0.2x
0.3x
0.6x
0.4x
0.2x
0.2x
0.2x
0.1x
1.1x
0.9x
0.4x
0.1x
0.4x
1.1x
P/Book
2.1x
-1.3x
1.8x
0.9x
1.3x
1.8x
1.0x
0.9x
1.8x
29.2x
1.7x
1.8x
1.9x
0.8x
0.8x
1.4x
1.9x
P/E
-10.1x
35.2x
14.1x
120.4x
16.4x
14.3x
12.3x
11.3x
6.5x
20.2x
93.4x
12.8x
33.8x
-22.9x
6.5x
15.7x
33.8x
SG&A
(33.1%)
(7.3%)
(10.4%)
(6.5%)
(12.9%)
(10.3%)
(5.8%)
(20.3%)
(3.5%)
(9.8%)
(13.5%)
(12.8%)
(19.1%)
(25.4%)
(25.4%)
(12.1%)
(3.5%)
R&D
D&A
(37.7%)
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
(3.1%)
(6.4%)
(6.4%)
(0.8%)
0.0%
(12.3%)
(1.7%)
(5.1%)
(5.9%)
(5.7%)
(2.1%)
(3.4%)
(1.9%)
(3.8%)
(4.1%)
(3.9%)
(5.2%)
(3.8%)
(5.9%)
(3.9%)
(1.7%)
Source: Goldman Sachs Research estimates.
Exhibit 43: Forecasted 2010 EBITDA margins for Exhibit 41 auto part suppliers average 9%
Common Size Income Statement
Revenue
COGS
Gross profit
Min
100%
91%
9%
Typical
100%
82%
18%
Max
100%
71%
29%
EBITDA
D&A
5%
(2%)
9%
(4%)
19%
(5%)
Capex / Revenue
2.1%
4.4%
11.4%
Source: Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
42
June 27, 2010
Americas: Clean Energy: Energy Storage
A123 Systems (AONE: Neutral, $9 6-month price target)
Key data
Current
Price ($)
6 month price target ($)
Market cap ($ mn)
9.67
9.00
1,004.0
Revenue ($ mn) New
Revenue ($ mn) Old
EPS ($) New
EPS ($) Old
P/E (X)
EV/EBITDA (X)
ROE (%)
12/09
91.0
91.0
(2.55)
(2.55)
NM
NM
NM
12/10E
141.2
141.2
(1.13)
(1.13)
NM
NM
NM
12/11E
281.7
276.4
(1.00)
(0.88)
NM
NM
NM
12/12E
451.6
430.9
(0.50)
(0.45)
NM
NM
NM
EPS ($)
3/10
(0.28)
6/10E
(0.28)
9/10E
(0.29)
12/10E
(0.28)
Price performance chart
30
1,350
25
1,250
20
1,150
15
1,050
10
950
5
Jun-09
850
Sep-09
Dec-09
A123 Systems, Inc. (L)
Apr-10
Investment view
We assume coverage of A123 with a Neutral rating. We believe the company has a leading technology and
ample near-term funding, but that announced OEM and Tier 1 alliances may be more tenuous than they seem.
We believe the company will take longer-than-expected to achieve positive earnings as capacity expansion
consumes cash while the utilization ramp is likely slower-than-expected. We forecast 2010, 2011, and 2012
revenue of $141 mn, $282 mn, and $452 mn respectively, and EPS of -1.13, -1.00, and -0.50 respectively. We
believe the revenue ramp is a better indicator of the company’s path to profitability than EPS at this early stage
of commercialization. We expect positive EBITDA and near break-even net income in 2013, one year later than
consensus currently expects.
Core drivers of growth
In the near term, we expect execution on existing contracts to be the core driver. As the electric vehicle battery
market evolves over the medium term, we expect more visibility into A123’s ability to gain share and better
battery economics. We expect the next catalyst for the stock to be consumer response to high-profile plug-in
vehicle launches in 4Q 2010 / 2Q 2011, and particularly the Fisker Karma launch with A123’s battery.
Risks to the investment case
Upside risks include: (1) New contract wins, (2) definitive, positive announcement on Chrysler, or other brandname OEM partnership, (3) faster-than-expected market development, and (4) a clear differentiation vs. peers on
the back of technology leadership.
S&P 500 (R)
Downside risks include: (1) Negative feedback on the Fisker Karma delays, (2) cost overruns for capacity
Share price performance (%)
Absolute
Rel. to S&P 500
3 month
(40.7)
(38.1)
6 month
(56.1)
(56.6)
12 month
---
expansion, (3) poor execution at volume production, (4) slower-than-expected large-format li-ion battery market
development, and (5) failure to gain market share due to aggressive competition from larger Japanese and
Korean companies.
Source: Company data, Goldman Sachs Research estimates, FactSet. Price as of 6/18/2010 close.
Valuation
Our 6-month price target of $9 is based on our DCF valuation. At the current share price of $9.19, the stock
trades at 2010E P/Revenue multiple of 6.8X and a 2011E P/Revenue multiple of 3.5X. We expect multiples to
continue to decline as revenue increases and the thematic news flow is less relevant to trading momentum.
Industry context
We have a Neutral coverage view of the Advanced Battery industry, reflecting uncertainty in the pace and level
of market growth, which has started to ground valuation multiples. We view strong alliances, funding, and
technology as the critical near-term success factors defining the company opportunity. We see promise for
vehicle electrification and industry evolution toward mainstream market adoption of plug-in vehicles.
Goldman Sachs Global Investment Research
43
June 27, 2010
Americas: Clean Energy: Energy Storage
Key Financial Metrics
Exhibit 44: A123 Systems key financial metrics
2008-2012E, $ millions
Fiscal Year ended December 31
Revenue
Gross Margin
EBITDA
Operating Income
EPS (GAAP)
Free cash flow to the firm
Free cash flow per share
% of Revenue
Gross Margin
EBITDA
Operating Income
% change YoY
Revenue
Gross Margin
2008A
$69
(12)
(9)
(80)
(9.04)
(13)
(1.43)
2008A
(17.9%)
(13.2%)
nm
2008A
2009A
$91
(3)
(3)
(85)
(2.55)
(9)
(0.09)
2009A
(3.0%)
(2.8%)
(93.8%)
2009A
33%
nm
2010E
$141
(2)
(1)
(117)
(1.13)
(165)
(1.57)
2010E
(1.5%)
(0.8%)
(83.1%)
2010E
55%
nm
2011E
$282
34
(1)
(111)
(1.00)
(202)
(1.88)
2011E
12.1%
(0.4%)
(39.3%)
2011E
99%
nm
2012E
$452
104
(0)
(53)
(0.50)
(107)
(0.98)
2012E
23.1%
(0.1%)
(11.7%)
2012E
60%
207%
Source: Company data, Goldman Sachs Research estimates.
Investment Points

[+/-] Alliances: A123’s alliances with heavy-duty suppliers are a key positive since we expect this market to lead the light-duty
auto market. But, lack of a brand-name light-duty vehicle partner is a negative, and on balance we view the company’s
alliances as more fluid relative to Japanese JVs that are already set in stone. We think additional clarity into longer-term
alliances would be a positive catalyst for the stock.

[+] Technology: The company has a leading, if not the number one technology, with upside potential if technology leadership
proves more important than we currently believe.

[+] Funding: A123 has ample liquidity to execute its capacity expansion plan, so we do not expect it to take on significant debt.
If the ATVM loan does not come through, which we view as only a slight downside risk, then the company could require
additional funding around 2013-2014.

[+] Production in progress: A123 has several years of manufacturing experience at scale through production of cylindrical
cells at its plant in China.

[-] Capital intensity: The company has grown organically and quickly, so capex per kWh of expansion is higher than its peers.

[-] Delayed profitability: Revenue is ramping more slowly than expected at the time of the IPO, and we do not expect the
company to turn EBITDA-positive until 2013, versus Street consensus of 2012.
Goldman Sachs Global Investment Research
44
June 27, 2010
Americas: Clean Energy: Energy Storage

[-] Underwhelming disclosure: Increased transparency as the business matures would benefit investors’ ability to
appropriately value the stock.

[+/-] Market trajectory: We believe it is premature to know how quickly core li-ion battery markets will develop, or what role
current leaders will play.
Valuation
Our DCF implies a share price of $9.00
Given the early-stage nature of A123’s business, we have used a DCF analysis, from which we can imply multiples of revenue
(EV/Revenue) and EBITDA. As profitability is achieved, we believe investors will eventually shift their valuation metrics from DCF
and EV/Revenue to focus on metrics including EV/EBITDA, Price to Earnings (P/E), and P/E to Growth (PEG). We forecast 2013 to be
A123’s first year of generating EBITDA and net income.
Our key DCF assumptions include:

Revenue growth of 37% (2010E-2020E CAGR) in-line with our assumption for industry growth.

EBIT margins peak at almost 15% in year 7 and trend down to a normalized margin of about 14% in the terminal year

Capital expenditures forecast based on an assumption of $0.35 per Wh for capacity additions and 2%-3% for maintenance
capex during the next 10 years; capital expenditures estimated to be 5% of revenue in the terminal year.

We use a net capex number in our DCF that represents the gross capex invested by A123 net of government grants, which
provides a meaningful cash flow benefit in 2010, 2011, and 2012.

Discount rate of 12.8% and terminal growth rate of 4.0%. The relatively high terminal growth rate is meant to capture the
potential for this business to continue growing at an elevated rate beyond year 10 (inflation of 2% plus 2% for incremental
growth). The terminal value implies an EV/EBITDA multiple of 5.5X and 11.4X P/FCF.

Our DCF analysis implies that over 100% of A123 enterprise value is embedded in the terminal value, highlighting the high
degree of capital intensity in the advanced battery business, the need for scale economies to achieve profitability, and the
importance of the long-term growth and investment assumptions in our model
Goldman Sachs Global Investment Research
45
June 27, 2010
Americas: Clean Energy: Energy Storage
Ener1, Inc. (HEV Neutral, $3.50 6-month price target)
Key data
Current
Price ($)
6 month price target ($)
Market cap ($ mn)
3.62
3.50
452.4
Revenue ($ mn) New
Revenue (-- mn) Old
EPS ($) New
EPS (--) Old
P/E (X)
EV/EBITDA (X)
ROE (%)
12/09
34.8
-(0.44)
-NM
NM
NM
12/10E
77.2
-(0.46)
-NM
NM
NM
12/11E
199.1
-(0.38)
-NM
NM
NM
12/12E
319.8
-(0.29)
-NM
NM
NM
EPS ($)
3/10
(0.12)
6/10E
(0.11)
9/10E
(0.11)
12/10E
(0.12)
Price performance chart
8
1,450
7
1,350
6
1,250
5
1,150
4
1,050
3
950
2
Jun-09
850
Sep-09
Jan-10
Ener1, Inc. (L)
Share price performance (%)
Absolute
Rel. to S&P 500
Apr-10
6 month
(46.0)
(43.3)
We initiate coverage of Ener1 with a Neutral rating with promising technology and an asset-light capacity plan
offset by somewhat risky industry alliances and a promising but multi-year path to consumer adoption. We
believe the company has the ability to leverage its leading technology to expand capacity versus self-funding the
expansion, and while retaining committed long-term backing. We forecast strong revenue growth in 2010, 2011,
and 2012 to $77 mn, $199 mn, and $320 mn respectively, with revenue expected to reach $1 billion in 2015. We
forecast EPS of -0.46, -0.38, and -0.29 in 2010, 2011, and 2012, respectively. Smaller losses relative to A123 are
commensurate with more shares but also a slower near-term expansion. As with A123, we expect the company
to begin to generate EBITDA in 2013, but we do not expect the company to generate net income until 2015.
Core drivers of growth
In the near term, we expect execution on the Think City BEV to be the core driver of growth. We expect to gain
more visibility into the company’s plans with respect to the Wanxiang JV and Russian grid energy storage in the
coming months, both of which are likely to be medium-term business drivers.
Risks to the investment case
Upside risks include: (1) Faster-than-expected business development in China and/or Russia, or (2) a break
away from the pack on the back of technology leadership, particularly in the light-duty plug-in market.
Downside risks include: (1) Negative feedback following the Think City launch, (2) cost overruns for capacity
expansion, (3) poor execution at volume production, (4) slower-than-expected large-format li-ion battery market
development, and (5) failure to gain market share due to aggressive competition from larger, better funded
Japanese and Korean companies.
S&P 500 (R)
3 month
(19.0)
(11.9)
Investment view
12 month
(31.8)
(42.8)
Source: Company data, Goldman Sachs Research estimates, FactSet. Price as of 6/24/2010 close.
Valuation
Our $3.50 6-month price target is based on our DCF valuation. At the current share price of $3.62, the stock
trades at 2010E P/Revenue multiple of 6.6x and a 2011E P/Revenue multiple of 2.9x. We expect multiples to
continue to decline as fundamentals improve and the thematic news flow is less relevant to trading momentum.
Industry context
We have a Neutral coverage view of the Advanced Battery industry, reflecting uncertainty in the pace and level
of market growth, which has started to ground valuation multiples. We view strong alliances, funding, and
technology as the critical near-term success factors defining the company opportunity. We see promise for
vehicle electrification and industry evolution toward mainstream market adoption of plug-in vehicles.
Goldman Sachs Global Investment Research
46
June 27, 2010
Americas: Clean Energy: Energy Storage
Key Financial Metrics
Exhibit 45: Ener1 key financial metrics
2008-2012E, $ millions
Ener1 (HEV), December 31 Fiscal Year
Fiscal Year ended December 31
Revenue
Gross Margin
EBITDA
Operating Income
EPS (GAAP)
Free cash flow to the firm
Free cash flow per share
% of Revenue
Gross Margin
EBITDA
Operating Income
% change YoY
Revenue
Gross Margin
2008A
$7
2
(32)
(34)
(0.51)
(17)
(17.01)
2008A
31.9%
nm
nm
2008A
2009A
$35
4
(44)
(49)
(0.44)
(50)
(49.61)
2009A
11.7%
nm
nm
2009A
408%
86%
2010E
$77
12
(54)
(63)
(0.46)
(85)
(85.36)
2010E
14.9%
(70.4%)
(81.7%)
2010E
122%
183%
2011E
$199
36
(43)
(58)
(0.38)
(63)
(63.37)
2011E
18.0%
(21.5%)
(29.0%)
2011E
158%
212%
2012E
$320
53
(30)
(50)
(0.29)
(68)
(67.97)
2012E
16.5%
(9.3%)
(15.6%)
2012E
61%
47%
Source: Company data, Goldman Sachs Research estimates.
Investment Points

[+/-] Alliances: Key alliance with Think offers the advantage of a partner with pure electric vehicle experience but the risk of
small market share and unknown brand. Partnership with Volvo appears strong, but volume production is not slated to begin
until 2013.

[+] Technology: The company has a leading technology and experience manufacturing prismatic li-ion cells through its 2008
acquisition of Enertech.

[+] Funding: Ample near-term funding but likely to need capital without pending ATVM loan approval.

[+/-] Less capital intensive: The company has grown through acquisitions and JVs, which require less capex per kWh of
expansion. Execution of the manufacturing JV with Wanxiang will be a key variable of fundamental performance.

[-] Delayed profitability: Like A123, we do not forecast positive EBITDA or net income until 2013.

[-] Underwhelming disclosure: Increased transparency as the business matures would benefit investors’ ability to
appropriately value the stock.

[+/-] Market trajectory: We believe it is premature to know how quickly core li-ion battery markets will develop, or what role
current leaders will play.
Goldman Sachs Global Investment Research
47
June 27, 2010
Americas: Clean Energy: Energy Storage
EnerSys (ENS, Buy, $29 6-month price target): Worth its weight
Key data
Current
Price ($)
6 month price target ($)
Market cap ($ mn)
22.56
29.00
1,110.0
Revenue ($ mn) New
Revenue (-- mn) Old
EPS ($) New
EPS (--) Old
P/E (X)
EV/EBITDA (X)
ROE (%)
EPS ($)
3/10
1,579.4
-1.28
-17.7
7.8
8.6
3/11E
1,856.3
-2.12
-10.6
6.4
13.0
3/12E
2,006.9
-2.41
-9.4
6.2
14.2
3/13E
2,121.4
-2.66
-8.5
6.1
16.6
3/10
0.36
6/10E
0.48
9/10E
0.50
12/10E
0.55
Price performance chart
Source of opportunity
We see 30% potential upside to our $29/share 6-month price target, driven by higher EPS as a recovery in motive
power and reset cost controls enables margin expansion. We expect 120Q11 motive revenue to be up 32% yoy
and flat qoq. The company reported FY2010 revenue of $1,579, and our revenue forecasts for FY2011/2012 are
$1,856/$2,007. We expect cost savings to drive gross margins up to 23% in 1Q2011 from 21% in 4Q10, en route
toward the company’s 25% longer term target. We forecast 1Q2011 adjusted non-GAAP EPS of $0.50, and FY11
adjusted non-GAAP EPS of $2.15, 3% above consensus of $2.09. Our adjusted non-GAAP EPS forecast for
FY2012 is $2.41. We forecast healthy FCF/share of $1.33 in FY2011 and expect the company to continue its
strategy of making accretive acquisitions, rather than use FCF for stock buybacks. We believe the company has a
strong record of delivering solid fundamental performance and enjoys a defensible lead over competitors.
Aggressive cost cutting during the downturn and lower lead input costs should drive margins upward on the
back of the ongoing industrial recovery. The company’s global manufacturing base is also an advantage
because it provides a natural hedge against currency fluctuations and reduces transportation costs.
28
1,450
26
1,350
Catalyst
24
1,250
22
1,150
20
1,050
18
950
We think the shares are primarily driven by earnings, so the next catalyst will be execution on the FY1Q11 print.
Since EnerSys’s motive segment sales are highly correlated with industrial production and forklift orders, and
reserve segment sales are partially driven by telecom capex spending, we expect positive related data points to
also be catalysts for the stock.
16
Jun-09
850
Sep-09
Jan-10
EnerSys Inc. (L)
Share price performance (%)
Absolute
Rel. to S&P 500
Apr-10
Valuation
S&P 500 (R)
3 month
(8.4)
(0.3)
6 month
0.2
5.2
12 month
27.8
7.2
Our price target of $29 is based on a DCF valuation. At the current share price of $22.23, the stock trades at
FY2011 P/E of 10.3X, compared with its pre-downturn historic forward P/E range of 15X-20X. A $29 price implies
a multiple of 13.5X for FY2011 and 12X for FY2012, with our price target implying 30% upside.
Source: Company data, Goldman Sachs Research estimates, FactSet. Price as of 6/24/2010 close.
Key risks
(1) Slower-than-expected recovery in forklift orders, (2) technology disintermediation in the long-term,
particularly in the reserve power market in the Americas and Europe, and (3) larger-than-expected impacts from
foreign exchange and/or lead market exposure.
Industry context
We expect EnerSys to maintain its leading, 28% market share in industrial lead-acid batteries, a niche market
with high barriers to entry due to high fixed costs and the importance of strong brands coupled with a global
retail distribution network. We note that the electric forklift market, which accounts for half of EnerSys’s sales, is
steadily gaining share from the internal combustion forklift market and now accounts for 55% of all forklifts and
66% of all industrial trucks, including hand trucks.
Goldman Sachs Global Investment Research
48
June 27, 2010
Americas: Clean Energy: Energy Storage
Investment Points

[+] Defensible, leading market share: The company is the leader amongst a small number of competitors in a niche market
that is difficult to enter (Exhibits 46 and 47). We see no meaningful, near-term opportunities for current competitors to capture
share, or for more advanced technologies to penetrate the company’s core markets. In the long term, the company faces risk
from advanced technologies, including lithium ion batteries, particularly in the reserve power market in the Americas and
Europe. This risk may be partially offset by expansion opportunities in Asia.

[+] Mix of products, including premium technologies: Most lead acid batteries are commodities, but EnerSys offers some
unique premium products such as Thin-plate pure lead (TPPL) batteries for the reserve (backup) power market and square tube
designs for the motive (forklift) market.

[+] Industrial recovery: Our Economics team forecasts yoy increases in industrial production of 5.6/6.5/12.7% for FY2011 in
Europe/United States/Asia, following yoy declines in FY2010 of -8.8/-6.2/7.4% (Exhibit 49). Forklift orders are highly correlated
with industrial production (Exhibit 50), and EnerSys revenue is correlated with forklift orders, so we expect the industrial
recovery to continue to drive revenue recovery. We forecast revenue of $1,856 in FY2011 versus $1,579 in 2010, a yoy increase
of 18% (Exhibit 48).

[+] Cost management: The company’s aggressive cost management plan resulted in an increase in gross margins of 2% yoy
and flat operating margins despite a 20% decline in revenue between FY2009 and FY2010. We expect this to translate into
further margin expansion in FY2011, for which we forecast a gross margin of 24% and operating margin of 9% (Exhibit 52).

