Friday, August 30, 2013

Detroit Electric Pushes the Pause Button

The Detroit Electric SP:01 roadster.
The reborn Detroit Electric definitely has one thing in common with the original company, which went out of business in 1939 — it ran into problems trying to sell battery-powered vehicles. Detroit Electric is the latest in a long series of companies to have had difficulty realizing big dreams in the electric marketplace.
According to statements the company made earlier, Detroit Electric was to have employed more than 100 workers at a Michigan factory, with the capacity to make 2,500 cars a year. But recent reports by The Detroit News and the Web site The Truth About Cars said that the company still had not signed a lease for the factory and that the office the company was to occupy in the Fisher Building in Detroit was empty, with a few Detroit Electric signs scattered here and there.
Don Graunstadt, the company’s North American president, said in a news release on Thursday that, with more than 60 orders in hand from customers in Europe and Asia, the company would instead first focus overseas and produce cars this year at an existing plant in Holland.
In the release, the company said it had faced “some operational headwinds” and was working to achieve a federal safety certification that would enable “the start of production and sales within the U.S. market.”
Albert Lam, group chief executive of Detroit Electric, said in the release: “We are Detroit Electric, not London Electric; our commitment to the city of Detroit, the state of Michigan and the United States is as strong as it ever was. While there have been some delays in our plan to start production in Detroit, many vehicle programs experience some form of delay.”
Detroit Electric plans to produce the SP:01 sports car, which the company originally said was to have gone into production in August. The car was priced at $135,000, and like the discontinued Tesla Roadster, is based on the Lotus Elise.
According to statements the company made earlier, its plans were to produce 999 SP:01s, with other models to follow. In April the company also announced a partnership with Geely Automobile Holdings to develop electric cars for the Chinese market.
In its release, the company acknowledged the need for further development of the aerodynamics needed to achieve the performance the company had promised that the SP:01 would deliver. The car was designed to be fast and attractive, capable of hitting a top speed of 155 miles per hour and going from zero to 62 m.p.h. in 3.7 seconds.
“It’s an oddball business model,” Sam Jaffe, a senior research analyst at Navigant Research, said in a telephone interview. “There are plenty of other choices in that price range that would make a lot more sense for people to buy from established automakers. And it’s incredibly difficult to make something as complicated as a car — you need to work with a mind-boggling network of people, including suppliers, customers and dealer networks. I would say it was impossible for a start-up to do it, but Tesla has proven me wrong.”
Philip Gott, a senior director of long-range planning for IHS Automotive, said there were easier things than starting a car company.
“The car is the least difficult part of it,” he said in a telephone interview. “Most start-ups have dreams of building vehicles in large numbers, but to do that you need mass-market appeal, national service and support, with pockets deep enough to support warranty claims, parts availability and mechanics who know what they’re doing.”