Investors in the fledgling electric-vehicle charging equipment industry that aims to supply the nation’s new fleet of plug-in vehicles got a shock this week as Ecotality, one of the top firms in that business and recipient of more than $100 million in federal funding, announced it is struggling to avoid bankruptcy.

The company’s stock price plummeted on two consecutive days after the company on Monday released a required financial disclosure form in which it revealed a range of problems, including technical problems with its not-yet-deployed fast-charger and a connector plug on existing units.

Most devastating, though, the company revealed it was considering filing for bankruptcy protection and that a key source of government funding was cut. So far the government has supplied Ecotality with about $135 million, most available under the post-recession stimulus fund, according to a DOE report last month.

Ecotality sent a letter to the DOE this month saying it might not be able to finish the “EV Project” – a report on how plug-in vehicle owners use the nearly 12,000 charging stations the company has deployed as part of its government-supported project since 2009. In response, the DOE sent San-Francisco-based Ecotality a letter saying it would immediately suspend any further federal payments to the company.

“Although the Company is currently exploring options for a restructuring or sale of the entire business and/or assets of the Company, the Company may need to file a petition commencing a case under the United States Bankruptcy Code as part of any such process or otherwise in the very near future,” Ecotality reported.

As one of the nation’s top-ranked electric-vehicle charging equipment companies, Ecotality controlled about 12,000 of the nation’s roughly 20,000 non-home charging stations at the end of 2012. An added 32,000 chargers are expected to be added by the end of 2013, according to John Gartner, a senior analyst with Navigant who analyzes plug-in vehicle and infrastructure trends.

So far electric vehicle owners, who routinely charge their vehicles at home, are not required to pay for the electricity they receive from nearly all of those public stations. The stations typically are installed by business owners who are seeking to attract the vehicle owners as customers and who themselves have only paid a part of the government-subsidized cost of the installed station. Utilities also often partner in the chargers’ installation and supply energy at low or no cost to the charge station owners.

If Ecotality does one day file for bankruptcy, it would be joining several other high-profile alternative-energy company failures, including lithium-ion battery maker A123 and solar panel maker Solyndra, also recipients of Department of Energy financial support.

But while it might signal tougher times, it would not signal a disaster for the fledgling industry, analysts say. That’s because plug-in vehicle sales, while not reaching the stratospheric levels early predicted by President Obama and automakers, nevertheless have been far stronger than conventional gas-electric hybrid cars were during that technology’s early years, Mr. Gartner notes.

“Electric vehicle sales this year will be around 90,000 vehicles,” he says. “It’s not at the level some were predicting – but it’s still pretty good when you compare that to the growth of the Toyota Prius and other hybrids.”

So far there are about 120,000 plug-in vehicles on American roads, according to the Electric Drive Transportation Association. Even so, that current rate of growth if sustained would only put about one-third of Mr. Obama’s wished-for 1 million plug-in cars on the road by 2015.

In response, the electric vehicle infrastructure equipment market is still expected to rise from just under 200,000 charging units sold in 2012 to almost 2.4 million in 2020, Navigant predicted in a report last year. And there are positive signs that the market is also “entering a new phase where it will be less dependent on government-funded deployments and thus required to present an attractive return on investment” for potential charging-equipment operators.

Until now, companies like Ecotality have only rarely been able to charge consumers who pull up to one of it’s “Blink” brand charging stations for a charge-up – depending instead for revenue on sales of equipment. But it’s still a major problem when companies have to give away fuel.

“It’s a very real issue if you’re going to give electricity away for free,” says Kevin See, senior analyst at Lux Research, a Boston-based emerging-technology research firm. “That’s starting to change, certainly among public stations where it matters most. But the bulk of charging today is still done at home. So even if they are charging for it, they are competing with people who have their own source.”

In such an environment, big electric equipment players like Siemens and ABB are poised to survive and meet emerging demand for growth – as are some newer companies like ChargePoint and DBT, Gartner says. Smaller entrants could find it a tougher road, though. The Ecotality road-bump could presage a potential shakeout in the fledgling charging infrastructure industry, some say.

“There’s been a lot of hype around this idea of plug-in vehicles and the result is overblown expectations,” Mr. See says. “It doesn’t mean that electric vehicles aren’t a growing market. They are – but not nearly as fast as this [charging infrastructure] ecosystem needs for everybody to survive and thrive.”

There’s also the question of political fallout if Ecotality goes bankrupt. A DOE Inspector General report last month was critical of how the company dispensed funds to support its EV Project. But Gartner points out that there’s a big difference between Solyndra and Ecotality.

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With Solyndra, much of the funding went toward research and development. So when it went bankrupt – there wasn’t much left to show for the public’s investment. But even if Ecotality’s assets are some day sold, the fact is the government gets about 12,000 public charging stations to help prime the US plug-in vehicle market – and encourage automakers to make them, Gartner notes.

“Eventually you’ll have a greater ratio of cars out there that need public charging because they aren’t charging at home,” he says. “Then we’ll see a need to charge in public and a much greater willingness to pay.”