[+] Electrification of forklifts: Electric forklifts now account for 50% of all forklifts, and continue to gain share for internal
combustion forklifts (Exhibit 53). Overall, 66% of industrial trucks are electric, including motorized hand trucks. We note the
forklift market is about 50% replacement orders and 50% new demand.

[+] Accretive acquisitions: Management has delivered consistent results while overseeing 10 acquisitions since the 2004 IPO
(Exhibit 54); these acquisitions have allowed the company to offer diverse products through a leading distribution network and
to expand its manufacturing base into lower-cost locations. The pattern of acquisitions is also consistent with an intention to
geographically expand within the niche rather than enter new battery markets.

[+] Low lead prices: Lead accounts for approximately one-third of the company’s costs (Exhibit 55). Lead prices declined 50%
between January 2010 and June 2010 (Exhibit 56), and the forward curve is currently flat (Exhibit 57), which should contribute
to margin expansion.

[+/-] Euro exposure: The company has both manufacturing and sales in Europe, providing a natural hedge against Euro
exposure. Overall, we agree with the company view that Euro exposure will be limited to less than $0.05 impact on quarterly
earnings.

[-] Technology disintermediation: Although we view the lead-acid battery market as being separate from the lithium ion
market, we think there is some risk that lithium ion, or other advanced technologies, will eventually be able to capture a share
of the reserve power market in cases where a smaller, lighter battery may be valued. EnerSys’s 2006 acquisition of modular
energy devices, which makes li-ion batteries for military and telecom applications, as well as its 2009 investment in fuel cell
company Altergy signals recognition that advanced technologies may gain share in its core markets. Although EnerSys may
add to its product offerings as needed in response to customer signals, we believe lead-acid batteries will remain the focus.
Goldman Sachs Global Investment Research
49
June 27, 2010
Americas: Clean Energy: Energy Storage
Exhibit 46: $6.6 billion industrial battery market
Exhibit 47: Small industry with few competitors
Motive power is 44% of total, of which 93% is forklifts, 2009E
EnerSys market share is about 38% in motive and 23% in reserve power
Other
reserve
power, $0.9
Reserve
power
market
Industrial
forklifts, $2.7
Uninterruptible
power supply
$1.0
Telecom
reserve power,
$1.7
Major
Competitors
Ticker
GS Rating
Market Cap
(million USD)
Country
Segment(s)
EnerSys
GS Yuasa
Exide
C&D
Coslight
Northstar
East Penn
Hoppecke
Crown
ENS
6674.T
XIDE
CHP
1043
-
Buy
Neutral
NC
NC
NC
n/a
n/a
n/a
n/a
1,115
2,902
401
25
359
PRIVATE
PRIVATE
PRIVATE
PRIVATE
United States
Japan
United States
United States
Hong Kong
United States
United States
Germany
United States
Motive, Reserve
Motive
Motive, Reserve
Motive
Motive
Motive
Motive, Reserve
Reserve
Reserve
Other motive
power, $0.2
Source: Company data, Goldman Sachs Research.
Source: Factset, data, Goldman Sachs Research.
Exhibit 48: We expect revenue, margins, and returns to increase yoy in FY2011
Summary financials, $ millions
EnerSys (ENS), March 31 Fiscal Year
Fiscal Year ended March 31
Revenue
Gross Margin
EBITDA
Operating Income
EPS (GAAP)
EPS (adjusted non-GAAP)
Free cash flow to the firm
Free cash flow per share
% of Revenue
Gross Margin
EBITDA
Operating Income
% change YoY
Revenue
Gross Margin
EBITDA
Operating Income
EPS (GAAP)
EPS (adjusted non-GAAP)
Free cash flow to the firm
Free cash flow per share
Ratios
Leverage Ratio
ROIC
2008A
$2,027
382
169
119
1.22
1.42
(21)
(0.84)
2008A
18.8%
8.3%
5.9%
2008A
2008A
2.4x
8.0%
2009A
$1,973
413
192
142
1.66
1.92
181
3.28
2009A
21.0%
9.7%
7.2%
2009A
(3%)
8%
14%
19%
36%
35%
nm
nm
2009A
1.1x
9.5%
2010A
$1,579
361
159
114
1.28
1.44
108
1.87
2010A
22.9%
10.1%
7.2%
2010A
(20%)
(13%)
(17%)
(20%)
(23%)
(25%)
(41%)
(43%)
2010A
0.9x
7.4%
2011E
$1,856
450
215
168
2.12
2.15
79
1.32
2011E
24.3%
11.6%
9.1%
2011E
18%
25%
35%
47%
66%
49%
(27%)
(29%)
2011A
0.8x
10.2%
2012E
$2,007
515
247
187
2.41
2.41
90
1.63
2012E
25.7%
12.3%
9.3%
2012E
8%
14%
15%
11%
14%
12%
15%
23%
2012A
1.2x
10.6%
Source: Company data, Goldman Sachs Research.
Goldman Sachs Global Investment Research
50
June 27, 2010
Americas: Clean Energy: Energy Storage
Exhibit 49: Industrial production is recovering, leading to revenue growth…
$2,500
Exhibit 50: …since forklift sales are correlated with industrial production
Volume of forklifts sold in US
15.0%
Asia
10.0%
$2,000
Revenue
US
$1,500
0.0%
Europe
$1,000
-5.0%
Revenue
YoY Change
5.0%
-10.0%
150,000
125,000
100,000
75,000
50,000
25,000
0
$500
700
-15.0%
800
900
1,000
1,100
1,200
1,300
1,400
U.S. Industrial Production
$0
-20.0%
2005
2006
2007
2008
2009
2010
2011
All forklifts (Class I, II, IV, V)
Linear (All forklifts (Class I, II, IV, V))
2012
Electric Forklifts (Class IV and V)
Linear (Electric Forklifts (Class IV and V))
Source: Company data, Goldman Sachs Research estimates.
Source: Industrial Truck Association, Goldman Sachs Research estimates.
Exhibit 51: Production costs have historically tracked revenue…
Exhibit 52: ...and margins are returning to historic highs around 25%
$500
Gross margins
25%
$2,000
$400
$300
$1,500
15%
$1,000
$200
$100
$200
Operating margins
Revenue
Implied COGS = (22.300) + 0.4843 * Revenue
p-value < 0.01, R-squared = 99%
$300
$400
Revenue (millions)
Source: Company data, Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
$500
Margins
20%
Revenue
COGS (millions)
30%
$2,500
Estimated COGS
Reported COGS (2004-2010 quarters)
10%
$500
5%
$600
$0
0%
FY 2004
2005
2006
2007
2008
2009
2010
2011E
2012 E
Source: Company data, Goldman Sachs Research estimates.
51
June 27, 2010
Americas: Clean Energy: Energy Storage
Exhibit 53: About two-thirds of all industrial trucks, and half of all forklifts, sold in the US are electric
Electric forklifts sold in the US
Electric motorized hand trucks sold in the US
250,000
70%
Electric forklifts (% of all forklifts)
Volume of forklifts sold in US
Percent electric industrial trucks (including motorized hand trucks)
60%
200,000
50%
150,000
40%
30%
100,000
20%
50,000
10%
0%
2009
2008
2007
2006
2005
2004
2003
2001
2002
1999
2000
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
0
Source: Industrial Truck Association, Goldman Sachs Research estimates.
Exhibit 54: EnerSys has completed 10 acquisitions to add to organic growth since going public
Announcement Date
1/14/2010
10/30/2009
8/3/2009
1/9/2007
12/1/2006
7/26/2006
5/18/2006
2/22/2006
10/13/2005
9/10/2004
Completion Date
1/14/2010
11/30/2009
8/3/2009
5/18/2007
1/6/2007
8/22/2006
5/18/2006
2/22/2006
10/11/2005
9/14/2004
Target
Douglas Battery Manufacturing Co-Industrial Battery
Accu Holding AG industrial battery business
Keystone Mountaineer Power Systems Inc
Energia AD
Leclanche's Lead-Acid Battery Business
Chaozhou Xuntong Power Source Co Ltd
Lithium Primary Battery Business of Alliant
Modular Energy Devices Inc
Geraete und Akkumulatorwerks Zwickau GmbH
First National Battery Pty Ltd
Acquirer
EnerSys
EnerSys
EnerSys
EnerSys
EnerSys
EnerSys
EnerSys
EnerSys
EnerSys
Enersys Australia
Original Value
---EUR 13.00M
-USD 5.70T
--EUR 3.00M
--
USD Value
---17.56M
-5.70T
--3.60M
--
Source: Thomson Reuters.
Goldman Sachs Global Investment Research
52
June 27, 2010
Americas: Clean Energy: Energy Storage
Exhibit 55: Lead costs are about 25% of revenue and one-third of COGS
Production Costs
Fixed costs
Labor
Lead
Steel
Copper
Other raw materials (plastic, etc.)
Raw materials total
Fixed + labor total
Total COGS
Gross margin
% of Revenue
30%
11%
25%
5%
3%
5%
38%
41%
79%
21%
% of COGS
38%
14%
32%
6%
4%
6%
48%
52%
100%
Source: Company data, Goldman Sachs Research estimates.
Exhibit 57: The lead forward curve is relatively flat, reducing commodity risk
Exhibit 56: Lead prices have declined by over 50% since January, 2010
250
$2.00
$1.30
Lead LME Spot Price
$1.60
$1.40
150
$1.20
$1.00
$0.80
100
$0.60
LME Inventory
50
$0.40
Current
1 Year ago
2 Years ago
3 Years ago
3 Months ago
6 Months ago
$1.20
US$ per pound
200
Price (US$ per pound)
Inventory (thousand tonnes)
$1.80
$1.10
$1.00
$0.90
$0.20
$0.00
Apr-10
Jun-10
Jan-10
Mar-10
Oct-09
Dec-09
Jul-09
Sep-09
Jun-09
May-09
Jan-09
Mar-09
Dec-08
Sep-08
Nov-08
Jun-08
Aug-08
May-08
Feb-08
Mar-08
Dec-07
Sep-07
Nov-07
Jun-07
Aug-07
0
$0.80
$0.70
Spot
Source: London Metal Exchange, Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
3 Month
15 Month
Source: London Metal Exchange, Goldman Sachs Research estimates.
53
June 27, 2010
Americas: Clean Energy: Energy Storage
Exhibit 58: CY2011E P/E ratios for industrial companies average 12.4X
P/E
Price
Company
Hist.
Ticker
6/24/10
Rating
3M
MMM
Cooper Industries
CBE
Danaher
DHR
Dover
DOV
Eaton
ETN
Emerson Electric
EMR
General Electric
GE
Graco Inc
GGG
Grainger
GWW
Honeywell
HON
Illinois Tool Works
ITW
Ingersoll Rand
IR
ITT Corp.
ITT
Kennametal
KMT
Parker Hannifin
PH
Pentair
PNR
Rockwell Automatio ROK
Roper Industries
ROP
SPX Corp.
SPW
Tyco International
TYC
United Technologie UTX
Multi-Industry Average
$78.18
$46.95
$38.77
$43.30
$69.42
$44.59
$15.08
$29.59
$102.91
$41.00
$43.36
$38.25
$46.73
$26.62
$56.64
$32.56
$50.97
$57.94
$55.08
$36.73
$67.35
CL-Buy
Neutral
Buy
Buy
Neutral
Neutral
Buy
Sell
Neutral
Neutral
Buy
Neutral
Neutral
Sell
Neutral
Neutral
Neutral
Buy
Neutral
Neutral
Buy
S&P 500
SPX
1,074
2010E 2011E
13.7
15.1
17.2
14.2
14.6
16.2
13.9
18.5
16.5
15.5
14.0
15.9
10.9
13.4
13.7
16.3
15.4
18.1
16.0
14.0
14.5
15.1
12.2
13.0
14.4
11.1
11.4
12.7
11.2
14.8
13.3
12.8
11.4
12.7
9.7
11.8
10.8
13.6
13.6
15.0
11.4
11.7
12.2
12.4
13.8
11.5
Relative P/E vs. Group
Hist. rel.
Avg
2010E
2011E
Range
19.1
13.8
20.9
16.9
12.9
18.1
16.9
14.9
17.1
16.0
18.1
13.4
14.5
13.1
14.1
14.3
16.7
19.3
15.0
13.2
16.2
15.9
-9%
0%
14%
-6%
-3%
7%
-8%
22%
9%
2%
-8%
5%
-28%
-11%
-9%
8%
2%
20%
6%
-7%
-4%
-1%
6%
16%
-10%
-8%
3%
-9%
20%
8%
4%
-8%
3%
-21%
-4%
-12%
10%
1%
22%
-8%
-5%
-1%
0% - 25%
(20%) - 0%
15% - 30%
(10%) - 15%
(30%) - (10%)
5% - 20%
(5%) - 15%
(5%) - 15%
(5%) - 15%
(10%) - 10%
(5%) - 20%
(30%) - (15%)
(5%) - 15%
(25%) - (5%)
(25%) - 5%
(15%) - 15%
(5%) - 25%
10% - 35%
(30%) - 10%
(15%) - 5%
(10%) - 10%
EV/EBITDA
Hist.
EV/Sales
Hist.
FCF
yield
Beta
2010E 2011E Avg 2010E 2011E Avg 2010E
7.9
10.7
11.1
7.6
10.0
8.7
10.7
10.0
8.3
8.4
8.3
11.6
7.2
7.1
7.4
9.6
9.4
10.4
7.4
6.7
7.4
8.9
7.0
9.3
9.8
6.7
8.3
7.3
8.4
8.4
6.8
7.1
6.9
9.4
6.6
6.3
6.2
8.2
7.9
9.2
6.0
6.1
6.6
7.6
10.0
8.3
11.0
9.7
7.9
9.9
15.1
8.6
8.3
8.9
10.0
8.5
7.5
7.0
7.7
7.9
8.9
12.1
9.3
6.5
8.5
9.1
2.3
1.8
2.2
1.4
1.3
1.7
1.8
2.9
1.1
1.3
1.6
1.3
1.0
1.2
1.1
1.4
1.6
2.8
0.8
1.2
1.3
1.6
2.1
1.6
2.1
1.3
1.2
1.5
1.7
2.6
1.0
1.2
1.4
1.2
0.9
1.1
1.0
1.3
1.4
2.5
0.7
1.1
1.3
1.4
2.6
1.4
2.2
1.6
1.1
1.8
4.2
3.4
0.9
1.4
2.1
1.2
1.0
1.0
1.0
1.1
1.3
2.6
1.3
1.0
1.2
1.7
7%
7%
7%
8%
6%
7%
7%
5%
7%
10%
7%
4%
10%
5%
7%
7%
5%
7%
7%
9%
8%
7.0%
0.88
1.21
0.85
1.19
0.98
0.96
1.21
1.20
0.90
1.13
1.02
1.36
0.98
1.55
1.13
1.19
1.31
1.12
1.30
1.08
0.95
1.12
Source: Factset, Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
54
June 27, 2010
Americas: Clean Energy: Energy Storage
Financial Models
Goldman Sachs Global Investment Research
55
June 27, 2010
Americas: Clean Energy: Energy Storage
A123 Systems, Inc. Financial Model
Exhibit 59: A123 Systems, Inc. Income Statement, $ millions, fiscal year ended December 31
Product
Y/Y Growth (Product)
Research and development services
Y/Y Growth (R&D services)
Total Revenue
Y/Y Growth
Product
Research and development services
Total cost of revenue
Gross Profit (Loss)
Gross Margin
Research and development
Sales and marketing
General and administrative
Total operating expenses
Operating Profit (Loss)
Operating Margin
Interest income
Interest expense
Gain on foreign exchange
Unrealized loss on preferred stock warrant liability
Other income (expense) - net
Pretax Income (Loss)
Provision for Income Taxes
Tax Rate
Income/(Loss) before MI
Minority interest (MI)
Net Income (Loss), Continuing Ops
Accretion to preferred stock
Net Income (Loss) to Common, Cont Ops
Non-recurring/Discontinued Ops
Extraordinary Items
Net Income, Reported
Shares Outstanding - Basic (Avg)
Shares Outstanding - Diluted (Avg)
2010E
2Q10E
3Q10E
23.4
34.3
41.9%
71.5%
4.5
4.5
41.3%
25.4%
$27.9
$38.8
41.8%
64.5%
(25.6)
(35.4)
(3.6)
(3.6)
(29.2)
(39.0)
($1.3)
($0.1)
(4.5%)
(0.4%)
(14.6)
(15.1)
(2.9)
(2.9)
(10.4)
(11.6)
(27.9)
(29.7)
($29.2)
($29.8)
(104.5%)
(76.9%)
0.1
0.2
(0.2)
(0.2)
(0.1)
0.0
(29.3)
(29.8)
2006A
28.3
nm
6.0
nm
$34.3
nm
(29.0)
(4.4)
(33.4)
$1.0
2.8%
(8.9)
(1.5)
(6.1)
(16.5)
($15.5)
(45.3%)
0.9
(0.6)
(0.4)
(0.1)
(15.7)
2007A
35.5
25.3%
5.8
(2.6%)
$41.3
20.4%
(38.3)
(4.5)
(42.8)
($1.5)
(3.6%)
(13.2)
(4.3)
(13.3)
(30.9)
($32.4)
(78.2%)
1.7
(0.7)
0.5
(0.1)
1.5
(30.9)
2008A
53.5
50.7%
15.0
156.8%
$68.5
65.7%
(70.5)
(10.3)
(80.8)
($12.2)
(17.9%)
(37.0)
(8.9)
(21.5)
(67.3)
($79.6)
(116.1%)
1.3
(0.8)
(0.7)
(0.3)
(0.6)
(80.2)
2009A
76.5
43.0%
14.5
(3.2%)
$91.0
32.9%
(83.8)
(10.0)
(93.7)
($2.7)
(3.0%)
(48.3)
(8.5)
(26.0)
(82.7)
($85.4)
(93.8%)
0.2
(1.2)
0.7
(0.5)
(0.9)
(86.3)
1Q10A
19.8
(1.7%)
4.7
51.5%
$24.5
5.4%
(22.4)
(4.2)
(26.5)
($2.0)
(8.3%)
(14.1)
(2.8)
(10.1)
(27.0)
($29.0)
(118.6%)
0.1
(0.3)
0.2
0.0
(29.0)
(0.0)
(0.3%)
(15.7)
(15.7)
(0.0)
($15.7)
(0.1)
(0.3%)
(31.0)
0.0
(31.0)
(0.0)
($31.0)
(0.3)
(0.3%)
(80.4)
(0.0)
(80.5)
(0.0)
($80.5)
(0.3)
0.3%
(86.589)
0.8
(85.8)
(0.0)
($85.8)
(0.1)
(0.4%)
(29.1)
0.1
(29.0)
($29.0)
0.0%
(29.3)
(29.3)
($29.3)
(0.1)
(15.8)
(31.0)
(80.5)
(85.8)
(29.0)
6.0
6.0
6.4
6.4
8.9
8.9
33.7
33.7
2011E
2Q11E
3Q11E
60.1
70.2
156.3%
104.6%
4.7
4.7
5.0%
5.0%
$64.8
$75.0
131.9%
93.1%
(54.6)
(60.8)
(3.8)
(3.8)
(58.4)
(64.6)
$6.4
$10.4
9.9%
13.9%
(16.1)
(16.6)
(5.7)
(6.6)
(12.3)
(14.7)
(34.1)
(37.9)
($27.7)
($27.5)
(42.8%)
(36.7%)
1.2
1.7
(0.2)
(0.2)
0.9
1.5
(26.8)
(26.0)
4Q10E
45.5
129.0%
4.5
(3.4%)
$50.0
103.9%
(45.0)
(3.6)
(48.6)
$1.4
2.8%
(15.6)
(3.2)
(11.9)
(30.7)
($29.3)
(58.5%)
0.2
(0.2)
(0.0)
(29.3)
2010E
123.0
60.8%
18.2
25.2%
$141.2
55.1%
(128.3)
(15.0)
(143.3)
($2.1)
(1.5%)
(59.4)
(11.8)
(44.0)
(115.3)
($117.3)
(83.1%)
0.6
(0.9)
0.2
(0.1)
(117.4)
1Q11E
57.2
189.4%
4.7
0.0%
$61.9
153.1%
(52.3)
(3.8)
(56.1)
$5.8
9.4%
(15.8)
(5.5)
(12.9)
(34.3)
($28.5)
(46.0%)
1.4
(0.2)
1.1
(27.3)
4Q11E
75.3
65.5%
4.7
5.0%
$80.0
60.0%
(64.8)
(3.8)
(68.6)
$11.4
14.3%
(17.2)
(7.0)
(14.1)
(38.3)
($26.9)
(33.6%)
1.2
(0.2)
0.9
(26.0)
2011E
262.8
113.6%
18.9
3.7%
$281.7
99.5%
(232.5)
(15.1)
(247.6)
$34.1
12.1%
(65.7)
(24.8)
(54.1)
(144.6)
($110.6)
(39.3%)
5.4
(1.0)
4.4
(106.1)
2012E
431.8
