Electric Fuel Corporation

(Nasdaq:EFCX) plans to spin off its division devoted to developing electric power for cars.

The company will tentatively be called Electric Fuel Transportation Corporation, the company announced on Monday.

Electric Fuel will retain its core business, of disposable zinc air batteries for cellphones.

Batteries for electric cars were Electric Fuel's first vision, but the field failed to generate significant revenues. Its efforts to create a green car have been financed mainly by the United States and the Germany governments.

Electric Fuel Transportation will continue efforts to commercialize zinc-air technology into a hybrid transportation system.

The efficacy of the core technology was proved in field tests held in Nevada, funded by the

Federal Transit Administration

. Electric Fuel managed to power a 40-seat bus using a zero-mission electric system.

Gas emissions arw a by-product of electricity production. But the bus fueled by Electric Fuel's technology complied with FTA standards. The energy the technology provided had the capacity to run an air-conditioned bus at full passenger capacity for a whole day.

The upside of the energy crisis

In practice, the company seized the opportunity of the energy crisis to spin off its car unit. The fears generated by the crisis have led to a spurt of interest in alternative technology.

Electric Fuel shares soared 54% in three trading days after U.S. President George W. Bush promised tax credits to buyers of clean cars.

Since last week, Electric Fuel shares have gained 62%. On May 21, the company's market cap stood at $83 million.

Based on Bush's stated opinion was that current energy crisis will be graver than that of the 1970s, the U.S. administration has decided to encourage energy-conservation plans. Its tax credits could cost it $10 billion over ten years.

Wanted: A new president for the company

Electric Fuel has meanwhile announced that it is looking for a new president. Its specs are a person who can win the backing of the transportation industry, help find strategic partners from the industry and help obtain government support to advance the company's development plans.

Government support is an easy one. The support of the big car makers isn't, as they watch alternatives rise to their traditional gasoline-powered business.

Electric Fuel will need cash for the new company. The company recently secured $11.1 million from institutionals. But at the time said that the funds are exclusively designated for its cellular-phone battery business.

In its announcement yesterday, Electric Fuel said it is negotiating financing for the new company with institutionals.