Detroit Electric Confident in Business Plan

DETROIT – Detroit Electric executives say the niche auto maker will succeed where other electric-vehicle start-ups have failed because its business model focuses on outsourcing major components and assembly, rather than establishing its own manufacturing infrastructure.

“Many have failed, but we have a better chance because we have learned from the mistakes of others,” Albert Lam, chairman and CEO, tells WardsAuto at a media event here. “Our business model lets us focus our resources on more important things, such as the innovation, quality and performance of our products.”

Lam, a former Apple and Lotus executive, unveils here Detroit Electric’s first product, the SP:01 electric roadster. Powered by a 201-hp electric motor, the 2,354-lb. (1,067-kg) EV can sprint to 62 mph (100 km/h) in 3.7 seconds and boasts a 155 mph (249 km/h) top speed.

The SP:01, which will sticker at $135,000 before government incentives, is underpinned by a Lotus platform and has carbon-fiber body panels. Lam says 85% of the roadster is based on Lotus engineering, with slight modifications made by his team.

The electric powertrain is sourced from AC Propulsion, although calibration and system configuration was handled by Detroit Electric. “It’s not standard off-the-shelf,” he says.

The electric motor drives the rear wheels via a 4-speed manual transmission from Lotus. An optional twin-speed gearbox also will be offered.

Only 999 copies of the SP:01 will be built, after which an all-new roadster will be developed to replace it. The low-volume SP:01 will be assembled in the U.S. for the North American market and in Asia for Europe and Asia-Pacific consumers.

Components, including the chassis, will be shipped to the U.S. and Asia assembly sites, where yet-to-be hired workers will build the SP:01. Lam says Detroit Electric is in the process of selecting plant sites, with a final decision expected before month’s end.

About 20-25 workers will be hired to assemble the vehicles at each site, he says. Production is scheduled to begin in August, with shipments to start in September.

Batteries will be sourced from Cochem and a South Korean manufacturer that has not been identified. The lithium-polymer battery packs will give the SP:01 an estimated 180-mile (290-km) range. Charge time for the packs will be four hours on a 240V outlet, Lam says.

The SP:01 boasts several innovative technologies, including a feature that allows its batteries to power a house for up to 2½ days in case of a power outage. Another allows the driver to fully deplete the battery if necessary order to reach his destination.

Most EVs don’t drain their batteries completely, because such a deep discharge can cause damage. Lam admits the feature will harm the battery, noting the range-extending option only can be used five times.

Detroit Electric plans to launch a hatchback and sedan by the end of 2014 to be priced $32,000-$35,000. The two new models will be built in higher volumes than the SP:01 and assembly will be outsourced, Lam says.

He does not reveal what companies will handle production of the roadster and sedan, but says Canada-based Magna and Finland’s Valmet are possibilities. Between the SP:01, the hatchback and sedan, Detroit Electric plans to sell 10,000 to 40,000 units annually worldwide within the next two to three years.

“We want to look at things realistically,” Lam says. “We’re not looking to grow to the size of Ford or (General Motors).”

Detroit Electric has sufficient funding to launch the SP:01 while concurrently designing and developing the sedan and hatchback, Lam says. The startup has secured funding from private investors but has not accepted any money from government sources. It recently turned investment from a Chinese bank with government links.

“I will take money from Chinese private investors any day, but if they are government-linked I think it complicates things,” Lam says. “That’s our strategy going forward.”

The company is seeking an additional $50 million-$100 million but does not need the funds at the moment, he says. Detroit Electric has secured an OEM partner, which will be revealed at the Shanghai auto show this month.

Lam says the partner is a global auto maker with ties to China, but declines to identify the company or indicate whether it is providing funding to Detroit Electric.

Lam says Detroit Electric is exploring options for a distribution network in North America, including partnering with an existing dealer body. In Europe, a new distribution model will be implemented, but the auto maker declines to reveal details.

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