64.3%
19.8
5.0%
$451.6
60.3%
(331.4)
(15.8)
(347.2)
$104.4
23.1%
(64.6)
(34.6)
(58.3)
(157.5)
($53.1)
(11.7%)
1.7
(2.4)
(0.7)
(53.8)
2013E
661.2
53.1%
20.8
5.0%
$682.1
51.0%
(480.3)
(16.6)
(496.9)
$185.1
27.1%
(68.3)
(49.0)
(65.7)
(183.0)
$2.1
0.3%
1.1
(3.8)
(2.7)
(0.5)
0.0%
(29.8)
(29.8)
($29.8)
0.0%
(29.3)
(29.3)
($29.3)
(0.1)
0.1%
(117.5)
0.1
(117.5)
($117.5)
0.0%
(27.3)
(27.3)
($27.3)
0.0%
(26.8)
(26.8)
($26.8)
0.0%
(26.0)
(26.0)
($26.0)
0.0%
(26.0)
(26.0)
($26.0)
0.0%
(106.1)
(106.1)
($106.1)
0.0%
(53.8)
(53.8)
($53.8)
0.0%
(0.5)
(0.5)
($0.5)
(29.3)
(29.8)
(29.3)
(117.5)
(27.3)
(26.8)
(26.0)
(26.0)
(106.1)
(53.8)
(0.5)
103.3
103.3
104.1
104.1
104.6
104.6
105.1
105.1
104.3
104.3
105.6
105.6
106.1
106.1
106.6
106.6
107.1
107.1
106.3
106.3
108.3
108.3
110.3
110.3
EPS - Continuing Ops- Basic
EPS - Continuing Ops- Diluted
Y/Y EPS Growth (diluted)
($2.64)
($2.64)
nm
($4.88)
($4.88)
nm
($9.04)
($9.04)
nm
($2.55)
($2.55)
nm
($0.28)
($0.28)
nm
($0.28)
($0.28)
nm
($0.29)
($0.29)
nm
($0.28)
($0.28)
nm
($1.13)
($1.13)
nm
($0.26)
($0.26)
nm
($0.25)
($0.25)
nm
($0.24)
($0.24)
nm
($0.24)
($0.24)
nm
($1.00)
($1.00)
nm
($0.50)
($0.50)
nm
($0.00)
($0.00)
nm
EBITDA
Depreciation and amortization
Y/Y Growth
EBITDA Margin
($12.9)
2.7
nm
(37.5%)
($28.4)
3.9
nm
(68.7%)
($71.4)
8.2
nm
(104.2%)
($72.2)
13.2
nm
(79.3%)
($25.3)
3.7
nm
(103.2%)
($25.0)
4.2
nm
(89.6%)
($25.0)
4.8
nm
(64.4%)
($23.4)
5.8
nm
(46.9%)
($98.7)
18.6
nm
(69.9%)
($22.0)
6.5
nm
(35.5%)
($20.6)
7.1
nm
(31.8%)
($19.8)
7.7
nm
(26.4%)
($18.1)
8.7
nm
(22.7%)
($80.5)
30.1
nm
(28.6%)
($7.6)
45.4
nm
(1.7%)
$63.0
60.8
nm
9.2%
Percent of total revenue
Product gross profit
R&D services gross profit
Gross profit
Research and development
Sales and marketing
General and administrative
Operating expenses
Depreciation & Amortization
Operating profit (EBIT)
EBITDA
Pretax Income
Net Income - Continuing Ops
Net Income - Reported
2006A
(2.2%)
26.4%
2.8%
25.8%
4.5%
17.8%
48.1%
7.7%
(45.3%)
(37.5%)
(45.6%)
(45.8%)
(45.9%)
2007A
(7.9%)
23.0%
(3.6%)
32.0%
10.4%
32.3%
74.7%
9.5%
(78.2%)
(68.7%)
(74.7%)
(75.0%)
(74.9%)
2008A
(31.7%)
31.4%
(17.9%)
53.9%
12.9%
31.4%
98.3%
11.9%
(116.1%)
(104.2%)
(117.0%)
(117.5%)
(117.4%)
2009A
(9.5%)
31.4%
(3.0%)
53.0%
9.3%
28.6%
90.9%
14.5%
(93.8%)
(79.3%)
(94.8%)
(94.3%)
(94.2%)
1Q10A
(13.0%)
11.5%
(8.3%)
57.7%
11.4%
41.1%
110.2%
15.3%
(118.6%)
(103.2%)
(118.4%)
(118.6%)
(118.6%)
2Q10E
(9.2%)
20.0%
(4.5%)
52.2%
10.4%
37.3%
100.0%
14.9%
(104.5%)
(89.6%)
(104.9%)
(104.9%)
(104.9%)
3Q10E
(3.0%)
20.0%
(0.4%)
38.9%
7.6%
30.0%
76.5%
12.5%
(76.9%)
(64.4%)
(76.8%)
(76.8%)
(76.8%)
4Q10E
1.0%
20.0%
2.8%
31.1%
6.4%
23.8%
61.3%
11.7%
(58.5%)
(46.9%)
(58.6%)
(58.6%)
(58.6%)
2010E
(4.3%)
17.8%
(1.5%)
42.1%
8.4%
31.2%
81.6%
13.2%
(83.1%)
(69.9%)
(83.1%)
(83.2%)
(83.2%)
1Q11E
8.5%
20.0%
9.4%
25.6%
8.9%
20.9%
55.4%
10.5%
(46.0%)
(35.5%)
(44.2%)
(44.2%)
(44.2%)
2Q11E
9.1%
20.0%
9.9%
24.8%
8.9%
19.0%
52.7%
11.0%
(42.8%)
(31.8%)
(41.4%)
(41.4%)
(41.4%)
3Q11E
13.5%
20.0%
13.9%
22.2%
8.8%
19.6%
50.5%
10.3%
(36.7%)
(26.4%)
(34.7%)
(34.7%)
(34.7%)
4Q11E
13.9%
20.0%
14.3%
21.5%
8.7%
17.6%
47.9%
10.9%
(33.6%)
(22.7%)
(32.4%)
(32.4%)
(32.4%)
2011E
11.5%
20.0%
12.1%
23.3%
8.8%
19.2%
51.3%
10.7%
(39.3%)
(28.6%)
(37.7%)
(37.7%)
(37.7%)
2012E
23.3%
20.0%
23.1%
14.3%
7.7%
12.9%
34.9%
10.1%
(11.7%)
(1.7%)
(11.9%)
(11.9%)
(11.9%)
2013E
27.4%
20.0%
27.1%
10.0%
7.2%
9.6%
26.8%
8.9%
0.3%
9.2%
(0.1%)
(0.1%)
(0.1%)
25.3%
(2.6%)
20.4%
32.3%
1.9%
28.3%
nm
50.7%
156.8%
65.7%
83.9%
128.8%
88.6%
nm
43.0%
(3.2%)
32.9%
18.9%
(3.2%)
16.1%
nm
(1.7%)
51.5%
5.4%
14.2%
125.3%
23.8%
nm
41.9%
41.3%
41.8%
30.5%
35.3%
31.1%
nm
71.5%
25.4%
64.5%
56.7%
24.1%
53.0%
nm
129.0%
(3.4%)
103.9%
104.5%
40.8%
97.9%
nm
60.8%
25.2%
55.1%
53.2%
50.1%
52.9%
nm
189.4%
0.0%
153.1%
134.1%
(9.6%)
111.6%
nm
156.3%
5.0%
131.9%
113.3%
5.0%
100.0%
nm
104.6%
5.0%
93.1%
71.9%
5.0%
65.7%
nm
65.5%
5.0%
60.0%
43.9%
5.0%
41.0%
730.7%
113.6%
3.7%
99.5%
81.2%
0.9%
72.8%
nm
64.3%
5.0%
60.3%
42.5%
5.0%
40.2%
206.7%
53.1%
5.0%
51.0%
44.9%
5.0%
43.1%
77.3%
Percent change year-over-year
Product revenue
R&D services revenue
Revenue
Product cost of sales
R&D services cost of sales
Cost of sales
Gross profit
Source: Company data, Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
56
June 27, 2010
Americas: Clean Energy: Energy Storage
Exhibit 60: A123 Systems, Inc. Balance Sheet, $ millions, fiscal year ended December 31
Cash and cash equivalents
Restricted cash
Accounts receivable, net
Inventory
Current portion of notes receivable
Prepaid expenses and other current assets
Total Current Assets
Property, plant and equipment - net
Pre-funded government capex
Total property, plant and equipment, net
Goodwill
Intangible assets - net
Notes receivable - net of current portion
Deferred offering costs
Other assets
Restricted cash
Total Assets
Revolving credit lines
Current portion of long-term debt
Current portion of capital lease obligations
Accounts payable
Accrued expenses
Deferred revenue
Deferred rent
Other current liabilities
Total Current Liabilities
Long-term debt - net of current portion
Capital lease obligations - net of current portion
Deferred revenue - net of current portion
Deferred rent - net of current portion
Other long-term liabilities
Preferred stock warrant liability
Total Liabilities
2010E
2Q10E
3Q10E
353.5
313.1
0.8
0.8
17.9
20.6
34.8
32.7
9.0
10.4
$416.0
$377.7
2006A
9.5
1.3
1.7
13.7
1.3
0.5
$27.9
2007A
23.4
0.8
9.8
21.1
0.0
4.7
$59.7
2008A
70.5
0.8
17.7
35.7
5.1
$129.8
2009A
457.1
1.7
17.7
37.4
8.9
$522.9
1Q10A
410.5
0.8
16.5
33.8
8.4
$470.1
12.5
12.5
5.4
0.8
0.4
0.6
0.1
$47.7
29.6
29.6
9.6
4.7
1.4
0.2
$105.1
52.7
52.7
9.6
2.4
4.5
9.7
0.2
$209.0
65.8
5.9
71.7
9.6
1.3
11.7
1.0
$618.1
72.2
5.9
78.1
9.6
0.9
35.5
2.2
$596.4
91.4
20.8
112.3
9.6
0.9
35.5
2.2
$576.5
1.0
2.3
1.1
4.6
2.8
1.9
13.6
3.7
4.1
1.0
9.1
6.7
3.8
0.2
0.3
29.0
8.0
4.6
0.4
19.5
14.4
13.1
0.2
0.4
60.5
8.0
6.5
0.4
16.5
11.7
7.5
0.1
1.9
52.5
8.0
5.2
0.5
17.1
15.0
2.9
0.0
2.0
50.7
3.1
0.0
1.0
0.4
0.7
$18.8
2.0
0.1
0.5
0.2
1.5
0.7
$33.8
5.9
0.3
26.0
0.0
1.4
1.0
$95.1
7.4
0.2
26.1
0.6
2.9
$89.8
6.1
0.5
25.7
1.0
5.0
$89.0
-
2010E
276.0
0.8
25.2
39.3
12.7
$354.0
1Q11E
238.2
0.8
29.4
42.6
14.3
$325.3
111.9
20.6
132.5
9.6
0.9
35.5
2.2
$558.4
123.1
14.9
138.0
9.6
0.9
35.5
2.2
$540.2
123.1
14.9
138.0
9.6
0.9
35.5
2.2
$540.2
133.8
12.3
146.2
9.6
0.9
35.5
2.2
$519.7
157.7
26.2
183.9
9.6
0.9
35.5
2.2
$503.9
8.0
5.2
0.5
17.4
16.3
7.9
0.1
2.0
57.4
8.0
5.2
0.5
19.6
18.1
13.0
0.1
2.0
66.4
8.0
5.2
0.5
23.6
20.7
14.9
0.1
2.0
74.9
8.0
5.2
0.5
23.6
20.7
14.9
0.1
2.0
74.9
8.0
5.2
0.5
26.1
22.2
14.9
0.1
2.0
78.8
6.1
0.5
25.7
1.0
5.0
$95.7
6.1
0.5
25.7
1.0
5.0
$104.7
6.1
0.5
25.7
1.0
5.0
$113.1
6.1
0.5
25.7
1.0
5.0
$113.1
6.1
0.5
25.7
1.0
5.0
$117.1
-
-
-
-
-
4Q11E
74.0
0.8
46.3
61.1
22.5
$204.7
2011E
74.0
0.8
46.3
61.1
22.5
$204.7
2012E
25.0
0.8
74.2
66.6
31.6
$198.3
2013E
97.6
0.8
112.1
81.7
40.9
$333.1
181.3
26.5
207.8
9.6
0.9
35.5
2.2
$488.2
203.9
26.5
230.3
9.6
0.9
35.5
2.2
$483.3
203.9
26.5
230.3
9.6
0.9
35.5
2.2
$483.3
255.6
25.5
281.2
9.6
0.9
35.5
2.2
$527.7
193.4
5.2
198.6
9.6
0.9
35.5
2.2
$580.0
8.0
5.2
0.5
30.4
24.8
15.8
0.2
2.0
86.9
8.0
5.2
0.5
34.3
27.3
16.7
0.2
2.0
94.2
8.0
5.2
0.5
37.3
29.4
29.7
0.1
2.0
112.3
8.0
5.2
0.5
37.3
29.4
29.7
0.1
2.0
112.3
66.2
5.2
0.5
52.3
35.3
36.1
0.2
2.0
197.8
66.2
5.2
0.5
74.9
44.2
43.8
0.2
2.0
236.9
6.1
0.5
25.7
1.0
5.0
$125.2
6.1
0.5
25.7
1.0
5.0
$132.5
6.1
0.5
25.7
1.0
5.0
$150.5
6.1
0.5
25.7
1.0
5.0
$150.5
6.1
0.5
25.7
1.0
5.0
$236.1
6.1
0.5
25.7
1.0
5.0
$275.2
Redeemable convertible preferred stock
Redeemable common stock
Stockholders' equity/(deficit)
Series B-1 convertible preferred stock
Common stock
Additional paid-in capital
Treasury stock
Accumulated (deficit) income
Accum. other comprehensive income
Total A123 Stockholders' equity/(deficit)
Minority interest/Noncontrolling interest
Total Stockholder's equity/(deficit)
62.9
-
132.9
-
235.0
11.5
0.0
0.0
7.1
(0.0)
(41.5)
0.3
(34.0)
(34.0)
0.0
0.0
9.7
(72.4)
0.1
(62.6)
1.0
(61.6)
0.0
0.0
19.6
(152.9)
(0.2)
(133.4)
0.9
(132.6)
0.1
767.7
(238.7)
(0.9)
528.2
0.1
528.3
0.1
776.1
(267.7)
(1.1)
507.4
0.0
507.5
0.1
776.1
(294.3)
(1.1)
480.8
0.0
480.8
0.1
776.1
(321.5)
(1.1)
453.7
0.0
453.7
0.1
776.1
(348.1)
(1.1)
427.0
0.0
427.1
0.1
776.1
(348.1)
(1.1)
427.0
0.0
427.1
0.1
776.1
(372.5)
(1.1)
402.6
0.0
402.6
0.1
776.1
(396.5)
(1.1)
378.7
0.0
378.7
0.1
776.1
(419.5)
(1.1)
355.7
0.0
355.7
0.1
776.1
(442.4)
(1.1)
332.7
0.0
332.7
0.1
776.1
(442.4)
(1.1)
332.7
0.0
332.7
0.1
776.1
(483.6)
(1.1)
291.5
0.0
291.6
0.1
776.1
(470.4)
(1.1)
304.7
0.0
304.8
Total Stockholder's Equity, Including Redeemables
Total Liabilities & Equity
28.9
$47.7
113.9
$209.0
528.3
$618.1
507.5
$596.4
480.8
$576.5
453.7
$558.4
427.1
$540.2
427.1
$540.2
402.6
$519.7
378.7
$503.9
355.7
$488.2
332.7
$483.3
332.7
$483.3
291.6
$527.7
304.8
$580.0
71.3
$105.1
-
2011E
2Q11E
3Q11E
168.4
113.7
0.8
0.8
35.4
41.4
49.8
56.1
17.2
20.1
$271.7
$232.2
4Q10E
276.0
0.8
25.2
39.3
12.7
$354.0
-
-
-
-
-
-
Source: Company data, Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
57
June 27, 2010
Americas: Clean Energy: Energy Storage
Exhibit 61: A123 Systems, Inc. Statement of Cash Flows, $ millions, fiscal year ended December 31
2006A
Cash flows from operating activities:
Net income (loss) - as reported
Adjustments to reconcile net income (loss) to net CFOs:
Depreciation and amortization
Noncash rent
Noncash foreign exchange loss on intercompany loan
Impairment of long-lived and intangible assets
Unrealized loss on preferred stock warrant liability
Loss on issuance of notes receivable
(Gain) loss on disposal of PP&E
Amortization of debt issuance costs and noncash intere
Stock based compensation expense
Imputed interest on noninterest-bearing notes
In-process research and development
Minority interest in net loss
Accrued interest on notes receivable
Cumulative effect of change in accounting principle
Changes in assets and liabilities - net of acquisitions:
Accounts receivable
Inventory
Prepaid expenses and other assets
Accounts payable
Accrued expenses
Deferred rent
Deferred revenue
Other liabilities
Changes in assets and liabilities - net of acquisitions:
Total adjustments
Net cash flows from operations
Cash flows from investing activities:
(Increase) decrease in restrictred cash
Purchase of PP&E
Proceeds from sale of PP&E
Proceeds from government grant
Cash paid for acquisitions - net of cash acquired
Investment in minority interest
Issuance of notes receivable
Repayment on notes receivable
Repayment of notes receivable from stockholders
Net cash flows used in investing
Cash flows from financing activities:
Proceeds from government grant
Proceeds from issuance of common stock
Proceeds from exercise of stock options
Advances under revolving credit lines
Purchase of treasury stock
Deferred offering costs
Proceeds from issuance of long-term debt
Payments on long-term debt
Payments on capital lease obligations
Net proceeds from issuance of redeemable common stoc
Net proceeds from issuance of redeemable convertible p
Net cash flows provided by financing activities
Net Change in Cash
Beginning Cash
Ending Cash
2007A
2008A
2009A
1Q10A
2010E
2Q10E
3Q10E
4Q10E
2010E
2011E
2Q11E
3Q11E
(15.7)
(31.0)
(80.5)
(85.8)
(29.0)
(29.3)
(29.8)
(29.3)
2.7
(0.1)
0.4
0.1
0.2
0.1
1.0
(0.0)
(0.1)
-
3.9
(0.1)
0.1
0.0
0.2
1.6
0.4
(0.0)
(0.1)
-
8.2
(0.1)
1.2
3.1
0.3
0.0
0.1
4.5
0.0
-
13.2
0.5
(0.9)
0.9
0.5
0.0
0.1
8.6
(0.8)
-
3.7
0.4
(0.3)
0.5
2.5
(0.1)
-
4.2
2.7
-
4.8
2.7
-
5.8
2.7
-
(0.9)
(11.1)
(0.2)
2.6
0.9
1.2
(7.5)
(3.2)
($18.9)
(6.1)
(1.5)
(3.0)
0.9
4.4
1.4
0.0
(3.9)
2.1
($28.9)
(6.6)
(15.8)
(1.7)
11.2
8.0
32.9
0.2
28.2
45.5
($34.9)
0.0
(1.6)
2.0
(4.3)
(0.5)
(5.5)
0.0
(9.9)
12.2
($73.6)
0.2
3.7
0.0
(2.0)
(0.4)
(4.1)
0.9
(1.7)
5.1
($24.0)
(1.4)
(1.0)
(0.7)
0.3
1.4
0.1
5.0
3.7
10.6
($18.7)
(2.7)
2.1
(1.4)
2.2
1.8
(0.0)
5.0
7.0
14.6
($15.3)
(4.5)
(6.6)
(2.3)
4.0
2.6
(0.0)
1.9
(5.0)
3.5
($25.8)
(8.4)
(1.8)
(4.3)
4.4
5.3
0.0
7.9
0.9
4.1
33.7
($83.7)
(4.2)
(3.4)
(1.6)
2.5
1.5
(0.0)
(5.2)
4.2
($23.2)
(6.1)
(7.2)
(2.9)
4.4
2.7
0.1
0.9
(8.1)
1.9
($24.9)
(1.2)
(6.9)
(1.6)
(1.0)
0.3
0.2
($10.2)
1.2
(15.0)
0.0
(13.5)
($27.2)
(0.2)
(41.4)
0.5
0.0
($41.1)
(1.8)
(39.4)
0.0
($41.2)
(0.3)
(13.9)
5.7
(13.0)
($21.5)
(45.2)
($45.2)
(47.0)
($47.0)
(33.0)
($33.0)
(0.3)
(139.1)
5.7
(13.0)
($146.8)
(30.6)
($30.6)
0.1
0.6
(0.0)
3.0
(1.3)
(0.0)
30.3
$32.6
0.9
0.1
2.7
(3.5)
(0.2)
69.9
$70.0
5.0
0.1
4.3
(3.8)
9.1
(4.0)
(1.3)
11.5
102.0
$123.0
3.9
395.8
0.4
8.6
(6.2)
(0.7)
99.6
$501.4
1.3
0.5
(2.7)
(0.2)
($1.1)
6.9
$6.9
21.9
$21.9
21.7
$21.7
51.7
0.5
(2.7)
(0.2)
$49.4
3.6
5.9
$9.5
(0.0)
23.4
$23.4
0.0
70.5
$70.5
386.6
457.1
$457.1
(40.3)
353.5
$313.1
(37.1)
313.1
$276.0
(181.1)
457.1
$276.0
(46.6)
457.1
$410.5
(57.0)
410.5
$353.5
(117.5)
1Q11E
18.6
0.4
(0.3)
0.5
10.5
(0.1)
-
4Q11E
2011E
2012E
2013E
(27.3)
(26.8)
(26.0)
(26.0)
(106.1)
(53.8)
(0.5)
6.5
2.9
-
7.1
2.9
-
7.7
3.0
-
8.7
3.0
-
30.1
11.8
-
45.4
12.6
-
60.8
13.7
-
(5.9)
(6.3)
(2.9)
3.9
2.5
(0.0)
0.9
(7.8)
2.9
($23.1)
(4.9)
(4.9)
(2.4)
3.0
2.1
(0.0)
13.0
5.8
17.5
($8.4)
(21.2)
(21.8)
(9.8)
13.8
8.7
0.0
14.9
(15.4)
26.5
($79.6)
(27.9)
(5.5)
(9.1)
15.0
5.9
0.0
6.4
(15.2)
42.8
($10.9)
(37.9)
(15.1)
(9.3)
22.6
8.9
0.1
7.7
(23.1)
51.4
$50.9
(58.3)
($58.3)
(58.8)
($58.8)
(58.8)
($58.8)
(206.4)
($206.4)
(225.0)
($225.0)
(23.6)
($23.6)
15.9
$15.9
13.4
$13.4
27.2
$27.2
27.5
$27.5
84.1
$84.1
128.8
58.2
$186.9
45.3
$45.3
(37.8)
276.0
$238.2
(69.8)
238.2
$168.4
(54.7)
168.4
$113.7
(39.7)
113.7
$74.0
(202.0)
276.0
$74.0
(49.0)
74.0
$25.0
72.6
25.0
$97.6
Source: Company data, Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
58
June 27, 2010
Americas: Clean Energy: Energy Storage
Ener1, Inc. Financial Model
Exhibit 62: Ener1, Inc. Income Statement, $ millions, fiscal year ended December 31
FY2002A FY2003A FY2004A FY2005A FY2006A FY2007A FY2008A FY2009A
Battery
Fuel Cell
Nanotechnology
Corporate
Revenue
$0.0
$0.0
Cost of goods sold
Gross Profit
$0.0
0.0
($0.0)
FY2010E
Q1E
FY2011E
Q2E
Q3E
Q4E
FY2011E FY2012E FY2013E FY2014E FY2015E
$0.0
$0.1
0.2
$0.3
$6.7
0.0
0.1
$6.8
$34.6
0.0
0.2
$34.8
$10.9
0.1
0.0
$11.0
$13.4
0.1
0.0
$13.5
$19.8
0.1
0.1
$20.0
$32.4
0.2
0.1
$32.7
$76.5
0.4
0.3
$77.2
$42.0
0.2
0.1
$42.4
$52.0
0.3
0.2
$52.5
$50.6
0.3
0.2
$51.0
$52.7
0.3
0.2
$53.2
$197.3
1.1
0.7
$199.1
$317.0
1.7
1.1
$319.8
$574.6
3.1
2.0
$579.7
$809.6
4.4
2.8
$816.8
$991.3
5.4
3.4
$1,000.0
0.0
$0.0
$0.1
$0.1
$0.3
4.7
$2.2
30.7
$4.1
9.8
$1.1
11.8
$1.7
17.0
$3.0
27.0
$5.7
65.6
$11.5
36.5
$5.9
44.2
$8.2
41.2
$9.8
41.1
$12.0
163.1
$35.9
266.8
$52.9
480.5
$99.1
693.8
$123.0
861.6
$138.4
17.7
30.8
-
5.2
9.9
(0.0)
4.2
10.4
-
4.9
11.3
-
5.6
14.3
