Can You Fund a New Electric Car Company and Be Financially Successful?

Obviously the answer is Yes you can fund it, but this is not an easy task, we know that and are still working to fund our company.
But what goes along with this is” “Can you be financially successful?” What is financial success? I define it as a sustainable business that makes money for the stakeholders and the company to survive for the long haul.
Success has been scarce and we will talk about this further.

Let’s talk about our company as a case study. EnVironmental Transportation Solutions develops and markets an urban based electric Low Speed Vehicle. We will manufacture a road-worthy commercial fleet vehicle for under $10,000. We are different from many electric vehicle companies. We require only a modest investment of $5M – ½ is equity and ½ is debt to expand our manufacturing capacity, we breakeven on a mere 1,050 units annually, we have a realistic marketing plan that targets commercial fleet users who are hungry for EcoV, and we have an experienced management team that can put EcoV into production in 9 months. We are changing the rules in niche vehicle manufacturing.

For the Low Speed Vehicle market we are changing the paradigm, as are a few others, no longer is a LSV a dual purpose vehicle to use to play golf and drive on restricted access public roads in a closed community, but now EcoV is a daily driver that can be used on all public roads, 35 mph and slower and feel safe and comfortable driving it. Furthermore, EcoV is available in 4 and 6 passenger versions with a rear seat that easily converts into a utility vehicle or a 2 passenger pickup, all with a 1000 pound payload capacity. And we will do Factory customization for our customers.

But we have NOT got funded yet! At least in Michigan, we have fallen on deft ears.

Let’s talk about three types of EV companies: 1.) Non-EV Start-ups; This could be the Daimler Chrysler – GEM or GM EV1 , 2a) EV’s not like EcoV and there are several here, Feel Good Cars or Tesla are two current examples; and lastly, 2b.) EV’s like EcoV. We will talk about our experience, efforts and results.

Category 1: Non-EV Start-ups – these are companies in business today with products; they have assets, sales and a positive bottom-line. They need funding to expand into new products. Being an existing company is a huge benefit. 90% of all start-ups fail in first 5 years. Many investors stay away from start-ups for many reasons. If you are an existing company there are many State Economic Development Funds that will provide funding to expand, if you have sales and positive income, this opens opportunities for debt financing, there are private investors who feel more comfortable investing in these companies because of past success, and lastly the companies may be large enough to self fund the technology development and manufacturing start-up themselves.

Category 2a: Companies not like EcoV – Most start-ups believe they have a “great idea” or new “twist” on an existing concept that launches their quest to create a business. You need much more than a great idea, you need a strong management team with diversity of skills and experience in “the business” to make it happen. It has been said many times that it is better to have a first-rate management team with average technology than first-rate technology with a second-rate management team. First-rate management teams are more likely to succeed. The start-ups need passion about what they are doing and how they are doing it. This passion keeps the process going, and going, and going. It sounds exciting to be the underdog challenging the Big Dog with the new technology.
Some of these companies enter the new business with a very sexy product that sounds exciting and almost too good to be true. I have found that what sounds too good to be true, usually is. These companies have the potential to raise capital and with the right publicity, usually do. But do they have more than a sexy product or idea? Time usually tells all.

Category 2b: Companies like EcoV – EcoV is a product that is not very sexy. It is practical and useful to its mainstream customers, particularly fleet users. It uses mostly proven off-the-shelf current technology production components; no sex appeal there. It’s only Intellectual Property is the company trade secrets about how to do what has been done. It is about how to integrate systems, how to find the right suppliers, how to design around existing parts and systems, how to use and adapt existing auto industry standards, how to understand customer usage cycles and abuse issues, how to put in expected and unexpected safety features, how to find the right partners to take the product to production, how to control overhead costs, how to market and sell the product in early, mid and late years, and how to make money in the business. EcoV sounds like same old, same old, but it is not. Being successful in automotive in low volume niche business is a major challenge not understood by many.

The challenge is a reflection on the issues facing the transportation business in alternative energy. CleanTech, an organization assisting in investment opportunities in clean technologies and alternative energy, has indicated that only 4% of the invested money has gone into the Transportation business sector. This puts into perspective the challenge businesses have to fund EV companies.

I believe that beyond the “idea” is the need for an experienced management team that can superbly execute the idea. Having been in automotive for 35 years and having put into production many cars in North America, I realize that the automotive business is not as simple as it sometimes appears. Yes, there are now 60,000,000 vehicles being built worldwide per year, so how hard can it be? Just look at the failure rate of companies doing electric vehicles. Opportunity is the start of the maze, but it does not define the path to success.

Who is Richard Marks? Why is EcoV different? How do we find the needed investors?

I have been in automotive for 35 years. I spent 25 great years with General Motors learning the in’s and out’s of automotive design and production. I spent my last 5 years with GM’s Electric Vehicle program, EV1. I left GM in mid-96, realizing that I was far more committed to the battery electric drive technology than GM. I worked for a couple Tier 1 suppliers and then about 4 years ago, I start down a path to do my own EV. We started with a Low Speed Vehicle, because, by automotive standards, it is much simpler to do than a standard automobile because of the safety and vehicle testing required. We saw the opportunity to start with a LSV, build an organization and team, get profitable, and then move into a standard EV later.

Our management team is built around the automotive knowledge base in Detroit. My management team of 7 automotive executives is powerful because we bring extensive auto experience in all areas, bring start-up and funding experience, can build EcoV cost effectively with automotive quality, and can market and sell EcoV. Despite what people outside of Detroit think about the auto companies in Michigan, we don’t live in caves with wood burning forges building cars. I believe that the electric vehicle will come to market from outside of mainstream, but by automotive & EV experienced people. There is just too damn much to learn on the path to execution that amateurs outside of the auto industry will need to learn. It can be done, but the mistakes cannot afford to be costly ones.

