A New Kind of Cop Car, A New Kind of Business Model - Autoline with John McElroy

Autoblog has followed the developments at Carbon Motors ever since the start-up unveiled its new police cruiser a year and a half ago. And while the car looks impressively good, what makes this company worth watching goes well beyond the product. Carbon has come up with a business model that could let it carve out a profitable chunk of the automotive market that, up to now, was always controlled by major car companies.
The key is that Carbon is building the first-ever vehicle specifically designed for police work. It's based on research from 2,800 law enforcement personnel from 800 different law enforcement agencies spread throughout the United States. From that, Carbon developed a proprietary list of 101 critical items needed to meet the needs of these customers – like a front seat that can accommodate a cop who is 6'10". As a result, this is not a modified version of some mass-market sedan, or a clever combination of parts from a bin. The Carbon Motors E7 is a clean-sheet design for a purpose-built police car.

John McElroy is host of the TV program "Autoline Detroit" and daily web video "Autoline Daily". Every week he brings his unique insights as an auto industry insider to Autoblog readers.

Carbon doesn't even call itself a car company. It calls itself a homeland security company, and aims to join the ranks of the kind of manufacturers that make ambulances and post office, fire and garbage trucks. But by focusing solely on cop cars, it has zeroed in on a juicy little segment that's just ripe for the picking.

There are 17,000 different law enforcement agencies across the U.S. that maintain a fleet of 425,000 cars. Those cars, which are driven a lot and driven hard, go through a lot of turnover, about 75,000 a year. Ford, which dominates the market with the Crown Victoria, sells between 60,000 and 65,000 police models a year. Therein lies the secret to Carbon's business model. It can potentially grab enough volume to get the economy of scale that it needs. But instead of shooting for high-volume production, this Atlanta-based company is adopting a mid-volume business model, and the key to achieving that is how it's designed the E7.



The car uses a space frame largely comprised of aluminum extrusions, which are very inexpensive to tool up. The body is made of composite panels, with molded-in color. This means Carbon doesn't have to invest in a body shop or paint shop, the most expensive parts of the typical automotive assembly plant. While its piece costs may be higher, it will save hundreds of millions of dollars in up-front tooling costs. And it's relying on suppliers such as BASF, Dura, Lear and Lotus Engineering to provide the expertise and components it can't do on its own.

Carbon's plans are to use a 10-year product cycle. That way it can potentially achieve volumes of 500,000 cars over that time frame, maybe more. And that kind of volume can be quite attractive to suppliers, especially since homeland security companies typically don't go around squeezing their suppliers for price cuts every year, as is typical of the major car companies. Carbon won't talk about what it will charge for its car, but points out the average police car costs around $55,000 once it's equipped with lights, computers, gun racks, radios, partitions, and everything else that goes into them these days. The E7 will cost at least that, probably more. But Carbon's main selling point is that its maintenance and operating costs will be significantly cheaper than those of a Crown Victoria or any other gussied up civilian sedan.

For example, Carbon can mold all the badges and logos for individual police departments right into the panels since they're plastic. That protects them from getting scraped up. But cop cars can still get banged up pretty good, so this arrangement makes it quick and easy to remove and replace them. Less time in the shop means more time for police work. The same goes for heavy-duty brakes that are designed for police work so the pads last a lot longer on this 4,000 pound car. A 300-hp, 420 lb-ft clean-diesel promises to provide 0-60 mph performance in 6.6 seconds with a limited top speed of 140 mph. Yet Carbon claims the E7 will get 40% better fuel economy than a Crown Vic, and that a typical big city police force will save millions of dollars a year with a fleet of E7s.

The company's unique business model includes handling all sales over the internet, building only to order, and delivering directly to the customer. In other words, Carbon will not need any kind of national dealer network to distribute its vehicles, another example of how it plans to hold down costs.

And yet, so far all Carbon has is an impressive plan – on paper. While it has a great looking concept car, that's all it is for now, a concept. The car is far from being fully developed. The company hopes to be in production by 2012, but that seems a long way away for a car that's already been hyped in the press for nearly two years.

Of course, it's better to see the company set realistic goals than just try to hype its way through several layers of angel investors. We've seen enough of that happen before with the wannabees who always seem to roll out exotically expensive sports cars. What I like about Carbon Motors' chances is that it's going after a business model that will make it very difficult for any mass-market manufacturer to follow.


Autoline Detroit
Airs every Sunday at 10:30AM on Detroit Public Television.

Autoline Detroit Podcast
Click here to subscribe in iTunes

Now follow Autoline on Twitter for ongoing updates every day!

Autoline Daily

The video meant to be presented here is no longer available. Sorry for the inconvenience.