-
20.0
45.9
-
6.8
11.3
-
5.5
12.0
-
6.4
13.0
-
7.3
16.4
-
26.0
52.8
-
27.3
55.4
-
28.7
58.2
-
30.1
61.1
-
31.6
64.1
-
($54.3)
($12.2)
($9.3)
($9.6)
($11.7)
($42.8)
($29.8)
$12.3
$31.9
$42.7
8.7
$74.6
3.1
$21.2
3.7
$21.2
3.7
$23.1
4.4
$28.1
14.9
$93.7
20.1
$102.8
26.6
$113.4
29.1
$120.2
30.3
$126.0
($63.0)
($15.3)
($13.0)
($13.4)
($16.1)
($57.8)
($49.8)
($14.2)
$2.8
$12.4
(0.4)
0.0
($0.3)
(1.4)
0.1
($1.4)
(0.4)
0.0
($0.3)
(0.4)
0.1
($0.3)
(0.4)
0.1
($0.3)
(0.4)
0.0
($0.3)
(1.4)
0.2
($1.2)
(1.1)
0.1
($1.0)
(2.9)
0.1
($2.9)
(7.3)
0.3
($7.0)
(11.1)
1.0
($10.1)
($51.5) ($15.4) ($15.8) ($16.1) ($17.0)
5.0
1.4
7.3
21.3
-
13.6
19.0
-
10.5
6.4
9.2
-
8.3
11.9
0.6
-
11.6
22.9
-
EBITDA
($6.6)
($6.4)
($28.6)
($32.6)
($26.0)
($20.5)
($32.3)
Depreciation and amortization
Total operating expenses
$6.6
$6.4
8.5
$37.1
0.6
$33.2
0.4
$26.5
0.5
$21.3
1.6
$36.1
Operating income (loss)
($6.6)
($6.4)
($37.1)
($33.1)
($26.4)
($21.0)
($33.9)
Other income (expense)
Interest expense
Interest income
Other
Gain (loss) on derivative liabilities
Loss on foreign currency transactions
Equity in loss of EnerStruct, Inc.
Total other income (expenses)
(0.4)
0.0
0.0
($0.4)
(0.9)
0.0
(0.0)
(0.2)
($1.2)
(6.7)
0.3
49.8
(0.6)
$42.8
(9.9)
(0.6)
0.3
70.8
(0.4)
$60.2
(10.4)
(2.0)
(0.1)
(0.8)
($13.3)
(30.2)
0.1
0.0
(11.5)
(0.0)
($41.6)
(21.8)
0.5
0.2
3.9
(0.3)
($17.4)
Earnings before income taxes
($7.0)
($7.5)
$5.7
$27.0
($39.7)
($62.7)
($51.3)
Income tax benefit (provision)
Tax rate
(0.0)
(0.0)%
0.0%
0.0%
0.0%
0.0%
0.2
0.4%
Net income (loss) before non-controlling interest
Net income (loss) attributable to non-controlling interest
($7.0)
(0.6)
($7.5)
(1.4)
$5.7
3.4
$27.0
1.6
($39.7)
(1.6)
($62.7)
(1.2)
Net income (loss) attributable to Ener1, Inc.
($7.6)
($8.9)
$9.1
$28.6
($41.3)
($63.9)
-
-
(0.9)
(2.0)
(10.2)
Preferred stock dividends
Q4E
$0.0
0.1
$0.1
-
6.6
FY2010E
Q2E
Q3E
$0.0
0.0
$0.1
-
General and administrative
Research and development, net
Warrant modification expense
Grant proceeds recognized
Q1A
0.0%
(2.9)
($44.4) ($13.9) ($13.0) ($13.2) ($14.2)
5.1
$53.5
1.3
$16.4
2.3
$17.0
2.5
$18.7
2.5
$22.4
($49.4) ($15.3) ($15.3) ($15.7) ($16.7)
(5.8)
0.2
0.3
3.5
(0.2)
($2.1)
(0.2)
($0.2)
(0.5)
0.0
($0.5)
(0.4)
0.0
($0.4)
($64.4)
($15.6)
($13.3)
($13.6)
($16.4)
($59.0)
($50.9)
($17.1)
($4.2)
$2.3
0.0%
(0.0)
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
($51.2)
(1.3)
($51.5) ($15.5) ($15.8) ($16.1) ($17.0)
0.501
(0.1) -
($64.4)
0.1
($15.6)
-
($13.3)
-
($13.6)
-
($16.4)
-
($59.0)
-
($50.9)
-
($17.1)
-
($4.2)
-
$2.3
-
($52.5)
($51.0) ($15.6) ($15.8) ($16.1) ($17.0)
($64.3)
($15.6)
($13.3)
($13.6)
($16.4)
($59.0)
($50.9)
($17.1)
($4.2)
-
(0.0)
(0.0)
(0.0)% (0.1)%
-
-
0.0%
-
0.0%
-
-
($51.0) ($15.6) ($15.8) ($16.1) ($17.0)
-
-
-
-
-
-
-
-
-
$2.3
-
Net income (loss) attributable to common shareholders
($7.6)
($8.9)
$8.3
$25.7
($43.3)
($74.2)
($52.5)
($64.3)
($15.6)
($13.3)
($13.6)
($16.4)
($59.0)
($50.9)
($17.1)
($4.2)
$2.3
EPS attributable to Ener1, Inc. (basic)
EPS attributable to Ener 1, Inc. (diluted)
(0.03)
(0.03)
(0.03)
(0.03)
0.03
0.02
0.08
0.07
(0.10)
(0.10)
(0.88)
(0.88)
(0.51)
(0.51)
(0.44)
(0.44)
(0.12)
(0.12)
(0.11)
(0.11)
(0.11)
(0.11)
(0.12)
(0.12)
(0.46)
(0.46)
(0.10)
(0.10)
(0.09)
(0.09)
(0.09)
(0.09)
(0.10)
(0.10)
(0.38)
(0.38)
(0.29)
(0.29)
(0.09)
(0.09)
(0.02)
(0.02)
0.01
0.01
Shares -- basic
Shares -- diluted
116.7
116.7
124.9
125.0
143.6
143.6
143.6
143.6
147.9
147.9
140.0
140.0
149.6
149.7
154.4
154.4
159.0
159.0
165.1
165.2
157.0
157.1
174.1
174.1
183.7
183.8
183.7
183.8
183.7
183.8
299.6
299.6
319.2
319.2
347.1
424.3
347.5
433.0
401.5
401.5
72.9
72.9
103.4
103.4
Free Cash Flow Calculation
Net cash provided by operating activities
less: Net Capex
Free Cash Flow to Equity
0.0
0.0
$0.0
(5.4)
(0.9)
($6.2)
(13.9)
(1.1)
($15.0)
(24.3)
(0.8)
($25.1)
(17.1)
(1.3)
($18.4)
(26.7)
(0.6)
($27.3)
(24.1)
(14.1)
($38.2)
(40.7)
(8.9)
(9.8) (17.7) (21.6)
(14.6)
(9.7)
(6.4)
(6.4)
(6.4)
($55.3) ($18.6) ($16.1) ($24.0) ($28.0)
(57.9)
(28.8)
($86.7)
(0.8)
(4.7)
($5.5)
(10.6)
(4.7)
($15.3)
(15.1)
(4.7)
($19.8)
(19.4)
(4.7)
($24.1)
(45.8)
(18.8)
($64.6)
(33.0)
(36.0)
($69.0)
(0.3)
(139.2)
($139.5)
16.3
(144.0)
($127.7)
26.4
(72.0)
($45.6)
plus: Net interest expense
Free Cash Flow to the Firm
(0.4)
$0.4
(0.9)
($5.3)
(6.7)
($8.3)
(10.6)
($14.6)
(10.4)
($8.0)
(30.1)
$2.8
(21.3)
($17.0)
(5.7)
(0.2)
(0.5)
(0.4)
(0.3)
($49.6) ($18.4) ($15.7) ($23.6) ($27.6)
(1.4)
($85.4)
(0.3)
($5.2)
(0.3)
($15.0)
(0.3)
($19.5)
(0.3)
($23.8)
(1.2)
($63.4)
(1.0)
($68.0)
(2.9)
($136.7)
(7.0)
($120.8)
(10.1)
($35.5)
($0.02)
($0.02)
($0.03)
($0.02)
$0.04
($0.16)
($0.43) ($0.15) ($0.11) ($0.16) ($0.19)
($0.61)
($0.0)
($0.1)
($0.1)
($0.1)
($0.4)
($0.4)
($0.7)
($0.7)
($0.2)
Free cash flow per share
$0.00
Source: Company data, Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
59
June 27, 2010
Americas: Clean Energy: Energy Storage
Exhibit 63: Ener1, Inc. percent of revenue and yoy change, fiscal year ended December 31
Percent of total revenue
FY2002A FY2003A FY2004A FY2005A FY2006A FY2007A FY2008A FY2009A
99%
0%
1%
100%
FY2010E
Q2E
Q3E
Q4E
99%
1%
0%
0%
100%
99%
1%
0%
0%
100%
99%
1%
0%
0%
100%
99%
1%
0%
0%
100%
99%
1%
0%
0%
100%
Q4E
100%
100%
36%
64%
100%
Cost of revenue
Gross Profit
100%
100%
100%
68%
32%
88%
12%
90%
10%
88%
12%
85%
15%
83%
17%
85%
15%
86%
14%
84%
16%
81%
19%
-
-
208%
169%
334%
-
51%
88%
-
48%
90%
0%
31%
77%
0%
24%
57%
0%
17%
44%
0%
26%
59%
-
16%
27%
0%
10%
23%
0%
12%
26%
0%
EBITDA
-
-
-
(472%)
(127%) (127%)
(96%)
(66%)
(43%)
(70%)
(29%)
(18%)
(19%)
Total operating expenses
-
-
-
527%
126%
94%
68%
97%
50%
40%
45%
Operating Income
-
-
-
(495%)
(142%) (139%) (113%)
(79%)
(51%)
(82%)
(36%)
(25%)
Earnings before income taxes
-
-
-
(750%)
(148%) (141%) (117%)
(81%)
(52%)
(83%)
(37%)
(25%)
Net income (common stockholders)
-
-
-
(766%)
(147%) (142%) (117%)
(81%)
(52%)
(83%)
(37%)
(25%)
Q1E
FY2011E
Q2E
Q3E
150%
99%
1%
0%
0%
100%
FY2011E
Q2E
Q3E
Q1E
75%
25%
100%
154%
99%
1%
0%
0%
100%
FY2010E
Battery
Fuel Cell
Nanotechnology
Corporate
Revenue
General and administrative
Research and development, net
Warrant modification expense
98%
0%
1%
100%
Q1A
99%
1%
0%
0%
100%
FY2011E FY2012E FY2013E FY2014E FY2015E
99%
1%
0%
0%
100%
99%
1%
0%
0%
100%
99%
1%
0%
0%
100%
99%
1%
0%
0%
100%
99%
1%
0%
0%
100%
99%
1%
0%
0%
100%
77%
23%
82%
18%
83%
17%
83%
17%
85%
15%
86%
14%
14%
31%
0%
13%
27%
-
9%
17%
-
5%
10%
-
4%
7%
-
3%
6%
-
(22%)
(22%)
(9%)
2%
4%
4%
53%
47%
32%
20%
15%
13%
(26%)
(30%)
(29%)
(16%)
(2%)
0%
1%
(27%)
(31%)
(30%)
(16%)
(3%)
(1%)
0%
(27%)
(31%)
(30%)
(16%)
(3%)
(1%)
0%
Percent change year-over-year
FY2002A FY2003A FY2004A FY2005A FY2006A FY2007A FY2008A FY2009A
FY2010E
Q2E
Q3E
Q1A
Q4E
FY2010E
Q4E
FY2011E FY2012E FY2013E FY2014E FY2015E
Battery
Fuel Cell
Nanotechnology
Corporate
Revenue
567%
67%
79%
180%
(82%)
-
414%
(79%)
159%
408%
34%
79%
(33%) (17%)
34%
79%
146%
726%
23%
146%
197%
100%
199%
121%
18%
122%
286%
286%
286%
286%
289%
289%
289%
289%
155%
155%
155%
155%
63%
63%
63%
63%
158%
158%
158%
158%
61%
61%
61%
61%
81%
81%
81%
81%
41%
41%
41%
41%
22%
22%
22%
22%
Cost of revenue
Gross Profit
67%
180%
681%
559%
86%
44%
(17%)
86%
43%
121%
605%
173%
429%
114%
183%
271%
416%
275%
389%
143%
227%
52%
111%
149%
212%
64%
47%
80%
87%
44%
24%
24%
12%
(23%)
(66%)
-
(21%)
85%
(94%)
40%
92%
-
52%
34%
-
13%
58%
-
13%
40%
-
13%
50%
-
13%
50%
-
13%
49%
-
30%
15%
-
30%
15%
-
30%
15%
-
30%
15%
-
30%
15%
-
5%
5%
-
5%
5%
-
5%
5%
-
5%
5%
34%
General and administrative
Research and development, net
Warrant modification expense
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
159%
(20%)
(20%)
69%
48%
37%
35%
42%
42%
39%
29%
25%
23%
26%
26%
10%
10%
6%
5%
Operating Income
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
340%
Earnings before income taxes
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Net income (common stockholders)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
EBITDA
Total operating expenses
Incremental margins
FY2002A FY2003A FY2004A FY2005A FY2006A FY2007A FY2008A FY2009A
Gross Profit
EBITDA
Operating Profit
Net income
FCF to the firm
100%
-
100%
-
29%
330%
-
7%
5%
-
FY2010E
Q2E
Q3E
Q1A
-
8%
-
22%
-
Q4E
21%
-
FY2010E
18%
-
Q1E
15%
5%
42%
FY2011E
Q2E
Q3E
17%
10%
6%
6%
2%
22%
12%
8%
8%
13%
Q4E
31%
12%
3%
3%
19%
FY2011E FY2012E FY2013E FY2014E FY2015E
20%
9%
4%
4%
18%
14%
11%
7%
7%
-
18%
16%
14%
13%
-
10%
8%
7%
5%
7%
8%
6%
5%
4%
47%
Source: Company data, Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
60
June 27, 2010
Americas: Clean Energy: Energy Storage
Exhibit 64: Ener1, Inc. Balance Sheet, $ millions, fiscal year ended December 31
2002A
ASSETS
Current Assets
Cash and cash equivalents
Restricted cash
Accounts receivable
Grants receivable
Inventory
Deferred financing costs
Prepaid expenses and other current assets
Other current assets
Total Current Assets
2003A
2004A
2005A
2006A
2007A
2008A
2009A
Q1A
2010E
Q2E
Q3E
Q4E
2010E
Q1E
2011E
Q2E
Q3E
Q4E
2011E
2012E
2013E
2014E
2015E
0.3
0.6
1.1
0.3
$2.3
0.2
0.1
0.2
$0.5
14.1
0.2
0.1
$14.4
2.3
0.2
0.2
$2.7
0.3
0.2
0.2
$0.7
24.8
0.1
0.7
$25.6
11.2
3.0
7.0
10.2
1.2
$32.6
14.3
3.7
6.4
10.4
0.3
2.0
$37.0
7.6
4.5
8.3
12.8
15.5
2.4
4.4
$55.6
52.7
4.5
8.7
12.8
15.7
2.4
2.2
$99.0
24.9
4.5
9.4
12.8
19.4
2.4
2.8
$76.3
10.0
4.5
10.8
12.8
26.3
2.4
3.9
$70.7
10.0
4.5
10.8
12.8
26.3
2.4
3.9
$70.7
10.0
4.5
9.6
12.8
15.8
2.4
5.4
$60.6
12.4
4.5
10.0
12.8
16.0
2.4
7.4
$65.5
10.0
4.5
10.8
12.8
19.8
2.4
8.9
$69.3
10.0
4.5
12.4
12.8
26.8
2.4
10.0
$78.9
10.0
4.5
12.4
12.8
26.8
2.4
10.0
$78.9
10.0
4.5
14.3
12.8
27.3
2.4
16.0
$87.3
48.7
4.5
16.4
12.8
27.9
2.4
29.0
$141.7
166.6
4.5
18.9
12.8
28.4
2.4
40.8
$274.5
241.8
4.5
21.7
12.8
29.0
2.4
50.0
$362.3
Property, plant, and equipment
Equipment deposits and restricted cash
Deferred financing costs
Intangible assets
Investment in unconsolidated entity
Goodwill
Investment in EnerStruct, Inc.
Other non-current assets
Total Assets
22.2
1.2
$25.6
22.0
1.8
0.1
$24.4
13.4
3.6
1.2
0.4
$33.0
3.0
3.7
0.8
0.2
$10.4
3.6
2.8
0.0
0.1
$7.2
4.3
2.3
0.5
$32.7
39.5
5.1
15.2
48.7
0.6
$141.7
52.9
13.2
19.2
51.0
1.0
$174.4
90.4
12.7
24.9
52.1
1.2
$237.0
95.0
12.2
24.9
52.1
1.3
$284.6
99.3
11.7
24.9
52.1
1.7
$266.0
103.7
11.2
24.9
52.1
2.3
$264.9
103.7
11.2
24.9
52.1
2.3
$264.9
105.7
10.8
24.9
52.1
3.3
$257.4
107.1
10.4
24.9
52.1
4.4
$264.4
108.5
10.0
24.9
52.1
5.4
$270.1
109.2
9.6
24.9
52.1
6.0
$280.6
109.2
9.6
24.9
52.1
6.0
$280.6
126.7
7.9
24.9
52.1
9.6
$308.6
148.7
6.6
24.9
52.1
17.4
$391.4
138.6
5.2
24.9
52.1
24.5
$519.8
118.5
3.8
24.9
52.1
30.0
$591.6
LIABILITIES
Current Liabilities
Accounts payable and accrued expenses
Accrued income taxes payable
Deferred grant proceeds, current portion
Convertible line of credit and accrued interest
Short term borrowings
Capital lease obligations, current portion
Derivative liabilities
Short term borrowings, related party
Other current liabilities
Total Current Liabilities
3.9
0.6
9.7
$14.1
2.6
1.6
3.2
0.5
$7.9
2.3
113.9
0.3
$116.5
3.0
55.0
0.3
$58.3
5.9
7.2
1.3
$14.4
3.8
0.3
10.1
$14.3
16.3
0.3
9.4
2.0
$28.1
14.3
0.3
10.5
13.0
2.4
$40.5
48.9
0.3
0.1
16.6
23.2
2.7
$91.8
49.0
0.6
0.1
16.9
19.7
1.5
$87.9
48.5
0.7
0.1
16.9
16.9
0.9
$84.0
49.2
0.7
0.1
16.9
14.1
0.3
$81.4
49.2
0.7
0.1
16.9
14.1
0.3
$81.4
49.4
0.8
0.1
16.9
14.1
$81.3
49.5
0.8
0.1
16.9
14.1
$81.5
49.0
0.9
0.1
16.9
14.1
$81.0
49.7
0.9
0.1
16.9
14.1
$81.8
49.7
0.9
0.1
16.9
14.1
$81.8
50.2
1.0
0.1
16.9
14.1
$82.4
50.7
1.1
0.1
16.9
14.1
$83.0
51.2
1.2
0.1
16.9
14.1
$83.6
51.7
1.3
0.1
16.9
14.1
$84.1
Other long-term payables
Deferred income tax liabilities
Derivative liabilities
Deferred grant proceeds, less current portion
Long term borrowings
Capital lease obligations, less current portion
Convertible bonds
Long term borrowing, related party
Convertible notes, related party
2004 $19,700 convertible debentures
2005 $14,225 convertible debentures
Total Liabilities
1.6
0.7
$16.4
0.7
$8.6
0.1
2.6
$119.2
0.1
5.7
4.2
$68.2
0.0
7.9
7.9
5.4
$35.7
8.3
1.9
1.0
$25.4
1.1
0.4
0.8
4.6
0.4
$35.3
1.3
0.4
6.9
4.3
2.7
0.4
$56.4
3.9
0.4
7.2
18.9
4.4
0.4
$126.9
5.2
0.6
7.2
18.9
4.4
0.6
0.4
$125.2
6.6
0.7
7.2
18.9
4.4
0.6
0.4
$122.8
8.0
0.7
7.2
18.9
4.4
0.6
0.4
$121.6
8.0
0.7
7.2
18.9
4.4
0.6
0.4
$121.6
9.4
0.8
7.2
18.9
4.4
0.3
0.4
$122.7
10.8
0.8
7.2
18.9
4.4
0.4
$124.0
12.2
0.9
7.2
18.9
4.4
0.4
$124.9
13.6
0.9
7.2
18.9
4.4
0.4
$127.2
13.6
0.9
7.2
18.9
4.4
0.4
$127.2
19.1
1.0
7.2
18.9
4.4
0.4
$133.4
24.6
1.1
7.2
18.9
96.5
$231.4
30.2
1.2
7.2
18.9
222.9
$363.9
35.7
1.3
7.2
18.9
286.1
$433.3
0.3
-
-
2.6
10.1
4.0
-
5.0
13.2
-
6.6
15.2
-
7.8
-
-
-
EnerDel, Inc. Series A Preferred
Series B Preferred
Minority interest
Commitments and contingencies
Common stock
Paid in capital
Accumulated other comprehensive income
Retained earnings (accumulated deficit)
Total Ener1, Inc. stockholders' equity
Non-controlling interest
Total Stockholders' Equity
Total Liabilities and Stockholders' Equity
Weighted Average common shares (basic)
Weighted Average common shares (diluted)
Book value per share (diluted)
Cash and cash equivalents per share
Net cash (debt), including current portion
Net cash (debt) per share, including current portion
Days inventory
Days sales outstanding
Days payables outstanding
Cash conversion cycle (days)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3.1
54.8
(49.1)
8.9
$8.9
3.5
72.6
(60.2)
15.9
$15.9
3.5
76.7
(182.9)
(102.7)
($102.7)
3.5
72.8
(152.2)
(75.9)
($75.9)
4.2
137.5
(191.9)
(50.3)
($50.3)
0.9
244.2
(245.6)
(0.5)
($0.5)
1.1
383.4
1.5
(283.1)
102.9
3.5
$106.4
1.2
451.6
4.9
(341.5)
116.2
1.8
$118.0
1.3
457.6
6.4
(356.8)
108.4
1.7
$110.1
1.3
522.6
6.4
(372.6)
157.7
1.7
$159.4
1.3
522.6
6.4
(388.7)
141.5
1.7
$143.2
1.3
539.7
6.4
(405.8)
141.6
1.7
$143.3
1.3
539.7
6.4
(405.8)
141.6
1.7
$143.3
1.3
546.7
6.4
(421.4)
133.0
1.7
$134.7
1.3
565.8
6.4
(434.7)
138.8
1.7
$140.5
1.3
584.1
6.4
(448.3)
143.5
1.7
$145.2
1.3
608.8
6.4
(464.7)
151.8
1.7
$153.5
1.3
608.8
6.4
(464.7)
151.8
1.7
$153.5
1.3
681.4
6.4
(515.5)
173.5
1.7
$175.2
1.3
683.3
6.4
(532.6)
158.3
1.7
$160.0
1.3
683.3
6.4
(536.7)
154.2
1.7
$155.9
1.3
683.3
6.4
(534.3)
156.7
1.7
$158.4
$25.6
$24.4
$33.0
$10.4
$7.2
$32.7
$141.7
$174.4
$237.0
$284.6
$266.0
$264.9
$264.9
$257.4
$264.4
$270.1
$280.6
$280.6
$308.6
$391.4
$519.8
$591.6
299.62
299.62
0.03
0.00
(3)
(0.01)
-
319.23
319.23
0.05
0.00
(5)
(0.02)
3,360
0
30,399
-
347.09
424.33
(0.24)
0.03
11.44
0.03
83,987
-
347.46
433.03
(0.18)
0.01
(7.65)
(0.02)
-
401.53
401.53
(0.13)
0.00
(20.98)
(0.05)
555
-
72.92
72.92
(0.01)
0.34
13.35
0.18
133
-
103.38
103.38
1.03
0.11
(7.05)
(0.07)
399
373
1,278
2,051
116.66
116.71
1.01
0.12
(20.22)
(0.17)
122
67
169
358
124.90
124.97
0.88
0.06
(43.47)
(0.35)
