So many electric vehicle start-ups - which will survive?

First, let me get this off my chest: With General Motors reporting just 1,210 Chevy Volts sold in the first three months of 2011, including 608 in March, and Nissan showing only 452 Leafs out their U.S. dealers' doors in the first three months, including 298 in March, critics are chortling that there is no market for plug-in cars. But what these idiots don't know – or pretend not to know – is that both cars' sales so far have been severely limited by lack of supply, not demand.

While GM and Nissan have been very slow to ramp up production and distribution, primarily to ensure flawless quality, both EVs have thousands of would-be buyers cooling their heels on waiting lists. And GM (maybe Nissan, too) is telling Chevy dealers to retain (not sell) a Volt demonstrator at a time when some of them probably still haven't received their first one.

That said, with literally dozens of new EVs expected to hit the U.S. market (and others) in the next few years, I'm wondering how many start-up EV makers will survive.

Continue reading "So many electric vehicle start-ups – which will survive"...

In a Feb. 28 article, "EVs and Plug-Ins - Watts up: a stampede of new models," Automotive News' Dave Guilford lists more than 20 makers, large and small, touting near-term BEV and PHEV launches. Of the major makers with near-term EV production plans, he says:

• "Audi plans a range of high-priced electric cars starting with the...e-tron version of the R8 in 2012."
• BMW's Megacity vehicle project is scheduled to produce the i3 EV city car in 2013.
• Fiat/Chrysler will launch an electric 500 next year.
• Ford will follow its electric Transit Connect small commercial van with a Focus EV late this year and a C-Max small minivan plug-in hybrid for 2013.
• GM plans "'several different variants' of plug-in-hybrid Volt-technology vehicles in the next few years," plus a plug-in hybrid Cadillac SRX by 2013.
• Honda will have Fit EVs in a demonstration fleet this year and begin selling them in 2012, and is developing a two-motor plug-in hybrid powertrain for the 2013 Accord.
• Mazda plans a Mazda2 subcompact EV next spring, mainly for Japanese fleets.
• Mercedes-Benz (working with China's BYD) will build more than 500 subcompact A-Class EVs this year and bring them to the U.S. within three years, and "will launch the SLS AMG in 2013 as an EV, followed by an S-Class plug-in hybrid."
• Mitsubishi "plans to launch its i small EV, formerly...iMiEV, here late this year."
• Nissan/Infiniti plans to launch an Infiniti EV in 2013 as part of Nissan and Renault's planned eight-EV lineup that began with the 2011 Leaf.
• Smart is planning larger-scale production of its electric ForTwo by 2012.
• Toyota, besides its 2012 plug-in Prius, will launch an electric version of its tiny Scion iQ, plans (in cooperation with Tesla) a small demo fleet of RAV4 EVs (and "wants a production version by 2012") and "may develop an electric Lexus RX SUV."
• Volkswagen plans full-electric versions of its Up minicar and compact Jetta and Golf, the latter arriving here by late 2013 or early 2014.

Most of these mainstream makers are solvent enough to shoulder the huge costs of designing, developing and building small-volume EVs, and subsidize them (i.e., absorb per-vehicle losses), at least at first, if necessary. But what about Telsa and Fisker, and all these tiny start-ups operating on venture capital, government grants and loans, and begging for more?

Another interesting article, "'Spectacular Failures' Await Electric Vehicle Industry," appeared March 30 on WardsAuto.com. Author James Amend uses Li-ion Motors – which won the $2.5 million Progressive Automotive X-Prize for a "production-viable design," as a telling example. It "carries an upside-down balance sheet, with millions of dollars in liabilities to creditors and the U.S. Internal Revenue Service," he writes. "According to a regulatory filing, the company figures it needs an additional $2 million to bring its cars to market.

"Including plug-in hybrids," he adds, "more than 70 EVs are expected to hit roadways around the world, according to a Ward's survey of sellers and intenders.... Meanwhile, offerings from tiny start-ups such as Mindset, Detroit Electric and Green Automotive appear in doubt. Requests by Ward's seeking business updates...went unreturned."

About the non-mainstream companies included in AN's story, Guilford reports:

• Aptera "seeks a federal loan to start production of the 2e, a three-wheel EV."
• BYD "pushed back the scheduled launch of its EV and F3DM plug-in hybrid to spring 2012, delayed from last December."
• Coda "plans to launch its [China-built] battery-powered sedan in the second half of this year."
• Envision has begun installing electric powertrains "in partially-assembled vehicles bought from Renault/Dacia."
• Fisker is building the Karma plug-in hybrid luxury sedan in Finland and plans five more near-term models through 2016, including a small sedan to be built in Delaware starting in 2012.
• Tesla plans to launch its Model S electric sedan in mid-2012 and a sub-$30K small EV in four or five years.
• Think "is selling small quantities of its U.S.-manufactured City EV to fleet users and plans retail sales to limited markets this year."
• Wheego is launching sales of its LiFe two-seat EV microcar and "plans a five-seat car this year, followed by a light truck."
• Zap's Chinese partner Jonway Automobile "says it will sell the A380 EV SUV by June and...Alias EV roadster by September."

But Ward's Amend points out that even Tesla is far from financially viable, having lost $274 million on 2010 revenues of $144.5 million, according to a recent quarterly regulatory filing. The document also warned that Tesla's cost to develop its own Model S chassis will be substantial: "Our Model S production model will require significant investments of cash and management resources, and we may experience unexpected delays or difficulties that could postpone our ability to launch the Model S on our planned timeline or result in cost overruns."

One small company that may have found a formula for success is Bright Automotive, which "hopes to market a multipurpose PHEV to commercial and government fleets," Amend writes. "The Idea is powered by a Li-ion battery pack with a range of about 40 miles. Then it switches over to a hybrid propulsion system....

"Bright's technology drew a $5 million equity investment last year from GM, which supplies the Idea's 2.4L internal combustion engine. In return...GM gained access to Bright's work in advanced lightweight materials." He adds that Bright will also have "access to GM's advanced engine, transmission and other technologies," and that it's looking for DOE funding.

"Dan Cheng, a partner in the Southfield , MI, office of industry consultant A.T. Kearney," Ward's Amend reports, "envisions three camps of EV makers as the industry matures:

• Companies that fail because of the complex demands of commercializing a product
• Companies that are acquired by established manufacturers or folded under a parent's wing through a major equity stake
• A handful that make it on their own"

There is excellent reason why not a single start-up U.S. automaker has survived in the last seven decades, and why our last three periodically struggle to stay afloat. Few outside the industry have any idea of the astronomical costs of just meeting government regulations, let alone designing, developing, building and marketing viable vehicles, then keeping them running and customers happy once they're sold.

Place your bets now on which of these bold few will still be around by mid-decade.


Editor's Note: Another AutoblogGreen columnist, former Think CEO Richard Canny, recently wrote a column on this topic, and came to different conclusions. You can read it here.

Award-winning automotive writer Gary Witzenburg has been writing about automobiles, auto people and the auto industry for 21 years. A former auto engineer, race driver and advanced technology vehicle development manager, his work has appeared in a wide variety of national magazines including The Robb Report, Playboy, Popular Mechanics, Car and Driver, Road & Track, Motor Trend, Autoweek and Automobile Quarterly and has authored eight automotive books. He is currently contributing regularly to Kelley Blue Book (www.kbb.com), AutoMedia.com, Ward's Auto World and Motor Trend's Truck Trend and is a North American Car and Truck of the Year juror.