Electric Vehicle Disappointment Spreads

Unmanned aircraft and electric vehicle charging systems sound like two important and exciting markets for AeroVironment (Nasdaq: AVAV  ) . But both businesses are running into their own problems for very different but troubling reasons.

Charging the future
In the Efficient Energy Systems, or EES, business results were solid but nothing like the growth some of us were hoping for. Revenue grew 32.3% to $13.4 million in the quarter and gross margins were 25.3%.

The slower than expected uptick in demand for electric vehicles has resulted in slower than expected growth in charger sales for companies like AeroVironment and General Electric (NYSE: GE  ) .

As automakers like General Motors (NYSE: GM  ) , Tesla Motors (Nasdaq: TSLA  ) , and Ford (NYSE: F  ) begin to sell more electric vehicles this demand will ramp up but it's been slower than many expected. Chevy has sold just 6,142 Volts this year through November, and just 1,139 of the 180,000 vehicles sold in November were Volts.

Partnerships with Nissan and BMW, along with a slew of major highway charging station contracts, could make the electric car charger market a big opportunity for AeroVironment. But for now it's a slow and steady game waiting for EV sales to pick up.

Flying the skies alone
Unmanned aircraft should be a no-brainer for military operations, especially in the uncertain environments the military is operating in today. But our national budget problems are beginning to have an impact on unmanned aircraft suppliers like AeroVironment and Lockheed Martin (NYSE: LMT  ) as the military begins to streamline spending.

With all of that uncertainty in the air the Unmanned Aircraft Systems, or UAS, segment performed relatively well in the quarter. Revenue increased 24.8% from last year to $66.9 million, and a gross margin of 41% would make most companies jealous. In the current environment of troop draw downs in the Middle East and a tightening budget, those numbers are a testament to how important UAS is to the military.

Foolish bottom line
Overall the quarter wasn't too bad for AeroVironment. Sales were up 26% to $80.4 million and earnings per share were up to $0.30 from a penny a year ago. But there are challenges in its two markets going forward. I'm not giving up on the stock yet, but I am keeping a close eye on how quickly the company grows.

Interested in reading more about AeroVironment? Click here to add it to My Watchlist, and My Watchlist will find all of our Foolish analysis on this stock.

Fool contributor Travis Hoium owns shares of AeroVironment. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

The Motley Fool owns shares of Lockheed Martin and Ford Motor. Motley Fool newsletter services have recommended buying shares of General Motors, Ford Motor, AeroVironment, and Tesla Motors. 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.

Read/Post Comments (4) | Recommend This Article (3)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 07, 2011, at 4:06 PM, DHeavy wrote:

    EV's have been doomed from the beginning. I am amazed that so many investors could get sucked into this "pipe dream."

  • Report this Comment On December 07, 2011, at 5:17 PM, mzllrc wrote:

    What's the point of the electric car?

    - In the US most electricity comes from coal which has twice the CO2 as oil. This is a step backwards environmentally.

    - The batteries add 400 to 500 pounds. More mass is never a good thing.

    - The driving range is 35 to 100 miles on a full charge. Another step backwards.

    - It takes 12 hours to charge/fill up the car. Another step backwards.

    What is the point? There are no advantages to the electric car. And now they catch fire for unknown reasons.

    Time to give this one up.

  • Report this Comment On December 08, 2011, at 8:50 PM, BECKER662 wrote:

    The car of the chief fool.OBAMA

  • Report this Comment On December 09, 2011, at 12:50 AM, EVsRoll wrote:

    SOME Coal has twice the CO2 as oil...Dude, get your facts straight:

    The mass of an F350 never seems to bother people.

    Charging rate varies a LOT. 12 hours is the max.

    Driving range is people are finding out though, is is way enough for people (the majority) who drive 40 miles per day.

    Obama may appear a fool, but he is one smart man with more guts than us put together.

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