113
68
448
629
143.58
143.65
1.11
0.37
3.95
0.03
93
58
374
524
143.58
143.65
1.00
0.17
(21.82)
(0.15)
71
42
257
371
147.87
147.93
0.97
0.07
(34.70)
(0.23)
61
30
164
255
139.98
140.05
1.02
0.07
(34.70)
(0.25)
102
51
274
427
149.62
149.68
0.90
0.07
(35.52)
(0.24)
39
20
122
181
154.38
154.45
0.91
0.08
(34.27)
(0.22)
32
17
101
150
158.97
159.03
0.91
0.06
(38.01)
(0.24)
43
19
107
169
165.14
165.20
0.93
0.06
(39.40)
(0.24)
58
21
109
188
157.03
157.09
0.98
0.06
(39.40)
(0.25)
59
23
111
193
174.07
174.13
1.01
0.06
(44.94)
(0.26)
37
16
69
122
183.75
183.81
0.87
0.26
(103.50)
(0.56)
21
10
39
70
183.75
183.81
0.85
0.91
(117.55)
(0.64)
15
8
27
50
183.75
183.81
0.86
1.32
(111.03)
(0.60)
12
8
22
42
Source: Company data, Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
61
June 27, 2010
Americas: Clean Energy: Energy Storage
Exhibit 65: Ener1, Inc. Statement of Cash Flows, $ millions, fiscal year ended December 31
PERIOD CASH FLOWS
2002A
OPERATING ACTIVITIES
Net income (loss)
Gain on derivative liabilities
Minority interest in losses and preferred dividends of consolidated subsi
Non-cash accretion of discounts on debentures and notes
Non-cash interest expense related to financing costs
Non-cash interest expense related to converts & related party advances
Non-cash warrant modification expense
Non-cash inducements for debt conversions and equity investments
Depreciation and amortization
Grant proceeds recognized
Stock for services
Stock-based compensation expense
Shares issued in connection with EnerStruct
Loss (gain) on foreign currency transactions, net
Loss on disposal of equipment, net
Other non-cash expenses
2003A
2004A
2005A
2006A
2007A
2008A
2009A
Q1A
2010E
Q2E
Q3E
Q4E
Q1E
2011E
Q2E
Q3E
Q4E
(15.6)
0.9
0.5
3.1
0.0
(13.3)
0.9
0.5
3.7
0.0
(16.4)
0.9
0.5
4.4
0.1
(58.9)
3.4
2.1
14.9
0.2
(50.8)
3.4
2.1
20.1
0.1
(17.1)
(0.4)
3.4
2.1
26.6
0.1
(4.1)
3.4
2.1
29.1
0.1
2.5
3.4
2.1
30.3
0.1
2012E
2013E
2014E
2015E
7.1
(46.7)
(3.0)
2.6
0.9
0.2
1.3
0.6
(0.1)
23.4
28.6
(70.8)
(1.6)
5.0
1.2
0.6
1.1
0.4
0.0
10.6
(41.3)
0.1
1.6
3.7
1.3
0.4
9.2
0.4
1.6
0.8
0.0
1.3
(62.7)
11.5
21.5
1.7
1.2
0.6
0.5
1.7
0.9
0.1
(51.2)
(3.9)
17.7
2.4
0.3
0.9
2.0
3.0
0.3
0.9
(51.5)
(3.5)
1.0
2.9
7.7
4.1
1.4
(15.5)
(1.5)
0.9
0.5
2.2
(0.0)
1.0
0.9
(15.8)
0.9
0.5
2.3
0.3
(17.0)
0.9
0.5
2.5
0.1
(64.4)
(1.5)
3.4
2.1
9.5
(0.0)
1.0
1.2
Changes in certain operating assets and liabilities
Restricted cash
Accounts receivable
Grant receivable related to operating expenses
Inventories
Prepaid expenses and other current assets
Other assets
Accounts payable and accrued expenses
Interest payable
Changes in current assets, liabilities and other, net
Change in Working Capital
Net cash provided by operating activities
0.1
0.1
(0.0)
0.1
($5.4)
(0.2)
(0.2)
($13.9)
0.7
0.7
($24.3)
(0.2)
(0.1)
0.1
2.7
1.3
(0.1)
3.7
($17.1)
0.1
(1.7)
(1.3)
(0.8)
(3.8)
($26.7)
(1.2)
(1.1)
5.4
0.4
3.5
($24.1)
1.2
(0.3)
(1.7)
(1.9)
(2.8)
($40.7)
(2.0)
(0.3)
(5.4)
11.6
(1.2)
2.7
($8.9)
(0.4)
(0.7)
(1.4)
(0.2)
(3.7)
(6.9)
2.2
(0.6)
(1.1)
0.1
(0.5)
0.7
0.3
0.1
0.1
2.0
(5.5)
(8.5)
($9.8) ($17.7) ($21.6)
(4.5)
(0.3)
(16.1)
0.5
11.9
(0.8)
(9.3)
($57.9)
1.3
(0.5)
(0.8)
(1.6)
10.4
(0.2)
(3.8)
(7.0)
(1.6)
(1.9)
(1.6)
(1.0)
0.2
0.1
(0.5)
0.7
0.0
0.0
0.0
0.1
10.3
(2.4)
(6.6)
(8.8)
($0.8) ($10.6) ($15.1) ($19.4)
(1.6)
(0.5)
(6.1)
0.5
0.2
(7.6)
($45.8)
(1.9)
(0.5)
(6.0)
0.5
0.1
(7.8)
($33.0)
(2.1)
(0.5)
(13.0)
0.5
0.1
(15.1)
($0.3)
(2.5)
(0.6)
(11.9)
0.5
0.1
(14.3)
$16.3
(2.8)
(0.6)
(9.2)
0.5
0.1
(12.0)
$26.4
INVESTING ACTIVITIES
Capital expenditures
Grant proceeds received related to capital expenditures
Restricted cash
Legal fees for acquisition of minority interest
Investment in unconsolidated entity
Cash paid for acquisition of remaining 19.5% interest in EnerDel
Cash received in acquisition of Enertech
Direct costs for acquisitions
Cash proceeds from sale of assests
Other
Net cash (used in) provided by investing activities
(0.9)
(2.0)
($2.9)
(1.1)
(0.2)
($1.2)
(0.8)
($0.8)
(1.3)
0.0
($1.3)
(0.6)
0.1
($0.5)
(14.1)
(3.0)
(0.6)
5.0
(1.1)
0.0
($13.8)
(14.6) (16.2)
6.5
(1.2)
(0.7)
(13.3)
(5.8)
0.1
0.0
($29.1) ($16.1)
(12.5)
6.1
(0.1)
($6.4)
(12.5)
6.1
(0.4)
($6.7)
(12.5)
6.1
(0.7)
($7.0)
(53.7)
24.9
(0.7)
(5.8)
(1.0)
($36.3)
(10.8)
6.1
(0.9)
($5.6)
(10.8)
6.1
(1.2)
($5.9)
(10.8)
6.1
(0.9)
($5.6)
(10.8)
6.1
(0.6)
($5.3)
(43.0)
24.3
(3.7)
($22.4)
(77.5)
41.5
(3.6)
($39.6)
(179.0)
39.8
(7.8)
($147.0)
(149.5)
5.5
(7.1)
($151.1)
(77.5)
5.5
(5.5)
($77.5)
8.8
(0.6)
0.1
$8.2
18.5
1.1
15.0
(3.2)
(2.3)
$29.0
13.1
0.3
(0.0)
$13.4
10.9
5.5
(0.0)
$16.4
5.2
5.2
42.1
(0.8)
$51.7
1.8
31.0
(8.0)
(0.4)
(0.3)
$24.1
65.0
(0.6)
0.4
(3.5)
$61.3
(0.6)
(2.8)
($3.4)
17.1
(0.6)
(2.8)
$13.7
10.6
5.0
0.0
86.5
(3.4)
0.4
(9.2)
$90.0
7.0
(0.6)
$6.4
19.1
(0.3)
$18.8
18.3
$18.3
24.7
$24.7
69.1
(0.9)
$68.2
72.6
$72.6
92.1
1.8
92.1
$186.0
126.4
126.4
$252.7
63.2
63.2
$126.4
Effect of foreign exchange on cash and equivalents
Increase (decrease) in cash and cash equivalents
Beginning cash and cash equivalents
Ending cash and cash equivalents
(0.0)
0.2
$0.2
13.9
0.2
$14.1
-
-
(11.8)
14.1
$2.3
(2.0)
2.3
$0.3
24.5
0.3
$24.8
0.2
(13.6)
24.8
$11.2
5.9
12.1
0.7
58.4
(4.6)
(0.3)
0.8
$73.0
10.6
5.0
0.0
4.4
(1.6)
$18.4
(0.1)
(0.0)
3.1
11.2
$14.3
(6.7)
14.3
$7.6
45.1
7.6
$52.7
(27.8)
52.7
$24.9
(14.9)
24.9
$10.0
(0.0)
(4.3)
14.3
$10.0
0.0
10.0
$10.0
2.4
10.0
$12.4
(13.6)
0.9
0.5
3.7
0.0
2011E
(8.9)
0.1
0.9
0.2
0.0
2.1
-
FINANCING ACTIVITIES
Proceeds from borrowings, net of costs
Proceeds from borrowings, related party
Proceeds from exercise of warrants and options
Proceeds from sale of stock, net of costs
Redemption of EnerDel Series A Preferred Stock
Repayment of capital leases
Repayment of borrowings, related party
Repayment of notes payable and bank installment loan
Other
Net cash provided by financing activities
(16.1)
0.9
0.5
2.5
0.1
2010E
(2.4)
12.4
$10.0
10.0
$10.0
10.0
$10.0
(0.0)
10.0
$10.0
38.7
10.0
$48.7
117.8
48.7
$166.6
75.2
166.6
$241.8
Source: Company data, Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
62
June 27, 2010
Americas: Clean Energy: Energy Storage
EnerSys, Inc. Financial Model
Exhibit 66: EnerSys, Inc. Income Statement, $ millions, fiscal year ended March 31
FY2004A FY2005A FY2006A FY2007A FY2008A FY2009A FY2010A
FY2011E
Q2E
Q3E
Q4E
FY2011E
Q1E
FY2012E
Q2E
Q3E
Q4E
FY2012E
FY2013E
FY2014E
FY2015E
Europe
Americas
Asia
Revenue
$511.1
408.8
49.2
$969.1
$568.8
450.0
65.1
$1,083.9
$675.4
535.9
72.0
$1,283.3
$784.5
630.8
89.1
$1,504.5
$777.9
1,115.3
133.3
$2,026.7
$987.2
831.3
154.4
$1,972.9
$742.0
700.3
137.1
$1,579.4
$200.5
201.7
48.1
$450.3
$197.1
209.6
46.8
$453.5
$219.6
208.0
39.9
$467.5
$215.4
227.4
42.1
$484.9
$832.6
846.8
177.0
$1,856.3
$211.7
217.4
55.4
$484.6
$211.4
226.0
53.9
$491.3
$235.6
224.4
46.0
$506.0
$231.1
245.4
48.6
$525.0
$889.8
913.2
203.9
$2,006.9
$931.1
961.1
229.2
$2,121.4
$954.9
991.4
252.6
$2,198.9
$999.2
1,043.4
283.9
$2,326.5
Cost of goods sold
Gross profit
722.8
$246.3
828.5
$255.4
1,006.5
$276.8
1,193.3
$311.2
1,644.7
$381.9
1,559.4
$413.4
1,218.5
$360.9
347.6
$102.7
341.7
$111.8
352.0
$115.5
364.5
$120.5
1,405.8
$450.5
359.6
$125.0
366.2
$125.1
376.1
$129.9
390.0
$135.0
1,491.9
$515.0
1,576.2
$545.1
1,634.2
$564.7
1,729.1
$597.5
171.3
21.1
-
179.0
-
199.9
8.6
-
61.7
1.5
-
71.2
-
72.6
-
75.4
-
281.0
1.5
-
79.7
-
79.1
-
83.1
-
86.1
-
328.0
-
347.0
-
358.9
-
379.1
-
$68.2
$117.9
$111.6
$141.2
$168.6
$191.5
$159.1
$50.2
$52.0
$55.1
$58.0
$215.3
$58.9
$60.4
$62.4
$65.3
$247.0
$273.7
$301.9
$337.8
47.2
2.1
49.2
$262.6
46.7
2.4
49.1
$271.0
44.9
44.9
$246.6
10.7
10.7
$63.2
11.4
11.4
$71.2
12.3
12.3
$72.6
12.9
12.9
$75.4
47.3
47.3
$282.5
13.6
13.6
$79.7
14.4
14.4
$79.1
15.6
15.6
$83.1
16.5
16.5
$86.1
60.0
60.0
$328.0
75.6
75.6
$347.0
96.1
96.1
$358.9
119.5
119.5
$379.1
$119.3
$142.4
$114.3
$39.5
$40.6
$42.8
$45.0
$168.0
$45.3
$46.0
$46.8
$48.9
$187.0
$198.1
$205.8
$218.3
Operating expenses (includes amortization)
Restructuring charges
Other
EBITDA
Depreciation
Amortization
Total depreciation and amortization
Total operating expenses
221.1
(3.8)
249.3
13.2
-
39.0
$192.4
41.5
$179.0
43.3
$208.5
45.4
2.0
47.4
$217.3
Operating income (loss)
$53.8
$76.4
$68.3
$93.9
Interest income (expense)
Other income (expense)
Total other income (expenses)
(20.3)
(25.7)
(46.0)
(23.3)
(3.3)
(26.6)
(24.9)
1.4
(23.5)
(27.7)
(3.1)
(30.8)
(28.9)
(4.2)
(33.2)
Earnings before income taxes
256.5
22.4
(7.9)
(27.2)
3.4
(23.8)
(22.7)
(4.4)
(27.0)
(5.7)
(5.7)
(5.2)
(5.2)
(4.8)
(4.8)
(5.0)
(5.0)
(20.8)
(20.8)
(5.7)
(5.7)
(6.3)
(6.3)
(6.7)
(6.7)
(7.1)
(7.1)
(25.8)
(25.8)
(32.9)
(32.9)
(38.5)
(38.5)
(42.6)
(42.6)
$7.8
$49.8
$44.8
$63.1
$86.2
$87.3
$33.8
$35.4
$38.0
$40.0
$147.2
$39.6
$39.7
$40.1
$41.7
$161.1
$165.2
$167.4
$175.7
Income tax benefit (provision)
Tax rate
Series A preferred stock dividends
Net income (loss)
(3.0)
37.9%
24.7
($19.9)
(17.4)
34.9%
$32.4
(14.0)
31.3%
$30.8
(17.8)
28.2%
$45.3
(26.5)
30.8%
$59.7
(36.6)
30.8%
$82.0
(25.0)
28.6%
$62.3
(10.1)
30.0%
$23.7
(10.6)
30.0%
$24.8
(11.4)
30.0%
$26.6
(12.0)
30.0%
$28.0
(44.2)
30.0%
$103.1
(13.1)
33.0%
$26.6
(13.1)
33.0%
$26.6
(13.2)
33.0%
$26.9
(13.8)
33.0%
$28.0
(53.2)
33.0%
$108.0
(54.5)
33.0%
$110.7
(55.2)
33.0%
$112.2
(58.0)
33.0%
$117.7
EPS (basic)
EPS (diluted)
Adjusted EPS (FD, Non-GAAP)
($1.80)
($1.80)
$1.34
$1.29
$1.03
$0.67
$0.66
$0.78
$0.97
$0.94
$0.89
$1.25
$1.22
$1.42
$1.68
$1.66
$1.92
$1.29
$1.28
$1.44
$0.49
$0.48
$0.50
$0.51
$0.50
$0.50
$0.56
$0.55
$0.55
$0.61
$0.60
$0.60
$2.16
$2.12
$2.15
$0.55
$0.54
$0.54
$0.60
$0.59
$0.59
$0.63
$0.62
$0.62
$0.67
$0.66
$0.66
$2.46
$2.41
$2.41
$2.72
$2.67
$2.67
$2.93
$2.87
$2.87
$3.32
$3.25
$3.25
11.0
11.0
36.4
37.0
46.2
46.8
46.5
47.5
47.6
48.6
48.8
49.4
48.1
48.8
48.3
49.2
48.6
49.4
47.7
48.5
46.2
47.0
47.7
48.5
48.0
48.8
44.0
44.8
42.5
43.3
41.8
42.6
44.1
44.9
40.9
41.7
38.4
39.2
35.6
36.4
Free Cash Flow Calculation
Net cash provided by operating activities
less: Capex
Free Cash Flow to Equity
39.2
(28.6)
$10.6
29.4
(31.8)
($2.5)
42.9
(39.7)
$3.2
72.4
(42.4)
$30.1
4.0
(45.0)
($41.0)
219.4
(57.1)
$162.3
136.6
(45.1)
$91.5
(35.2)
(15.3)
($50.6)
81.7
(16.4)
$65.3
42.4
(17.8)
$24.6
44.6
(19.7)
$24.9
133.5
(69.2)
$64.3
(36.4)
(19.2)
($55.6)
120.8
(18.9)
$101.8
32.1
(19.0)
$13.1
33.0
(19.2)
$13.8
149.5
(76.3)
$73.1
189.4
(77.6)
$111.8
214.8
(86.0)
$128.9
241.0
(94.4)
$146.6
plus: Net interest expense
Free Cash Flow to the Firm
(20.3)
$23.2
(23.3)
$12.7
(24.9)
$20.3
(27.7)
$50.0
(28.9)
($21.0)
(27.2)
$181.1
(22.7)
$107.7
(5.7)
($46.6)
(5.2)
$69.0
(4.8)
$27.9
(5.0)
$28.4
(20.8)
$78.8
(5.7)
($51.8)
(6.3)
$106.1
(6.7)
$17.6
(7.1)
$18.6
(25.8)
$90.5
(32.9)
$133.8
(38.5)
$154.6
(42.6)
$175.2
Free cash flow per share
$0.96
($0.07)
$0.07
$0.63
($0.84)
$3.28
$1.87
($1.03)
$1.32
$0.51
$0.53
$1.32
($1.14)
$2.28
$0.30
$0.32
$1.63
$2.68
$3.29
$4.03
Shares -- basic
Shares -- diluted
$118.6
235.6
13.9
(2.9)
Q1E
Source: Company data, Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
63
June 27, 2010
Americas: Clean Energy: Energy Storage
Exhibit 67: EnerSys, Inc. percent of revenue and yoy change, fiscal year ended March 31
Percent of total revenue
FY2004A FY2005A FY2006A FY2007A FY2008A FY2009A FY2010A
Europe
Americas
Asia
Revenue
Q1E
44%
47%
9%
100%
45%
46%
10%
100%
44%
45%
11%
100%
FY2012E
Q2E
Q3E
43%
46%
11%
100%
47%
44%
9%
100%
Q4E
44%
47%
9%
100%
FY2012E
FY2013E
FY2014E
FY2015E
100%
100%
100%
100%
100%
76.4%
23.6%
78.4%
21.6%
79.3%
20.7%
81.2%
18.8%
79.0%
21.0%
77.1%
22.9%
77.2%
22.8%
75.3%
24.7%
75.3%
24.7%
75.2%
24.8%
75.7%
24.3%
74.2%
25.8%
74.5%
25.5%
74.3%
25.7%
74.3%
25.7%
74.3%
25.7%
74.3%
25.7%
74.3%
25.7%
74.3%
25.7%
Operating expenses (includes amortization)
Restructuring charges
Other
17.7%
2.2%
-
16.5%
-
15.6%
0.7%
-
14.7%
(0.3%)
12.3%
0.7%
-
13.0%
1.1%
(0.4%)
14.9%
0.9%
(0.2%)
13.7%
0.3%
-
15.7%
-
15.5%
-
15.6%
-
15.1%
0.1%
-
16.4%
-
16.1%
-
16.4%
-
16.4%
-
16.3%
-
16.4%
-
16.3%
-
16.3%
-
Earning before income taxes
Net income
47%
44%
9%
100%
Q1E
74.6%
25.4%
Operating Income
43%
46%
10%
100%
FY2011E
Cost of goods sold
Gross profit
EBITDA
45%
45%
11%
100%
Q4E
50%
42%
8%
100%
Total operating expenses
47%
44%
9%
100%
FY2011E
Q2E
Q3E
44%
46%
10%
100%
44%
45%
11%
100%
43%
45%
11%
100%
43%
45%
12%
100%
7.0%
10.9%
8.7%
9.4%
8.3%
9.7%
10.1%
11.2%
11.5%
11.8%
12.0%
11.6%
12.2%
12.3%
12.3%
12.4%
12.3%
12.9%
13.7%
14.5%
19.9%
16.5%
16.2%
14.4%
13.0%
13.7%
15.6%
14.0%
15.7%
15.5%
15.6%
15.2%
16.4%
16.1%
16.4%
16.4%
16.3%
16.4%
16.3%
16.3%
5.6%
7.0%
5.3%
6.2%
5.9%
7.2%
7.2%
8.8%
9.0%
9.2%
9.3%
9.1%
9.4%
9.4%
9.3%
9.3%
9.3%
9.3%
9.4%
9.4%
0.8%
(2.0%)
4.6%
3.0%
3.5%
2.4%
4.2%
3.0%
4.3%
2.9%
6.0%
4.2%
5.5%
3.9%
7.5%
5.3%
7.8%
5.5%
8.1%
5.7%
8.2%
5.8%
7.9%
5.6%
8.2%
5.5%
8.1%
5.4%
7.9%
5.3%
7.9%
5.3%
8.0%
5.4%
7.8%
5.2%
7.6%
5.1%
7.6%
5.1%
Year-over-year Percent change
FY2004A FY2005A FY2006A FY2007A FY2008A FY2009A FY2010A
Q1E
FY2011E
Q2E
Q3E
Q4E
FY2011E
Q1E
FY2012E
Q2E
Q3E
Q4E
FY2012E
FY2013E
FY2014E
FY2015E
Europe
Americas
Asia
Revenue
11.3%
10.1%
32.4%
11.8%
18.7%
19.1%
10.6%
18.4%
16.2%
17.7%
23.8%
17.2%
(0.8%)
76.8%
49.6%
34.7%
26.9%
(25.5%)
15.9%
(2.7%)
(24.8%)
(15.8%)
(11.2%)
(19.9%)
28.4%
34.2%
42.2%
32.3%
17.3%
27.4%
34.5%
23.5%
4.8%
16.1%
22.6%
11.0%
3.4%
10.2%
17.4%
7.6%
12.2%
20.9%
29.1%
17.5%
5.6%
7.8%
15.1%
7.6%
7.3%
7.8%
15.1%
8.3%
7.3%
7.9%
15.3%
8.2%
7.3%
7.9%
15.3%
8.3%
6.9%
7.8%
15.2%
8.1%
4.6%
5.2%
12.4%
5.7%
2.6%
3.2%
10.2%
3.7%
4.6%
5.2%
12.4%
5.8%
Cost of goods sold
Gross profit
14.6%
3.7%
21.5%
8.4%
18.6%
12.4%
37.8%
22.7%
(5.2%)
8.3%
(21.9%)
(12.7%)
32.3%
32.6%
22.6%
26.2%
9.0%
17.4%
2.9%
24.8%
15.4%
24.8%
3.4%
21.7%
7.2%
11.9%
6.8%
12.5%
7.0%
12.0%
6.1%
14.3%
5.7%
5.8%
3.7%
3.6%
5.8%
5.8%
4.5%
-
11.7%
-
10.6%
-
12.8%
-
2.9%
69.5%
-
(8.2%)
(37.9%)
-
13.4%
(57.4%)
-
18.1%
-
17.9%
-
27.2%
-
19.3%
(89.2%)
-
29.1%
-
11.2%
-
14.4%
-
14.2%
-
16.8%
-
5.8%
-
3.4%
-
5.6%
-
73.0%
6.4%
(7.0%)
(5.4%)
4.2%
16.5%
26.6%
9.4%
4.2%
19.4%
3.9%
20.8%
13.6%
(0.2%)
3.2%
(16.9%)
(8.6%)
(9.0%)
64.9%
5.0%
9.1%
41.5%
6.0%
12.1%
8.7%
8.0%
21.6%
40.5%
5.5%
15.3%
35.3%
5.4%
14.5%
17.3%
5.0%
26.1%
16.2%
6.0%
11.2%
13.2%
8.0%
14.4%
12.7%
6.0%
14.2%
14.7%
27.0%
16.1%
10.8%
25.9%
5.8%
10.3%
27.1%
3.4%
11.9%
24.3%
5.6%
6.1%
Operating expenses (includes amortization)
Restructuring charges
Other
EBITDA
Depreciation
Total operating expenses
Operating Income
Earning before income taxes
Net income
42.0%
(10.6%)
37.4%
27.1%
19.4%
(19.8%)
102.3%
61.7%
11.0%
45.0%
47.0%
14.7%
13.2%
9.3%
8.5%
11.3%
5.9%
3.9%
539.0%
(10.0%)
40.8%
36.6%
37.7%
(26.4%)
175.5%
89.5%
20.9%
60.9%
68.7%
17.2%
12.1%
5.4%
4.4%
9.4%
2.5%
1.3%
5.0%
-
(4.9%)
47.0%
31.8%
37.5%
(24.1%)
181.4%
92.4%
15.0%
56.8%
65.4%
12.2%
7.3%
0.9%
(0.1%)
4.8%
2.5%
1.3%
5.0%
Q1E
