Detroit Electric Returns, Again

Published September 3, 2008

The story in yesterday’s Detroit Free Press sounded promising: A new electric car maker, with a revolutionary new electric motor, would revive the venerable Detroit Electric brand and start selling electric cars by the end of next year. It plans to sell 30,000 cars globally in its first year, ramping up to 270,000 by Year Three.

The company, the story said, was negotiating with Proton—the Malaysian automaker owned by the country’s government—to build cars for it. Detroit Electric’s CEO, Albert Lam, was formerly CEO of Lotus Engineering, the consulting and development arm of famed British carmaker Lotus, which Proton has owned since 1996.

The article didn’t point out, however, that Detroit Electric had already been revived once, by a California electric car company with a controversial history.

Detroit Electric’s first life actually ran from 1907 to 1939, when it sold electric cars made by the Anderson Electric Car Company. Last year, the brand was reestablished as a joint venture between Chinese transit-bus manufacturer China Youngman Automotive Group, owning 51 percent, and California electric vehicle maker ZAP, which had 49 percent. That may raise an eyebrow or two. ZAP has had many incarnations and a rapidly changing product line—chronicled last April by Randall Sullivan in a scathing Wired article, “Hype Machine: Searching for ZAP’s Fleet of No-show green Cars.”

One Brand Name, Two Entities

Last fall, Zap announced it would use the Detroit Electric brand to sell a three-wheeled, 322-horsepower two-seater called the Alias. Now, Zap and China Youngman Automotive Group have agreed to sell their stakes in Detroit Electric to new investors, specified as “a vehicle distributor and additional technology partners” who intend to provide both financing and technology for the venture. That new venture is the Detroit Electric that the Free Press says will receive $300 million of investment over five years from Dutch, American, and Malaysian backers.

Zap CEO Steve Schneider told HybridCars.com the plan had always been for Zap to sell its stake in the Detroit Electric manufacturing arm as new investors came along. In exchange, Zap retains 100 percent of rights to use the Detroit Electric brand for its products and will continue to own original drawings and other historical artifacts from the 1939 company, he said. That company also owns exclusive rights to distribute Detroit Electric vehicles in North America. In addition, ZAP received $750,000, according to the press release. To make matters even more confusing, Albert Lam—the chief executive of the Detroit Electric that will manufacture vehicles—remains on ZAP’s board of directors, which he joined last October.

page 2 of 2

Schneider said ZAP will demonstrate a Detroit Electric production vehicle next January at the National Auto Dealers Association’s annual convention in New Orleans. That car will go on sale in Q2 (April to June) next year, he said, and has already met “about 90 percent” of the certification requirements to be sold in the US, including crash testing and other safety requirements. (As an electric, it would be exempt from emissions testing.)

It’s a short but tumultuous history for a very old brand with a new lease on life. In less than a year, the company’s ownership has changed, it has shown at least four vehicles, and it plans to sell 5,000 vehicles—of the first year’s total of 30,000—in the United States.

Meanwhile Back in Malaysia

At a press event at a Proton facility in Malaysia, the company offered test drives in three cars converted to electric power: a Proton Savvy subcompact, a Proton Pesona sedan, and a Lotus Elise sports car. The vehicles will use lithium ion batteries, but the secret sauce is an electric motor, invented by chief scientist Frits van Breemen—said to be “four to 12 times lighter” than existing motors—giving it a claimed power-to-weight ratio of 5 watts per kilogram.

Oh, and that converted Lotus Elise? Schneider said it will be manufactured at either Lotus’s plant in Hethel, England, or a plant in Malaysia, in line with gas-engine Elises. The two cars will look the same, but electric versions will carry Detroit Electric badges, while the gasoline originals will continue to be called Lotus. (No Lotus official was available for comment when this article was posted.)

How do other electric-vehicle makers view this latest incarnation of Detroit Electric? Tesla Motors, for instance, might view an electrified Lotus Elise as disturbingly similar to its own electric Roadster—which has some components in common with the Elise. And Lotus played a role in engineering development for the Roadster.

Tesla marketing director Daryl Siry, however, told HybridCars.com simply, “We are not concerned about them as a competitor.”

---