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Monday, May 29, 2023

Monrovia Battery Maker Looks to Pull Plug on Rival

Monrovia’s AeroVironment Inc. is best known as a maker of drone aircraft for the military, as exemplified by the much ballyhooed announcement last week that it had finished a prototype of the Nano Hummingbird, a tiny spy plane disguised to look like the bird.

But the company also is accusing a local competitor of stealing schematics to its electric-car battery testing systems, which underlines the importance of automotive products to its future.

Analysts say electric-car battery testers and chargers represent AeroVironment’s fastest growing business. A spokesman said the company is positioned for high growth in that market and is serious about guarding its technologies.

“Even though it’s a small part of the business today, we see significant growth potential in our test systems, industrial charging systems and EV charging systems,” said spokesman Steven Gitlin, “making it all the more important to protect that intellectual property for ourselves and for our shareholders.”

In a Los Angeles Superior Court lawsuit filed last week, the company accuses Online Power Inc., a Commerce-based maker of backup power systems and other power-protection products, of using technology stolen by a former AeroVironment engineer, Aaron Tipnis. The case stems from a separate criminal investigation of Tipnis by the Department of Justice.

Tipnis pleaded guilty in December to providing former Online Power employee Donald Yang documentation about AeroVironment’s AV 900, a battery testing system used by electric vehicle developers, including General Motors and the Department of Defense, and its DC-DC converter, which narrows the voltage differences between a battery pack and fuel cell. Tipnis faced a maximum of 10 years in prison but was sentenced earlier this month to five years probation.

Tipnis’ attorney did not return a call for comment Thursday.

AeroVironment claims Online Power never returned the stolen technology and is continuing to use it. The civil action seeks to get its trade secrets back and to recover damages. According to the lawsuit, investigators found “large quantities” of stolen trade secrets in Online Power’s offices and “caught Online Power in the act of copying AeroVironment trade secrets into Online Power schematics.”

According to Tipnis’ plea agreement, some of the technology was used by Online Power for a project called DC Load Bank. That technology is used to test backup battery systems.

An Online Power executive, who declined to give his name because of the litigation, said the company never had any AeroVironment secrets. He said the exchange of documents was only between Tipnis and Yang, who left the company two years ago after the initial investigation, and that the company is not selling any products that compete with AeroVironment.

“AeroVironment is in the automobile charger business,” the executive said. “I’m in the business of power. It’s odd for someone to put forward charges for that kind of information.”

Maintaining a foothold

Founded in 1971 by noted inventor Paul MacCready, AeroVironment produced the first human-powered aircraft in the late 1970s, followed by solar-powered and unmanned versions. That expertise led to a partnership with General Motors to design a solar-powered car in the 1980s, and then to more work designing the GM Impact, the prototype for GM’s EV1, the first electric car from a major automaker. It was during development of the Impact that AeroVironment began making heavy-duty battery testers to simulate long-term battery use.

Since then, it has maintained a foothold in the business, and sells the testers to automakers, battery makers and government agencies. More recently, it has begun selling electric car chargers, too. Electric car-related product sales have represented 10 percent to 15 percent of the company’s revenue over the past several years.

But that slice could expand if electric car adoption takes off, analysts say, one reason many of them are high on the company. Of 18 analysts following the company according to Bloomberg News, eight rate the stock a “buy” and 10 have a “hold” rating.

Sales of testing equipment, chargers and other alternative energy products totaled $25 million in the company’s fiscal year ended April 30, which saw $250 million in total revenue.

Erik Olbeter, an analyst at Portland, Ore.-based Pacific Crest Securities Inc., said sales of such equipment should nearly double this fiscal year, and should continue to grow by an additional $20 million in the next.

“The EV business is the fastest growing business at AeroVironment,” he said. “It’s a core driver and any sort of infringement puts it at risk and would put the stock in jeopardy.”

Tim Quillin, an analyst at Stephens Inc. in Little Rock, Ark., said sales of electric vehicle-related products could grow to as much as one-third of the company’s overall business in the coming years – especially given the expected slowdown in defense spending, the company’s bread and butter.

“There are some expectations from investors that there’s strong growth ahead, but the pace of adoption of electric vehicles is still unclear,” he said. “I think in all but the most negative scenarios it’s going to be a nice growth business for them.”

Still, competition from companies such as Fenton, Mo.-based Bitrode Corp. and Aachen, Germany’s Digatron Firing Circuits is fierce.

“It’s a competitive marketplace, which is part of the reason why we’re so aggressive regarding infractions of intellectual property,” said AeroVironment’s Gitlin.

However, a resolution of the lawsuit could be far away. Online Power has not yet filed an answer, and there are no hearings scheduled.

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