FY2011E
Q2E
Q3E
Incremental margins
FY2004A FY2005A FY2006A FY2007A FY2008A FY2009A FY2010A
Gross Profit
EBITDA
Operating Profit
Net income
FCF to the firm
8%
43%
20%
46%
-
11%
4%
16%
13%
12%
7%
13%
14%
5%
5%
3%
-
(59%)
(43%)
(43%)
(42%)
(376%)
-
23%
18%
18%
14%
-
27%
18%
18%
14%
65%
37%
10%
9%
8%
13%
Q4E
70%
49%
41%
29%
35%
FY2011E
32%
20%
19%
15%
-
Q1E
65%
25%
17%
8%
-
FY2012E
Q2E
Q3E
35%
22%
14%
5%
98%
37%
19%
10%
1%
-
Q4E
36%
18%
10%
-
FY2012E
FY2013E
FY2014E
FY2015E
43%
21%
13%
3%
8%
26%
23%
10%
2%
38%
25%
36%
10%
2%
27%
26%
28%
10%
4%
16%
Source: Company data, Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
64
June 27, 2010
Americas: Clean Energy: Energy Storage
Exhibit 68: EnerSys, Inc. Balance Sheet, $ millions, fiscal year ended March 31
FY2003A FY2004A FY2005A FY2006A FY2007A FY2008A FY2009A FY2010A
Q1E
FY2011E
Q2E
Q3E
Q4E
$150.0
410.4
272.1
17.5
42.6
$892.6
$150.0
431.3
285.2
18.4
44.8
$929.8
$150.0
450.9
293.5
19.2
46.8
$960.5
FY2011E
Q1E
FY2012E
Q2E
Q3E
$150.0
457.3
294.6
19.6
47.7
$969.2
$150.0
464.6
298.2
20.0
48.7
$981.4
ASSETS
Current Assets
Cash and cash equivalents
Accounts receivable, net
Inventories, net
Deferred taxes
Prepaid and other current assets
Total Current Assets
$44.3
189.0
107.0
42.8
$383.2
$17.2
231.6
131.7
24.6
21.4
$426.6
$21.3
254.3
146.0
21.2
24.8
$467.6
$15.2
308.6
179.5
20.3
24.0
$547.7
$37.8
351.6
234.3
11.4
39.2
$674.3
$20.6
503.0
335.7
16.8
35.0
$911.2
$163.2
356.2
209.3
17.0
32.5
$778.2
Property, plant and equipment, net
Goodwill
Other intangible assets, net
Other non-current assets
Total Assets
$275.7
371.2
45.8
$1,075.8
$284.9
306.8
75.5
60.2
$1,153.9
$279.9
310.7
75.5
61.1
$1,194.8
$281.7
308.8
80.8
44.9
$1,263.9
$301.0
332.9
80.5
20.3
$1,409.0
$340.0
358.4
80.1
21.0
$1,710.8
$301.4
301.7
79.5
32.1
$1,492.9
ALIABILITIES
Current Liabilities
Short-term debt
Current portion of long-term debt and capital leases
Accounts payable
Accrued expenses
Other current liabilities
Total Current Liabilities
$14.4
95.0
134.7
3.7
$247.8
$2.7
9.2
113.0
163.6
0.3
$288.9
$5.7
8.4
117.9
150.7
2.7
$285.4
$6.6
9.6
157.8
159.7
2.6
$336.3
$11.7
10.9
200.2
175.2
$398.0
$41.1
13.0
260.5
202.5
4.6
$521.7
$7.4
25.3
127.6
186.8
$347.0
$0.0
26.7
198.3
190.0
4.4
$419.5
$0.0
27.0
212.1
186.4
3.3
$429.0
$0.0
27.0
222.4
220.6
4.7
$474.8
$0.0
27.0
227.1
231.6
4.9
$490.7
$0.0
27.0
228.8
240.1
5.1
$501.1
$0.0
27.0
228.8
240.1
5.1
$501.1
$0.0
27.0
230.8
201.1
4.0
$463.0
Long-term debt and capital lease obligations
Deferred taxes
Other non-current liabilities
Total Liabilities
231.8
130.4
$610.1
499.4
61.0
65.4
$914.6
361.4
69.5
40.8
$757.1
386.3
55.4
40.8
$818.8
379.7
43.7
45.5
$866.9
372.7
44.2
80.7
$1,019.2
343.0
63.7
62.6
$816.3
323.7
70.0
54.5
$867.8
325.3
52.9
41.2
$848.4
264.3
73.7
57.4
$870.1
270.9
77.4
60.2
$899.2
295.9
80.2
62.4
$939.6
Preferred stock
Common stock (135 millions shares authorized)
Additional paid-in capital
Unearned stock grant compensation
Treasury stock (1.8 million shares held)
Retained earnings
Accumulated other comprehensive income
Total EnerSys Stockholders' Equity
465.7
$465.7
0.01
0.1
188.8
(8.8)
59.3
$239.3
0.5
330.2
83.4
$437.7
0.5
335.3
(3.1)
54.3
58.3
$445.2
0.5
339.1
99.5
103.0
$542.1
0.5
369.0
159.2
162.9
$691.5
0.5
416.5
(19.8)
241.1
34.1
$672.3
0.5
428.6
(19.8)
303.4
67.2
$779.9
0.5
428.6
(19.8)
327.1
67.2
$803.6
0.5
428.6
(22.2)
351.9
67.2
$825.9
0.5
428.6
(52.4)
378.5
67.2
$822.4
Non-controlling interest
Total equity
$465.7
$239.3
$437.7
$445.2
$542.1
$691.5
4.2
$676.6
4.3
$784.2
4.3
$807.9
4.3
$830.3
4.3
$826.7
$1,075.8
$1,153.9
$1,194.8
$1,263.9
$1,409.0
$1,710.8
$1,492.9
Total Liabilities and Stockholders' Equity
$201.0
383.6
254.4
16.4
39.8
$895.3
$150.0
442.6
291.3
18.9
46.0
$948.7
FY2012E FY2013E FY2014E FY2015E
$150.0
$150.0
471.9
479.5
301.7
305.5
20.4
20.8
49.6
50.6
$993.6 $1,006.4
$150.0
479.5
305.5
20.8
50.6
$1,006.4
$150.0
498.3
316.4
22.0
53.5
$1,040.3
$150.0
507.7
321.6
22.8
55.5
$1,057.6
$150.0
527.9
333.3
24.1
58.7
$1,094.0
$337.0
$342.6
$347.1
$350.6
$353.3
317.3
317.3
317.3
317.3
317.3
90.1
90.1
90.1
90.1
90.1
40.2
40.9
41.7
42.6
43.4
$1,745.1 $1,760.1 $1,777.7 $1,794.2 $1,810.5
$353.3
317.3
90.1
43.4
$1,810.5
$355.3
317.3
90.1
45.9
$1,848.9
$345.2
317.3
90.1
47.6
$1,857.7
$320.1
317.3
90.1
50.4
$1,871.8
$0.0
27.0
242.9
229.6
5.9
$505.4
$0.0
27.0
242.9
229.6
5.9
$505.4
$0.0
27.0
256.6
242.9
6.2
$532.8
$0.0
27.0
266.0
251.2
6.4
$550.7
$0.0
27.0
281.5
265.4
6.8
$580.7
295.9
80.2
62.4
$939.6
352.3
368.0
404.4
417.6
63.5
87.1
90.1
93.1
49.4
67.8
70.1
72.5
$928.1 $1,035.9 $1,074.0 $1,088.7
417.6
93.1
72.5
$1,088.7
520.3
98.5
76.7
$1,228.4
576.9
101.9
79.3
$1,308.8
648.6
107.7
83.8
$1,420.8
0.5
428.6
(101.6)
406.5
67.2
$801.1
0.5
428.6
(101.6)
406.5
67.2
$801.1
0.5
428.6
(101.6)
433.0
67.2
$827.7
0.5
428.6
(218.4)
459.6
67.2
$737.5
0.5
428.6
(267.0)
486.5
67.2
$715.8
0.5
428.6
(293.2)
514.4
67.2
$717.5
0.5
428.6
(293.2)
514.4
67.2
$717.5
0.5
428.6
(505.3)
625.2
67.2
$616.2
0.5
428.6
(689.0)
737.3
67.2
$544.6
0.5
428.6
(904.6)
855.0
67.2
$446.8
4.3
$805.5
4.3
$805.5
4.3
$832.0
4.3
$741.8
4.3
$720.1
4.3
$721.9
4.3
$721.9
4.3
$620.5
4.3
$549.0
4.3
$451.1
$1,745.1 $1,760.1 $1,777.7 $1,794.2 $1,810.5
$1,810.5
$1,848.9
$1,857.7
$1,871.8
$315.1
$319.8
$324.8
$330.3
$337.0
317.3
317.3
317.3
317.3
317.3
90.1
90.1
90.1
90.1
90.1
34.2
36.6
38.4
39.4
40.2
$1,652.0 $1,656.3 $1,700.4 $1,725.9 $1,745.1
$1,652.0 $1,656.3 $1,700.4 $1,725.9 $1,745.1
$150.0
450.9
293.5
19.2
46.8
$960.5
Q4E
$0.0
27.0
234.8
245.5
5.5
$512.9
$0.0
27.0
238.7
238.0
5.7
$509.4
Source: Company data, Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
65
June 27, 2010
Americas: Clean Energy: Energy Storage
Exhibit 69: EnerSys, Inc. Statement of Cash Flows, $ millions, fiscal year ended March 31
PERIOD CASH FLOWS
FY2004A FY2005A FY2006A FY2007A FY2008A FY2009A FY2010A
OPERATING ACTIVITIES
Net income (loss)
Depreciation and amortization
Gain on sale of faciliites
Write-off of deferred financing fees
Provision of doubtful accounts
Increase (reduction) in deferred taxes
Stock-based compensation
Accretion of non-cash interest expense
Gain on disposal of fixed assets
Bargain purchase gain
4.8
39.0
6.6
0.8
(6.6)
0.0
27.7
32.4
41.5
3.6
(0.4)
9.9
0.2
2.1
-
30.7
43.3
0.6
5.5
0.4
2.6
-
45.2
47.4
0.3
8.0
3.1
0.7
-
59.7
49.2
1.4
8.0
3.0
3.9
-
(17.6)
(13.9)
(6.9)
2.6
9.5
(11.8)
4.8
(33.2)
$39.2
(13.4)
(8.2)
3.6
(0.4)
1.7
(27.7)
(15.6)
(60.0)
$29.4
(56.0)
(25.8)
2.2
0.3
42.5
(1.9)
(1.6)
(40.2)
$42.9
(22.7)
(39.6)
(4.8)
(0.3)
31.7
6.5
(3.0)
(32.3)
$72.4
INVESTING ACTIVITIES
Capital expenditures
Acquistions, net of cash received
Proceeds from disposal of property, plant, and equipment
Net cash (used in) provided by investing activities
(28.6)
1.2
0.4
($27.0)
(31.8)
(1.2)
4.0
($29.0)
(39.7)
(38.1)
0.9
($76.9)
FINANCING
Net decrease in short-term debt
Proceeds from issuance of long-term debt
Payments of long-term debt
Payments of capital lease obligations, net
Purchase of treasury stock
Exercise of stock options
Tax benefits from exercises of stock options
Deferred financing costs
Other
Net cash provided by financing activities
1.4
507.7
(184.5)
(1.1)
(11.0)
(352.5)
($40.0)
2.4
365.0
(503.0)
(1.2)
2.0
(1.2)
139.2
$3.2
1.5
30.0
(4.1)
(0.7)
1.5
0.1
(0.3)
$27.9
Changes in assets and liabilities, net of acquisitions:
Accounts receivable
Inventory
Prepaid expenses and other current assets
Other assets
Accounts payable
Accrued expenses
Other liabilities
Change in working capital
Net cash provided by operating activities
Effect of exchange rate changes on cash
Increase (decrease) in cash and cash equivalents
Beginning cash and cash equivalents
Ending cash and cash equivalents
0.7
(27.1)
44.3
$17.2
Q1E
FY2011E
Q2E
Q3E
Q4E
FY2011E
Q1E
84.6
49.1
(11.3)
4.0
4.9
10.3
5.0
6.2
-
62.3
44.9
2.7
7.0
7.0
7.2
(0.9)
(2.9)
23.7
10.7
(18.2)
-
24.8
11.4
19.9
-
26.6
12.3
3.2
-
28.0
12.9
2.5
-
103.1
47.3
7.3
-
26.6
13.6
(17.1)
-
(107.1)
(70.3)
0.4
4.6
34.6
15.8
0.8
(121.2)
$4.0
85.9
90.9
(1.5)
0.1
(109.7)
4.9
(3.9)
66.7
$219.4
(7.3)
(23.4)
(1.1)
(1.2)
59.1
(5.8)
(10.8)
9.5
$136.6
(26.7)
(17.7)
(2.8)
13.8
(3.6)
(14.4)
(51.4)
($35.2)
(20.9)
(13.2)
(2.2)
10.3
34.2
17.5
25.7
$81.7
(11.2)
(6.1)
(1.2)
4.7
11.0
3.1
0.3
$42.4
(8.4)
(2.2)
(0.9)
1.7
8.5
2.4
1.2
$44.6
(67.3)
(39.1)
(7.0)
30.5
50.1
8.6
(24.2)
$133.5
(6.4)
(1.1)
(0.9)
1.9
(38.9)
(14.1)
(59.5)
($36.4)
(42.4)
(7.0)
0.3
($49.1)
(45.0)
(17.4)
0.3
($62.2)
(57.1)
10.3
($46.8)
(45.1)
(33.2)
1.1
($77.2)
(15.3)
(2.4)
($17.7)
(16.4)
(1.9)
($18.2)
(17.8)
(1.0)
($18.8)
(19.7)
(0.7)
($20.4)
(69.2)
(6.0)
($75.2)
3.6
0.1
(7.0)
(1.3)
1.8
2.0
(0.6)
($1.3)
23.5
(9.8)
(1.0)
22.8
4.0
(0.0)
$39.6
(34.2)
397.5
(367.0)
(0.6)
(19.8)
5.8
6.1
(11.0)
($23.2)
(7.4)
(25.2)
0.9
5.0
2.3
($24.5)
25.1
(49.2)
($24.2)
(27.5)
(81.8)
($109.3)
0.6
(0.0)
0.5
4.1
17.2
$21.3
(6.1)
21.3
$15.2
22.6
15.2
$37.8
1.4
(17.2)
37.8
$20.6
(6.9)
142.5
20.6
$163.2
3.0
37.9
163.2
$201.0
1.9
$1.9
(51.0)
201.0
$150.0
(61.1)
(2.4)
($63.5)
(0.0)
150.0
$150.0
6.6
(30.2)
($23.6)
(0.0)
150.0
$150.0
0.0
150.0
$150.0
(51.0)
201.0
$150.0
FY2012E
Q2E
Q3E
FY2012E
FY2013E
FY2014E
FY2015E
26.9
15.6
2.6
-
28.0
16.5
2.6
-
108.0
60.0
11.4
-
110.7
75.6
4.2
-
112.2
96.1
2.6
-
117.7
119.5
4.4
-
(7.2)
(3.6)
(1.0)
4.0
44.4
19.9
56.5
$120.8
(7.3)
(3.5)
(1.0)
3.9
(7.5)
2.5
(12.9)
$32.1
(7.6)
(3.8)
(1.0)
4.2
(8.4)
2.6
(14.0)
$33.0
(28.6)
(12.0)
(3.8)
14.0
(10.5)
10.9
(29.9)
$149.5
(18.9)
(11.0)
(2.9)
13.7
13.3
4.5
(1.1)
$189.4
(9.4)
(5.1)
(2.0)
9.4
8.3
2.8
4.0
$214.8
(20.2)
(11.7)
(3.2)
15.4
14.2
4.8
(0.7)
$241.0
(19.2)
(0.7)
($19.9)
(18.9)
(0.8)
($19.8)
(19.0)
(0.8)
($19.8)
(19.2)
(0.9)
($20.1)
(76.3)
(3.3)
($79.6)
(77.6)
(2.5)
($80.0)
(86.0)
(1.7)
($87.6)
(94.4)
(2.8)
($97.1)
56.3
$56.3
15.8
(116.8)
($101.0)
36.3
(48.6)
($12.2)
13.3
(26.2)
($13.0)
121.7
(191.6)
($69.9)
102.7
(212.0)
($109.3)
56.5
(183.7)
($127.2)
71.8
(215.6)
($143.9)
-
-
-
(0.0)
150.0
$150.0
26.6
14.4
23.3
-
Q4E
(0.0)
150.0
$150.0
(0.0)
150.0
$150.0
0.0
150.0
$150.0
(0.0)
150.0
$150.0
0.0
150.0
$150.0
(0.0)
150.0
$150.0
0.0
150.0
$150.0
Source: Company data, Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
66
June 27, 2010
Americas: Clean Energy: Energy Storage
Exhibit 70: EnerSys, Inc. Ratios, $ millions unless otherwise noted, fiscal year ended March 31
FY2004A FY2005A FY2006A FY2007A FY2008A FY2009A FY2010A
Solvency and Leverage
Book Value Per Share
Debt
Net Debt (Cash)
Net Debt to Total Equity
Net Debt to Total Book Capitalization
Debt/EBITDA (ttm)
Net Debt/EBITDA (ttm)
CFO to Total Liabilities
Liquidity and Asset Utilization
Working Capital (CA - CL)
Current Ratio (CA/CL)
Quick Ratio
Days Inventory
Days Receivable
Days Payable
Cash Conversion Cycle
Interest Coverage (EBITDA/Net Interest Expense)
Cash Interest Coverage (EBIT/Net Interest Expense
"Primary working capital" - as defined by EnerSys
Primary working capital as % of TTM Revenue
Profitability and Returns
Gross Profit Margin
EBITDA Margin
Operating Profit Margin
Net Profit Margin
x Total Asset Turnover
= ROA
x Total Assets to Total Shareholders' Equity
= ROE (ttm)
NOPAT
/ Average Invested Capital
= ROIC
CFO/NI
Q1E
FY2011E
Q2E
Q3E
Q4E
$16.80
291
141
17.0%
8.3%
1.5x
0.7x
9.4%
$17.16
323
173
21.5%
9.9%
1.5x
0.8x
4.7%
$21.73
511
494
206.5%
42.8%
7.5x
7.2x
4.3%
$11.81
375
354
80.9%
29.6%
3.2x
3.0x
3.9%
$9.51
402
387
87.0%
30.6%
3.6x
3.5x
5.2%
$11.40
402
365
67.2%
25.9%
2.8x
2.6x
8.4%
$14.22
427
406
58.7%
23.7%
2.5x
2.4x
0.4%
$13.69
376
212
31.4%
14.2%
2.0x
1.1x
26.9%
$16.06
350
149
19.1%
9.0%
2.2x
0.9x
15.7%
$16.42
352
202
25.1%
12.2%
2.0x
1.1x
(4.2)%
$138
148%
0.52x
0 Days
3.4x
2.6x
$250
25.8%
$182
164%
0.59x
61
86
52
95 Days
5.1x
3.3x
$282
26.1%
$211
163%
0.58x
59
88
57
90 Days
4.5x
2.7x
$330
25.7%
$276
169%
0.68x
63
85
61
87 Days
5.1x
3.4x
$386
25.6%
$389
$431
175%
224%
0.68x
1.07x
63
64
91
66
58
30
96 Days 100 Days
5.8x
7.0x
4.1x
5.2x
$578
$438
28.5%
22.2%
$476
213%
1.09x
69
89
59
99 Days
7.0x
5.0x
$440
27.8%
$464
$455
$458
208%
196%
193%
0.98x
0.92x
0.90x
68
73
74
82
86
85
55
59
58
95 Days 100 Days 101 Days
8.8x
9.9x
11.5x
6.9x
7.8x
8.9x
$470
$494
$507
27.8%
27.8%
27.8%
25.4%
7.0%
5.6%
(2.0)%
23.6%
10.9%
7.0%
3.0%
0.9x
2.8%
2.7x
7.5%
$59
$883
6.7%
0.91x
21.6%
8.7%
5.3%
2.4%
1.0x
2.5%
2.8x
7.1%
$54
$903
6.0%
1.39x
20.7%
9.4%
6.2%
3.0%
1.1x
3.4%
2.6x
8.8%
$76
$988
7.7%
1.60x
$406
(1.97x)
18.8%
8.3%
5.9%
2.9%
1.3x
3.8%
2.5x
9.5%
$93
$1,162
8.0%
0.07x
21.0%
9.7%
7.2%
4.2%
1.2x
5.1%
2.2x
11.3%
$106
$1,116
9.5%
2.67x
22.9%
10.1%
7.2%
3.9%
1.0x
4.0%
2.1x
8.3%
$89
$1,205
7.4%
2.19x
22.8%
11.2%
8.8%
5.3%
0.3x
1.4%
2.1x
2.9%
$29
$1,209
2.4%
(1.49x)
24.7%
11.5%
9.0%
5.5%
0.3x
1.5%
2.0x
3.0%
$30
$1,204
2.5%
3.30x
$17.03
298
148
17.9%
8.6%
1.5x
0.7x
4.7%
24.7%
11.8%
9.2%
5.7%
0.3x
1.6%
2.1x
3.2%
$31
$1,199
2.6%
1.59x
Q1E
FY2012E
Q2E
Q3E
Q4E
$17.04
379
229
27.6%
13.0%
1.7x
1.0x
(3.9)%
$16.57
395
245
33.0%
13.8%
1.7x
1.1x
11.7%
$16.64
431
281
39.1%
15.7%
1.8x
1.2x
3.0%
$16.94
445
295
40.8%
16.3%
1.8x
1.2x
3.0%
$16.09
445
295
40.8%
16.3%
1.8x
1.2x
13.7%
$14.88
547
397
64.0%
21.5%
2.0x
1.5x
15.4%
$14.01
604
454
82.7%
24.4%
2.0x
1.5x
16.4%
$12.40
676
526
116.5%
28.1%
2.0x
1.6x
17.0%
$459
$459
$506
$469
192%
192%
209%
191%
0.89x
0.89x
0.96x
0.87x
72
71
74
73
84
89
85
85
57
59
58
58
99 Days 100 Days 101 Days 100 Days
11.5x
10.4x
10.3x
9.6x
8.9x
8.1x
7.9x
7.3x
$516
$516
$521
$528
27.8%
27.8%
27.6%
27.4%
$484
195%
0.89x
72
84
57
99 Days
9.3x
7.0x
$535
27.2%
$501
$501
199%
199%
0.90x
0.90x
70
73
82
87
56
59
96 Days 101 Days
9.2x
9.6x
6.9x
7.2x
$542
$542
27.0%
27.0%
$508
195%
0.88x
72
86
59
98 Days
8.3x
6.0x
$558
26.3%
$507
192%
0.86x
71
84
59
96 Days
7.9x
5.4x
$563
25.6%
$513
188%
0.83x
69
83
59
93 Days
7.9x
5.1x
$580
24.9%
25.7%
12.9%
9.3%
5.2%
1.2x
6.1%
3.0x
18.0%
$144
$1,266
11.3%
1.71x
25.7%
13.7%
9.4%
5.1%
1.2x
6.1%
3.4x
20.5%
$151
$1,255
12.0%
1.92x
25.7%
14.5%
9.4%
5.1%
1.2x
6.3%
4.1x
26.2%
$160
$1,234
13.0%
2.05x
24.8%
12.0%
9.3%
5.8%
0.3x
1.6%
2.2x
3.5%
$33
$1,205
2.7%
1.59x
FY2011E
$16.60
323
173
21.5%
9.9%
1.5x
0.8x
14.2%
24.3%
11.6%
9.1%
5.6%
1.1x
6.1%
2.2x
13.1%
$124
$1,209
10.2%
1.29x
25.8%
12.2%
9.4%
5.5%
0.3x
1.5%
2.1x
3.2%
$32
$1,242
2.6%
(1.37x)
25.5%
12.3%
9.4%
5.4%
0.3x
1.5%
2.4x
3.6%
$33
$1,249
2.6%
4.54x
25.7%
12.3%
9.3%
5.3%
0.3x
1.5%
2.5x
3.7%
$34
$1,233
2.7%
1.19x
25.7%
12.4%
9.3%
5.3%
0.3x
1.6%
2.5x
3.9%
$35
$1,251
2.8%
1.18x
FY2012E FY2013E FY2014E FY2015E
25.7%
12.3%
9.3%
5.4%
1.1x
6.1%
2.5x
15.2%
$134
$1,260
10.6%
1.38x
Source: Company data, Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
67
June 27, 2010
Americas: Clean Energy: Energy Storage
Appendices
Goldman Sachs Global Investment Research
68
June 27, 2010
Americas: Clean Energy: Energy Storage
Electric vehicle definitions