What is EcoV?
EcoV is a 25mph street legal electric Low Speed Vehicle that is road-worthy with automotive ride, comfort, durability and reliability that offers a safe driving experience on daily trips on public roads 35mph and slower. EcoV is to be built in USA in Detroit, MI.
For 50 cents of electricity out of a standard wall outlet in less than 8 hrs is completely charged and ready to go another 25-40 miles day-in and day-out.
EcoV comes in 3 models each with a 1000 lb load capacity. There are a 4 and 6 passenger models with a rear seat that converts into a utility load floor easily, and a 2 passenger pick-up truck.
There are many Factory installed options available to make EcoV exactly the way you need it or want it. There is right-hand drive, extended range, air conditioning and heat for extreme climates, and many more options. EcoV is technology neutral and can be updated easily to new affordable technologies.
EcoV has changed the Low Speed Vehicle paradigm. EcoV also changes the rules on how to do niche vehicles.

Who wants it and why?
The first market is fleets. EcoV is a street-worthy commercial fleet vehicle for under $10,000. Fleets are hungry for the operational cost savings EcoV provides in city operations..

Fleets market size: 17 M new cars and trucks sold per year (2005). 3M were sold to fleets, and of those 200,000 do not need to go faster than 25 mph and could be low speed vehicles.

Fleet applications: First fleet market is electric utility companies who desire to have vehicles which use their “fuel.” Fuel provider fleets are mandated to purchase 90% Alternative Fuel Vehicles by EPAct 1992 and to reduce consumption of oil based fuels.
DTE Energy is signed up to test next year.
From there we springboard to government fleets, as Federal Fleets, State Fleets, and municipal fleets. They are mandated to purchase 75% alternative fuel vehicles and reduce oil based fuel consumption.
Cities of Ann Arbor and Grosse Pointe Woods, MI are signed up to test next year.
University of Michigan Dept of Public Safety is signed up to test next year
Detroit Department of Parking Enforcement is preparing to test next year.
US Postal Service is going to test next year as a carrier route vehicle in city and urban areas.
Commercial fleets such as delivery services, vacation rentals, city rental vehicles, hotels, resorts and community transportation services, transportation vehicles at theme parks, for sales at Master Planned Communities and for maintenance are retirement communities.
This is a realistic approach to starting a new company. Furthermore, after commercial validation and profitability, we will expand into the even larger private use market. This includes everything from baby-boomer Master Planned Communities to urban families.

What about finding investors to date? Our country has great belief and faith in entrepreneurs bringing new ideas to market and creating jobs in America. Yes, start-ups can do that but can they get funded? Funding commercialization projects is a limitation in our system. Government funding stops at the commercialization stage. Why? Is it because over 90% of start-ups fail? Is it because our short term thinking overwhelms our ability to think long-term? I don’t know the answer, but it must change. Investors need to think longer term and similarly politicians need to think long term as well. If it is something needed for the future, you better start investing in it today, because successful start-ups don’t happen overnight when the crisis appears.

What have we done to date? Since the beginning of this year, we have been working on the funding. .

We put together a plan of attack of where the investors identified were.
Corporate Consortiums
Individuals
Fleet Buyers
Bank Venture Funds
Philanthropic Organizations
Utilities
Environmental Groups
Utilities Venture Funds
Other Vehicle Companies
Suppliers
Pension Funds
Unions
Corporate Venture Funds
Federal Government
Venture Capital Groups
State Government
Angel Investors
City Government

We have been networking for 4 years but that is only a start.
We have applied for State economic development money but were written off because of other companies that tried LSV’s and failed.
We have approached local electric utility companies thinking this would be great for them to support. We are not done exploring that opportunity yet.
We have approached customers who could have a large use for our product but were told they did not want it. We have not got to the right people yet.
There are numerous Government agencies who should be very interested in saving money by using our product in their city/urban/military base applications, but we have not got to the right people. Who are they? What more could our Government want but to reduce dependency on foreign oil, create jobs in America, provide alternative fuel vehicles that are simply clean, affordable, and have available fuel infrastructure.

We have mentioned numerous fleet customers who have driven our early prototype and signed up to test EcoV next year when we start production. Fleet customers are not typical early adopters, they are more mainstream buyers who have a work job to do and want to be sure what ever they buy, it does the job. We will let them test EcoV with confidence they will place orders afterwards. To date, they are skeptical because of all the previous deficient products and will not make any commitments for future purchases.

So where does this leave us. We need your advice and assistance to access to your network. We need to reach the people you know. We need you to provide us introductions to EV interested parties. The EV industry will need to work together if it is going to be successful.

For the Future: The public does not understand what EV’s have to offer them. It is a major disruptive technology for a lot of industries including automotive, but for the consumer EV’s represent an exciting opportunity to move into the future of transportation alternatives. Public policy needs to provide incentives to encourage EV’s and take away incentives that don’t encourage EV’s – why do we count flex-fuel vehicles as AFV’s when most only burn gas?..tie it to actual ethanol used. I personally believe that if we can get the public into solid and sound EV’s, the public will demand the OEM’s build more of them. This is working with hybrids, and starting to work with plug-in hybrids. The public is starting to demand they be built and offered. No OEM will deny the public what it demands, no matter how much they drag their feet. GM announced a couple of weeks ago that it will show plug-in hybrids or series hybrids at LA and Detroit auto shows as a step towards electrifying their entire fleet. Is it for real or is it Johnny-come-lately to be more popular by being fuel efficient with environmentally clean vehicles? Time will tell.

EcoV is simply elegant by being elegantly simple. We offer a practical, affordable application of current technology. EcoV will change the way transportation moves us!
We need your help & advice on how to get our company rolling! Pleased contact us. Thank you.