Zenn edges closer to electric-car battery: analyst

OTTAWA (Reuters) - Zenn Motor Co appears a step closer to its goal of making electric car drivetrains, a Paradigm Capital analyst said on Friday, but he halved his stock target citing the prolonged wait for a key component.

To build and sell its drivetrain, Zenn, a developer of zero-emission automotive technology, first needs a potentially groundbreaking battery, or energy storage unit (ESU), currently being developed by privately held EEStor Inc.

EEStor's delivery of a production-quality battery is the last of four milestones tied to a final $500,000 in Zenn funding. The Toronto-based company has already invested $7.5 million in EEStor and owns a 10.7 percent stake.

The battery promises to power a car up to 400 km (250 miles) on one charge and can be recharged in minutes rather than hours.

Investors had anticipated delivery by the end of 2009, but low-profile EEStor, which is not obliged by contract to meet a deadline, has yet to give Zenn a prototype.

"We understand that EEStor has been making rapid and numerous strides toward delivering a pre-production ESU to Zenn and that the unit delivered will be consistent with Zenn's specifications," Paradigm analyst Marvin Wolff said in a note.

"Zenn management remains confident that EEStor will deliver a pre-production ESU to Zenn in 'the not-too-distant future'."

Citing the delays, Wolff cut his one-year target price to C$5.45 from C$10.90.

Several blogs this week said that EEStor was granted a U.S. patent related to the use of ESU technology for power averaging on utility grids.