Start-stop / Micro-hybrid: Combines a stop/start system with a brake energy regeneration system. Brake energy regeneration
recovers energy that is lost during braking or coasting. Stop/start technology automatically switches the engine off when the
car is stationary and restarts once the clutch is pressed. The technology offers fuel cost savings of 4-7% when driving through
metropolitan areas. Micro-hybrids cannot use battery power to support the combustion engine or drive solely on electric
power.

Mild hybrid: Contains an electric motor that offers acceleration assistance, providing a supporting role for an internal
combustion engine. The electric motor offers acceleration assistance in addition to a start/stop system and regenerates braking
energy for recharging the battery. Mild hybrids offer an 11% improvement in fuel efficiency.

Full hybrid (HEV): A full hybrid can run on the internal combustion engine and/or electric motor in parallel. Batteries are
typically small (~1.5 kWh), and the electric motor is used for startup, acceleration assistance, and in some configurations, lowspeed driving. The incremental per-vehicle cost is about $6,000.

Plug-in hybrid (PHEV): A plug-in hybrid has a high capacity battery (current models are in the range of 16 kWh) that charges
via an electrical outlet. Whereas HEVs maintain a constant battery charge, PHEVs fully discharge the battery while driving and
are able to operate in pure electric mode. Current PHEV models typically have a 40-50 mile electric range plus a 250-300 mile
gasoline range. The incremental per-vehicle cost is about $15,000.

