Prices for renewable energy are falling, and that's good news for a firm in Simi Valley, Calif., that's been betting on solar power since the 1980s.
Aerovironment Inc., which makes solar-powered unmanned aircraft and fast-charging systems for electric vehicles, was once an obscure and minuscule firm that struggled to make a go of its clean-energy ambitions. It has evolved into a billion-dollar market capitalization favorite of Blackrock Inc., the largest public investment manager.
Almost two decades before it went public in 2007, Aerovironment designed the prototype of the GM Impact, the world's first commercially produced electric car. Even though Motor Trend said it was "the only electric vehicle that drives like a real car," and that it "proves beyond any doubt" that General Motors "knows how to build fantastic automobiles," the successor EV1 program was unprofitable and was canceled in 2003. By then, the U.S. was fighting wars in Afghanistan and Iraq, and Aerovironment shifted its focus from its bet on a distant clean-energy future to something decidedly tried and true: Military hardware, in the form of battlefield drones.
"We started with efficient energy systems" decades ago, "before defense drones really became a business for us," said Wahid Nawabi, president and chief executive officer.
Only much later did Aerovironment find success making fast-charging systems for modern electric vehicles, which it now helps build for Chinese, German, Italian, Japanese, Korean and U.S. automakers.
Aerovironment survived to make that transition because the U.S. Army and other government agencies became its biggest customers early in the new century -- accounting for 77 percent of sales in 2005 and about 55 percent today of more than $300 million in annual sales, according to data compiled by Bloomberg. That's because Aerovironment drones are small enough for soldiers to launch from backpacks and control with their hands to obtain data for combat, geography, tracking and bird's-eye reconnaissance. The business boomed as American and allied armed forces focused on flexibility and precision and after the Federal Aviation Administration Modernization and Reform Act of 2012 expanded the use of unmanned aerial vehicles for personal and commercial use.
The market for electric cars seems to be poised for a growth spurt, driven by plummeting prices for lithium-ion batteries, "which are set to fall by more than 70 percent by 2030," Bloomberg New Energy Finance says. By 2040, electric vehicles will displace 8 million barrels of transport fuel per day and add 5 percent to global electricity consumption, according to data compiled by Bloomberg.
Nawabi said that investors have responded enthusiastically to his company's shift toward chargers and commercial drones and away from military hardware, a pivot he says he emphasizes in meetings with analysts and portfolio managers.
Investors have known for years that they don't have to drive a Tesla or own its shares to benefit from "green" companies -- ones which use little energy, or renewable energy, in an effort to help the environment.
The emergence of clean-energy companies as market leaders is partly attributed the fall in the cost of producing renewable energy. Solar power's cost per megawatt hour plummeted to $83 today from $128 in 2015 and almost $315 in 2009. The cost of wind per megawatt hour is $67, down from $90 in 2009.
Business on 03/21/2018