Electric vehicle drive-train maker Enova Systems Inc. has finally run out of juice.

After years of racking up debts as contracts for its bus and truck drive systems failed to deliver – and hammered by a $2 million legal judgment it can’t pay – the Torrance company has shut its doors and laid off all but one of its employees. Its stock has been trading on a London exchange for around 2 cents for weeks.

But Enova’s lone employee, Chief Executive John Micek, is still holding out hope that the company can continue in some form. Despite a balance sheet that shows a mere $439,000 in assets against $6 million in liabilities and $163 million in accumulated losses, Micek is holding on to the company’s name and trying to maintain its public listing. He hopes someone can come in and buy the company through a reverse merger, which could yield the shareholders a little.

“The company is on hiatus,” he told the Business Journal last week.

In fact, Micek himself has another day job: he’s been interim chief financial officer since March for Smith Electric Vehicles, a longtime Enova customer in Palo Alto.

If no one comes to Enova’s rescue, a bankruptcy filing that would wipe out the holdings of more than 3,000 shareholders looks inevitable. Then Enova would officially join the long list of companies in the electric vehicle sector that have gone defunct.

But for all practical purposes, Enova is already defunct. In its latest Securities and Exchange Commission filing, covering the first half of this year, the company reported no revenue and racked up an additional $387,000 in losses. The filing also noted the company had ceased all product development. And it faces that $2 million judgment obtained by an Illinois subcontractor.

In blunt language, the report states: “The company does not currently believe it has any alternative other than to cease operations. … The company currently has no visibility as to either additional financing or the collection of receivables.”

Demand never showed

Enova made under-the-hood drive-train components for electric vehicles, such as power inverters and the like that basically take the electric power from batteries and convert it into mechanical energy that moves vehicles.

From the moment Enova was founded in the Bay Area 38 years ago as U.S. Electricar, the core problem was always the same: low demand. That’s mainly because end customers – either consumers or corporate fleet operators – have been slow to purchase electric vehicles.

Often, Enova or its predecessor would ink contracts to supply its drive trains to electric vehicle manufacturers, but the ultimate number of drive trains needed ended up short of expectations, leaving the company in the lurch with its own vendors. In 1995, U.S. Electricar had to seek a moratorium on $22 million it owed vendors to give it time to reach agreement on a payback plan. (At that time, the company had more than 300 employees. Employment had shrunk to around 30 by 2012.)

One of the company’s executives back then was Abas Goodarzi, who left in 1999 to form his own electric vehicle drive train company, U.S. Hybrid Inc., also in Torrance. (That year, U.S. Electricar changed its name to Enova Systems.)

Goodarzi, who has remained an investor in Enova ever since, told the Business Journal last week that the company was too narrowly focused on selling to a couple of niche markets: manufacturers of light electric trucks and buses.

“They kept gambling on just a handful of manufacturers and didn’t have the research and development to come up with other products,” Goodarzi said. “That’s why I left. Now, at U.S. Hybrid, we have diversified into different market segments, like heavy-duty trucks, full-size buses and, most recently, monorails.”

Enova’s strategy failed big time when the recession hit in 2008, followed by a natural gas production boom that led to a glut. Because of high upfront purchase costs of electric vehicles, several of Enova’s customers cut their orders in favor of much cheaper natural gas vehicles.

“Enova happened to be in a segment of the electric vehicle market that wasn’t driven by government mandate; it was only driven by the market dynamics,” said John Boesel, chief executive of Calstart, a Pasadena consortium of alternative fuel vehicle companies. “So when the market dynamics turned unfavorable, Enova was hit hard.”

Micek said Enova’s problems were also linked to the continued high cost and limited range of electric batteries.

“We kept waiting for the cost of batteries to go down to make the vehicles more affordable and that just hasn’t happened yet,” he said.

Other local electric vehicle companies also got hammered. Coda Automotive of Los Angeles filed for bankruptcy in 2012; only battery and energy storage company Coda Energy survived. Fisker Automotive Inc. of Anaheim filed for bankruptcy early last year; its assets were ultimately bought this year by Wanxiang Group Corp., a parts supplier in Hangzhou, China.

Big judgment

A competitor in Enova’s specific market segment – drive trains for trucks and buses – ISE Corp. of San Diego went bankrupt in 2010; its assets were sold out of bankruptcy in 2011 to a unit of Blueways International in Leuven, Belgium.

One of Enova’s terminated drive train orders back in 2008 started Enova’s legal headache.

Micek said one of the company’s British customers abruptly canceled its order, forcing Enova in turn to cancel its order with production subcontractor Arens Controls Co. of Arlington Heights, Ill. Arens sued Enova in federal court in Illinois for breach of contract, claiming Enova owed it $4.7 million for product that had been ordered but not delivered and nearly $200,000 for product that had been delivered. The case ultimately went to trial and the court delivered a judgment in December 2012 of $2 million against Enova.

In its SEC filing last month, Enova said that Arens had agreed to allow Enova to settle the judgment for $300,000 within a four-month window ending this past January. But by then, Enova didn’t even have enough cash to make that payment, so the original $2 million judgment now remains in effect.

Calstart’s Boesel said similar contract disputes have plagued the industry.

“When there’s a sense that market is about to take off and then it fizzles, there’s tension between manufacturers and suppliers,” Boesel said. “So disputes and tension between them are not uncommon.”

Meanwhile, Enova’s fortunes continued to sour when Micek became chief executive as end customers continued to abandon electric vehicles in favor of natural gas trucks and buses. In 2012, Enova laid off 26 of its 33 employees, with 11 of those ending up down the street at Goodarzi’s U.S. Hybrid.

Micek said the downsizing of both personnel and operations has continued since then.

“The goal has been to have absolutely minimal costs while we wait for new investment,” he said.

With the stock hovering between 2 cents and 3 cents and even dipping for a while to 1 cent, few investors have shown interest. Enova’s main attraction, ironically enough, is its past losses, which could result in a substantial future tax benefit for a buyer who kept Enova’s corporate entity intact with a reverse merger. However, that buyer would immediately be faced with the $2 million judgment.

Of course, underlying all this is an electric vehicle market that remains on a very slow growth curve.

“Having to hang in there while the market develops is a challenge,” Boesel said. “I expect most companies to continue to struggle.”