Electric vehicle (BEV): Like a PHEV, a BEV must be plugged into an electrical outlet to charge the battery, but unlike a PHEV,
there is no internal combustion engine. An electric vehicle uses electric motors for propulsion and is powered by a highcapacity battery (typically 24 kWh or larger). Tailpipe carbon dioxide emissions are zero, but the carbon intensity of the vehicle
miles traveled depends on the carbon intensity of the local electricity supply that is accessed during charging.
Goldman Sachs Global Investment Research
69
June 27, 2010
Americas: Clean Energy: Energy Storage
Lithium-ion battery chemistries
Exhibit 71: Lithium ion chemistries
Company
Ener1
A123
JCS (Johnson Controls & Saft)
KD Advanced Battery Group
SB LiMotive (Bosch & Samsung)
Lithium Energy Japan
LG Chem
Nissan / NEC
Hitachi
Panasonic
Sayno
BYD
Blue Energy
Altairnano
SK Energy
Lishen
Evonik Industries
Electrovaya
LMO/LMS
LTO
•
•
NiMH
•
•
•
LFP
•
•
•
•
•
•
•
•
•
Battery Chemistry
NCA
NCM
•
•
•
•
•
•
•
•
Index
Acronym
NiMH
NCA
LFP
LTO
LMO / LMS
NCM
LFS
LVP
LiNi
LMP
Li-Po
MNS
Li-Air
LFMP
•
•
Chemistry
Formula
Nickel Metal Hydride
NiOOH
Lithium Nickel Cobalt Aluminum Li(NiCoAl)O2
Lithium Iron Phosphate
LiFePO4
Lithium Titanate Oxide
Li4Ti5O12
Lithium Manganese Spinel
LiMn2O4
Lithium Nickel Cobalt ManganeseLi(NiCoMn)O2
Lithium Iron Sulphide
LiFeS
Lithium Vanadium Phosphate
Li3V2(PO4)3
Lithium Nickel
LiNiO2
Lithium Metal Polymer
Lithium Polymer
Lithium Manganese Titanium
Lithium-Air
Litihum Sulphur
Lithium Magnesium Iron Phosphate
Zinc-Nickel
Nickel Sodium
Zinc-Air
Source: Company data, Goldman Sachs Research estimates.
Goldman Sachs Global Investment Research
70
June 27, 2010
Americas: Clean Energy: Energy Storage
Battery manufacturing process
Exhibit 72: Prismatic lithium ion battery electrode manufacturing process and makers
Electrode manufacturing process
1.Positive electrode active material
(negative in the case of anode), a
conductive substance, and binder are
mixed to a paste
Positive
electrode active
material
or
negative
electrode
active
Conductive
material
substance
Binder makers
Kureha (4023, Jpn)
Binder
Dispersal tank
Negative electrode material makers
Positive electrode material makers
Nichia (unlisted, Jpn)
Umicore (UMI.BR, Belgium)
Asahi Glass (5201.T, Jpn)
Toda Kogyo (4100.T, Jpn)
Sumitomo Metal Mining (5713.T, Jpn)
Seido Chemical Industry (unlisted, Jpn)
Nippon Chemical Industrial (4092.T, Jpn)
Nihon Kagaku Sangyo (4094.T, Jpn)
Tanaka Chemical (4080.JQ, Jpn)
Nippon Denko (5563.T, Jpn)
Mitsubishi Chemical Hldgs (4188.T, Jpn)
L&F (066970.KQ. S Kor)
Tronox (TRXAQ, US)
Mitsui Mining and Smelting (5706.T, Jpn)
Sumitomo Osaka Cement (5232.T, Jpn)
Mitsui Engineering & Shipbuilding (7003.T, Jpn)
(Co) (Ternary) (Mn)
Share
Share
Share
◎
◎
△
◎
◎
○
×
○
×
△
×
×
○
○
△
×
◎
○
△
(Ni)
Share
(Fe)
Share
Hitachi Chemical (4217.T, Jpn)
Nippon Carbon (5302.T, Jpn)
BTR New Energy (unlisted, China)
JFE Hldgs (5411.T, Jpn)
Shanghai Shanshan (unlisted, China)
Mitsubishi Chemical Hldgs (4188.T, Jpn)
Kureha (4023.T, Jpn)
○
○
Share
◎
○
○
○
△
△
△
○
○
△
2. Aluminum foil (copper foil in the case of anode) is
coated with the paste
3. The coated foil is dried...
Dryer
Pump
Coating device
Aluminum foil (positive electrode)
or
Copper foil (negative electrode)
Coating device makers
Hirano Tecseed (6245.T. Jpn)
Inoue Kinzoku Kogyo (6246.T, Jpn)
Copper foil makers
Furukawa Electric (5801.T, Jpn)
Hitachi Cable (5812.T, Jpn))
Nippon Foil Mfg (Furukawa subsid.)
4....and roll pressed
Aluminum foil makers
Nippon Foil Mfg (Furukawa subsid.)
Iljin Holdings (015860.KS, S. Kor)
Roll press
5. The electrode is cut into strips
6. Completed cathode, anode
Slitter
Source: Company data, Goldman Sachs Research.
Goldman Sachs Global Investment Research
71
June 27, 2010
Americas: Clean Energy: Energy Storage
Exhibit 73: Prismatic lithium ion battery assembly
Assembly process
7. The two electrodes are wound around a core (round or flat) with a separator in between and cut to the required length.
Winding device Winding machinery makers
CKD (6407.T,Jpn)
Cathode
Separator makers
Asahi Kasei (3407.T, Jpn)
TonenGeneral Sekiyu (5012.T, Jpn)
Celgard (unlisted, US)
Ube Industries (4208.T, Jpn)
Sumitomo Chemical (4005.T, Jpn)
Mitsubishi Chemical Hldgs (4188.T, Jpn)
Toray Industries (3402.T Jpn)
SK Energy (096770.KS, S. Kor)
Separator
Separator
Positive tab
Anode
Negative tab
8 Inspection by soft x-ray (winding defects)
and insulation device (short circuits)
Electrolyte makers
Ube Industries (4208.T, Jpn)
Mitsubishi Chemical Holdings (4188.T, Jpn)
Cheil Industries (001300.KS, South Korea)
Toyama Chemical (unlisted, Jpn)
Mitsui Chemicals (4183.T, Jpn)
Positive tab
Negative tab
Side view
Top insulator
Tab
welding
Bottom insulator
14. Case and cap are welded
together with a laser welder
Aluminum
9. Bottom insulator and coiled
electrode inserted into the base
of aluminum cylinder
19. Final inspection is
conducted and cells are
shipped.
10. Anode tab welded
18. Cells are aged for
two to four weeks and
monitored for separator
micro-short circuits and
local short circuits
caused by winding
d f t
11. Top insulator
inserted
12. Tab is
twisted
17. As a safety check,
odor sensors are used
to detect any
electrolyte leakage
13. Tab and cap are
welded together and
cap is temporarily
welded to the case
16. Cell is cleaned
to remove
electrolyte residue
Electrolyte
15. Electrolyte is injected using a
vacuum injection device and the
injection opening is welded shut.
Source: Company data, Goldman Sachs Research.
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Battery start-ups to watch
Exhibit 74: Li-ion battery start-ups
Company
Location
ActaCell
Austin, TX
Investors
Capital
Latest Round
DFJ Mercury, Good Energies, Google.org, Applied
$5.8mn
Series A
Ventures
Initial efforts are focused on commercializing future materials for cathod and anode technologies developed at the University of Texas at Austin.
Amprius
Menlo Park, CA
VantagePoint VP, Trident Capital
N/A
N/A
Amprius is working on a silicon nanowire technology ethat nables a 10x improvement in anode capacity and increases battery cell capacity by 40%. The technology was developed at Stanford
University
Atieva
Mountain View, CA
China Environment Fund, Venrock Associates
$7.0mn
Seed
Develops software for monitoring individual battery cells, mechanical packaging, and controls for battery packs in plug-in vehicles.
Venrock, GGV Capital, Gabriel VP, Oak Investment,
Boston-Power
Boston, MA
$136M
Series D
Foundation Asset Mgt.
Supplies upgrade batteries for HP laptops and unveiled an EV battery in 2007. The company is working on its Sonata technology platform, for use in consumer electronic devices including
l t Battery
PDA
d
bil h
CFX
Azusa, CA
CMEA Ventures, Harris & Harris, U.S.V.P
$20.0M
Series B
Working with technology developed at Caltech to produce prismatic (flat), cylindrical, thin-film and coin lithium-ion cells.
Electrovaya
Ontario, Canada
Publicly traded on Toronto Stock Exchange (TSX:EFL)
n/a
n/a
Makes battery systems (cells, modules and interfaces) for hybrid and electric vehicles. The firm also has agreements with India’s Tata Motors and Norway’s Miljø Innovasjon for highway-speed
electric cars, and it announced plans to form a joint venture with India’s Hero Electric to build lithium-ion batteries for the Indian market as well as exports.
Enax
Tokyo
n/a
n/a
n/a
Shifting from a consulting services on li-ion batteries, ENAX has expanded its service areas into sales of li-ion rechargeable battery battery materials and packs.
Bay Partners, Redpoint Partners, DOE High-risk Energy
Envia Systems
Hayward, CA
$10.3M
Series A
Tech Fund
Aims to develop a prototype of a non-graphite anode for vehicle batteries.
ETV Motors
Israel
21 Ventures, Quercus Trust
$12.0M
Seed
Working on propulsion technology for extended-range electric vehicles.
Farasis Energy
Hayward, CA
DOE ($750k), other Chinese investors
~$1.0M
Seed
New lithium primary and rechargeable battery systems using patent pending materials, new cell designs, and safety technologies .
Flux Power
Vista, CA
n/a
n/a
Introducing modular systems for various energy storage applications, including electric vehicles and backup power supplies.
n/a
K2 Energy Solutions
Henderson, NV
DOE
$3.2M
Seed
Teamed with Angstron Materials Inc. to participate in a DOE research project for the development of hybrid nano graphene platelet-based high-capacity anodes for li-ion batteries.
Leyden Energy
Fremont, CA
Walden International, Lightspeed VP, Sigma Partners
$4.5M
Seed
Aims to produce li-ion batteries with high energy density for mobile phones, notebook computers, backup power for the grid, and hybrid vehicles. Previously known as Mobius Power.
Nexeon Limited
London, UK
Imperial Innovations, PUK Ventures, Invesco Perpetual
$18.5M
Series A
Working on silicon-based anodes for lithium-ion batteries, in contrast to using carbon.
Sakti3
Ann Arbor, MI
Khosla Ventures
$9M
Series B
Developing solid-state recharcheable lithium ion battery technology for electric vehicles and portable electronics.
Seeo
Berkeley, CA
Khosla Ventures
$10.6M
Seed
Developing a solid polymer electrolyte material that can transport lithium ions while providing safe and stable support for high energy electrode chemistries.
Planar Energy Devices
Orlando, FL
Battele Ventures, Innovation Valley Partners
$4.0M
Seed
The company's solid-state electrolytes produce ionic conductivity metrics comparable to liquid electrolytes used in traditional chemical batteries.
Porous Power Technologies
Lafayette, CO
n/a
$3.5M
Seed
Working on a coating for lithium-ion battery cells that can be used instead of a film.
Prieto Battery
Fort Collins, CO
Colorado University
$0.90M
Seed
Aims to produce lower cost, higher power density battery using a nanowire-based anode.
Quallion
Sylmar, CA
DOE
n/a
n/a
Developing a li-ion technology to reduce idling emissions from heavy duty trucks. Applied for $220M from the DOE to build a factory, but has yet to receive he money.
Source: Greentech Media, Goldman Sachs Research.
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ARPA-E BEEST Awards announced April 2010
Exhibit 75: Better Batteries – Batteries for Electrical Energy Storage in Transportation (BEEST)
Partners
Description
Funding
ReVolt Technology LLC
Zn-Air Battery: Zinc Flow Air Battery (ZFAB), the Next Generation Energy Storage for Transportation
ReVolt Technology will develop a novel large format high-energy zinc-air flow battery for long all-electric range Plug-In and All Electric
vehicles. This novel high energy battery concept is based upon a closed loop system in which the zinc (anode), suspended as slurry in
a storage tank, is transported through reaction tubes (cathode) to facilitate the discharge and recharge of the battery. ReVolt’s
fundamental breakthroughs in air electrodes enable a new class of high-energy rechargeable battery systems that combines key
innovations from the fields of fuel cells and batteries.
$5,000,335
Sion Power Corporation
(BASF, LBNL, PNNL)
Li-S Battery: Development of High Energy Li-S Cells for Electric Vehicles
Sion Power Corporation, a Brookhaven National Laboratory spin-out company, will develop an ultra-high energy Lithium-Sulfur battery
able to power electric vehicles more than 300 miles between charges, with and energy density of 500Wh/kg that is 3x that of current Liion batteries. While the high energy potential of Lithium-Sulfur is well known, Sion Power’s proprietary strategy, focusing on a
manufacturable approach to lithium anode protection and employing six different physical barrier layers, highly differentiates Sion's
approach from all other Lithium-Sulfur efforts. These strategies directly address cycle life and safety while also allowing higher
energies.
$5,000,000
PolyPlus Battery
Company
(Corning)
Li-Air Battery: Development Of Ultra-high Specific Energy Rechargeable Lithium/Air Batteries Based On Protected Lithium Metal
$4,996,311
Electrodes
PolyPlus Battery Company and Corning Incorporated will work together to achieve transformational improvements in rechargeable LiAir battery technology. PolyPlus's lithium-air batteries based on proprietary protected lithium electrodes and Corning's specialization in
glass, ceramics, and record of moving technology from laboratory to manufacturing have great promise for advancing Li-Air technology,
which holds promise to rival the energy density of gasoline. With a clear path to commercialization this technology hopes to
revolutionize Li-Air batteries for electric vehicle applications.
MIT
(A123 Systems, Rutgers
University)
Novel Battery: Semi-Solid Rechargeable Power Sources: Flexible, High Performance Storage for Vehicles at Ultra-Low Cost
(<$0.10/Wh)
Researchers at the Massachusetts Institute of Technology, in collaboration with A123 Systems and Rutgers University, will seek to
develop a revolutionary new electrical energy storage concept for transportation that combines the best attributes of rechargeable
batteries and fuel cells. This technology incorporates semi-solid high energy density rechargeable, renewable and recyclable
electrochemical fuel in a flow system that decouples power from stored energy. Early stage results suggest that high energy density
and system costs less than $100/kWh can be obtained, which would enable rapid widespread adoption of electric vehicles.
$4,973,724
Applied Materials
(A123 Systems, LBNL)
Advanced Li-Ion Battery Manufacturing: Novel High Energy Density Lithium-Ion Cell Designs via Innovative Manufacturing Process
Modules for Cathode and Integrated Separator
Applied Materials Inc. will lead an effort to develop ultra-high energy low cost lithium-ion batteries enabled by disruptive new
manufacturing processes. This novel approach will focus on developing a high energy density porosity-graded cathode on 3D current
collectors, an integrated separator, and a suite of modular manufacturing processes that have the potential to transform lithium-ion
battery manufacturing technology. These high energy cathodes will be incorporated with new high capacity anodes to demonstrate
prototype manufacturing of high energy lithium-ion cells with energy density greater than 400 Wh/kg and extremely low cost.
$4,373,990
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Partners
Description
Funding
Planar Energy Devices
(NREL, UCSD, Univ. of
Central FLorida, Univ. of
Colorado-Boulder, Univ. of
Florida, Univ. of South
Florida)
Solid State Lithium Battery: Solid State All Inorganic Rechargeable Lithium Batteries
$4,025,373
Planar Energy Devices, Inc, an Orlando, FL based early stage battery technology company, will seek to develop an ultra high energy,
long cycle life all solid-state lithium battery that can manufactured using low cost non-vacuum fabrication techniques, targeting energy
densities of 400Wh/kg and 1,080Wh/liter; system costs of $200/kWh, and cycle life of 5,000, Planar Energy Devices will demonstrate
pilot manufacturing of these disruptive new batteries using a low cost roll-to-roll process in ambient environment, all inorganic materials,
and solid state electrolytes whose ionic conductivity is similar to existing liquid electrolytes.
Pellion Technologies
(MIT, Bar-Ilan University)
Mg-Ion Battery: Low-Cost Rechargeable Magnesium Ion Batteries with High Energy Density
Pellion Technologies Inc., an MIT spin-out company, will develop inexpensive high-energy-density rechargeable magnesium-ion
batteries with the potential to disrupt current energy storage technologies for electric and hybrid-electric vehicles. To develop a gamechanging magnesium-ion battery, Pellion will leverage high throughput computational materials design coupled with accelerated
materials synthesis and electrolyte optimization to identify new high-energy-density magnesium cathode materials and compatible
electrolyte chemistries.
$3,204,080
Recapping Inc.
(Penn State Univ.)
Capacitive Storage: High Energy Density Capacitor
Recapping Inc. and researchers at Pennsylvania State University will seek to develop a novel energy storage device based on a 3D
nanocomposite structure with functional oxides that provide a very high effective capacitance. The basic fabrication of the dielectric
materials and devices will utilize traditional multilayer ceramic fabrication methods that will provide a cost effective alternative to battery
solutions, with added benefits of exploiting mechanisms that could maintain higher cycling and possibly deliver charge with high power
density. This technology hopes to create a cyclable and economically competitive energy storage device that will catalyze new, related
cleantech industries and contribute to the reduction of greenhouse gases and oil imports.
$1,000,000
Novel Battery: The All-Electron Battery: a quantum leap forward in energy storage
$1,000,000
Stanford University
(Honda, Applied Materials) In this project, researchers Stanford University will seek to develop an “All-Electron Battery”, a completely new class of electrical energy
storage devices for electric vehicles that has the potential to provide ultra-high energy and power densities, while enabling extremely
high cycle life. The All-Electron Battery stores energy by moving electrons, rather than ions, and uses electron/hole redox instead of
capacitive polarization of a double-layer. This technology uses a novel architecture that has potential for very high energy density
because it decouples the two functions of capacitors: charge separation and breakdown strength.
Missouri University of
Science & Technology
((Brookhaven National
Laboratory, MaxPower
Inc., NanoLab Inc.)
Li-Air Battery: High Performance Cathodes for Li-Air Battery Researchers at the Missouri University of Science and Technology will
lead a multi-disciplinary team to develop a disruptive new high energy air cathode to enable the successful development of ultra-high
energy Lithium-Air batteries. Lithium-Air batteries have extremely high theoretical energy densities (5,000-12,000 Wh/kg) approaching
those of gasoline due to the use of a high capacity lithium anode and oxygen from the air. However, existing Lithium-Air technologies
have exhibited very low power, round trip efficiency, and cycle life due to severe performance limitations at the air cathode. In this
project, researchers will seek to dramatically improve Lithium-Air air cathode performance through the development of a new
hierarchical electrode structure to enhance oxygen diffusion from the air and novel high performance bifunctional oxygen reduction and
evolution catalysts.
$999,997
Source: DOE, Green Car Congress.
Goldman Sachs Global Investment Research
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Reg AC
I, Mark Wienkes, CFA, hereby certify that all of the views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify
that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
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returns, multiple and volatility. Growth, returns and multiple are indexed based on composites of several methodologies to determine the stocks percentile ranking within the region's coverage
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Disclosures
Coverage group(s) of stocks by primary analyst(s)
Mark Wienkes, CFA: America-Clean Energy, America-Small Companies.
America-Clean Energy: Ener1, Inc., EnerSys Inc., First Solar, Inc., MEMC Electronic Materials, Inc., SunPower Corp..
America-Small Companies: A123 Systems, Inc., American Water Works Co., Inc., Bowne & Co., Inc., Education Management Corp., STR Holdings, Inc., USEC Inc..
Company-specific regulatory disclosures
The following disclosures relate to relationships between The Goldman Sachs Group, Inc. (with its affiliates, "Goldman Sachs") and companies covered by the Global Investment Research Division of
Goldman Sachs and referred to in this research.
Goldman Sachs has received compensation for investment banking services in the past 12 months: A123 Systems, Inc. ($9.67) and EnerSys Inc. ($22.56)
Goldman Sachs expects to receive or intends to seek compensation for investment banking services in the next 3 months: A123 Systems, Inc. ($9.67) and EnerSys Inc. ($22.56)
Goldman Sachs had an investment banking services client relationship during the past 12 months with: A123 Systems, Inc. ($9.67) and EnerSys Inc. ($22.56)
Goldman Sachs had a non-investment banking securities-related services client relationship during the past 12 months with: EnerSys Inc. ($22.56)
Goldman Sachs had a non-securities services client relationship during the past 12 months with: EnerSys Inc. ($22.56)
Goldman Sachs has managed or co-managed a public or Rule 144A offering in the past 12 months: A123 Systems, Inc. ($9.67) and EnerSys Inc. ($22.56)
Goldman Sachs makes a market in the securities or derivatives thereof: A123 Systems, Inc. ($9.67) and Ener1, Inc. ($3.88)
Goldman Sachs Global Investment Research
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Americas: Clean Energy: Energy Storage
Distribution of ratings/investment banking relationships
Goldman Sachs Investment Research global coverage universe
Rating Distribution
Buy
Investment Banking Relationships
Hold
Sell
Buy
Hold
Sell
Global
30%
54%
16%
48%
46%
38%
As of April 1, 2010, Goldman Sachs Global Investment Research had investment ratings on 2,821 equity securities. Goldman Sachs assigns stocks as Buys and Sells on various regional Investment
Lists; stocks not so assigned are deemed Neutral. Such assignments equate to Buy, Hold and Sell for the purposes of the above disclosure required by NASD/NYSE rules. See 'Ratings, Coverage
groups and views and related definitions' below.
Price target and rating history chart(s)
Stock Price Currency : U.S. Dollar
Goldman Sachs rating and stock price target history
1,600
14
25
1,400
15
1,200
20
800
Nov 16
N
M J J A S O N D J F MA M J J A S O N D J F MA M J J A S O N D J F M
2007
2008
2009
2010
30
Source: Goldman Sachs Investment Research for ratings and price targets; FactSet closing prices as of 3/31/2010.
Rating
Covered by Maria Karahalis, CFA,
Price target
Price target at removal
as of Nov 16, 2009
Not covered by current analyst
S&P 500
The price targets show n should be considered in the context of all prior published Goldman Sachs research, w hich may or
may not have included price targets, as w ell as developments relating to the company, its industry and f inancial markets.
1,400
12
25
15
1,200
38
39
1,000
34
10
800
5
0
600
Index Price
Stock Price
35
Stock Price
15
1,600
40
20
1,000
10
Stock Price Currency : U.S. Dollar
EnerSys Inc. (ENS)
Goldman Sachs rating and stock price target history
30
Jun 1
Mar 5
Jun 4
N
CS
NA
M J J A S O N D J F MA M J J A S O N D J F MA M J J A S O N D J F M
2007
2008
2009
2010
600
Index Price
A123 Sys te m s, Inc. (AONE)
Source: Goldman Sachs Investment Research for ratings and price targets; FactSet closing prices as of 3/31/2010.
Rating
Covered by current analyst
Price target
Price target at removal
Not covered by current analyst
S&P 500
The price targets show n should be considered in the context of all prior published Goldman Sachs research, w hich may or
may not have included price targets, as w ell as developments relating to the company, its industry and f inancial markets.
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