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Zap jolts its plans for electric cars

The cars are coming, but getting them out the door isn't so easy. Can Zap get some mileage out of a century-old Detroit relic?

Two years ago, Zap, the electric transportation specialist out of Santa Rosa, Calif., talked about coming out with a luxury, all-electric SUV called the Zap-X in late 2008 or early 2009. Things have changed a bit.

The company now plans to kick off its electric car strategy with the Alias, a three-wheeled electric car, CEO Steve Schneider said in a phone interview. The company hopes to have a working prototype later this year and then start selling cars in 2009.

Zap and China's Youngman Automotive Group, through a joint venture called Detroit Electric, will then follow up with an economy car, roughly coming out in 2010 or 2011, then a four-seater sedan similar in size and price to a Honda Civic. Subsequently, it will come out with a four-seater sedan that will compete in the Audi class.

An artist's rendering of the Zap Alias. Zap

The Zap-X is still on the road map, but now it's coming later, Schneider asserted.

The switch--starting at the low-end and going up rather than starting high and trickling down--comes as a result of circumstances, necessity, and new partnerships, Schneider said. Zap signed a deal with China's Youngman motors in 2007. Youngman is China's larger domestic car manufacturer and has several models on the street there.

The idea now is to take gas-burning cars produced by Youngman and retrofit them for electric engines and batteries. Manufacturing will become cheaper because a production line already exists. Miles Automotive, which plans to come out with an electric car in 2009 based around an existing Chinese gas-burning car, is doing the same.

The strategy, though, involves a large risk. Batteries remain costly for electric cars. A huge portion of the $98,000 cost of the Tesla Roadster lay in the battery, and the Tesla can only go around 250 miles on a charge. Economy cars in the $35,000 price band only have a range of around 100 miles, a short distance that makes consumers wary. (Toyota and General Motors have both said that the limited range on earlier electric cars was a big reason they didn't sell well.) Some companies are contemplating urging buyers of electric economy cars to occasionally use gas-burning cars for those days they need to drive more than 100 miles. Need to go to Tahoe? Here's your SUV.

The Zap-X SUV, as illustrated on Zap's home page. Zap

Regulatory issues are part of the reason that Zap's three-wheeler will come out first. Three-wheelers are classified as motorcycles so the safety and crash testing regulations are easier to meet. Venture Vehicles, which also wants to come out with a three-wheeler in 2009, is following the same strategy.

"The production time is relatively straightforward. It is only a matter of how fast we can get them through the regulatory framework," Schneider said.

The marketing will also de-emphasize the Zap name, which has had an up-and-down history with investors and consumers. Zap will sell cars that run at 55 miles per hour and less, but the freeway legal cars (which includes everything from the economy car up) will be sold under the Detroit Electric moniker. Detroit Electric was actually a car manufacturer from 1906 to 1939.

"They have sold more electric cars than anyone," Schneider said. The company liked the history and the brand and so decided to buy it.

As part of a promotion, Zap will sell a commemorative version of an electric car that Detroit came out with 100 years ago.

Many have been skeptical of Zap in the past. The company tried to bring Smart Cars to the U.S. in a deal that didn't get off the ground. Nonetheless, the little company does seem to be able to land interesting alliances. It recruited Albert Lam, former managing director at Lotus Engineering, to serve on its board of directors. Lam was instrumental in linking the deal with Youngman. And the company landed millions from investors in Dubai. Lotus also works with Zap.