Battery Makers Start to Make the Turn

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This is supposed to be the quarter battery manufacturers turn things around and start seeing a real pickup in demand. A123 Systems (Nasdaq: AONE  ) has promised that'll be the case, Ener1 (Nasdaq: HEV  ) needs it just to survive, and Valence Technology (Nasdaq: VLNC  ) needs to make sure it doesn't fall behind.

So far so good
A123 Systems is doing its part to carry the industry. Second-quarter revenue more than doubled from the first quarter to $36.4 million. Fisker and Smith Electric accounted for most of the increase as a ramp in production caused shipments to nearly triple from the first quarter.

A loss of $0.44 per share was slightly worse than expected, but after revenue beat expectations, the market shrugged and saw the quarter as about in line with expectations.

At Valence Technology, revenue increased to $14.1 million from $5.6 million a year ago as a variety of customers ramped up demand. The company has a large amount of demand from the medical industry and is expanding the number of customers it has in fleet and delivery vehicles.

There was concern last quarter that Smith Electric's choice to dual-source batteries with Valence and A123 Systems would take a bite out of demand. So far, Valence has been able to keep some of Smith's business and even recorded a $7.2 million order from Electric Vehicles International, a maker of delivery trucks.

Ener1 hasn't released earnings yet, but it did announce that Aspire Capital Fund has agreed to buy up to $50 million of the company's stock at Ener1's option. Since electric-vehicle maker Th!nk Global filed for bankruptcy protection, the company's finances have been in a shambles, but this might be a little ray of hope.

I'm not ready to jump into this penny stock yet, but I'll reconsider if the company can turn this funding into some consistent demand.

Foolish bottom line
Battery makers are still a risky proposition, but we're starting to see the sales pick up much like they predicted. Another few quarters of growth and they may be able to make it off the investing scrap heap.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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AONEQ.DL $0.00 Down +0.00 +0.00%
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HEV.DL $0.00 Down +0.00 +0.00%
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VLNCQ.DL $0.00 Down +0.00 +0.00%
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