Detroit Electric has ditched its original joint venture between ZAP and China Youngman Automobile Group and is now promising an affordable electric car by the end of 2009. The Netherlands-based company, led by CEO and majority shareholder Albert Lam, says it is looking to Malaysia to manufacture its electric vehicles and a group of international investors to raise hundreds of millions in funding.
So what happened to the former deal? ZAP says it has agreed to sell its ownership rights in Detroit Electric for $750,000, the amount it had originally invested in the JV, and gain exclusive rights to distribute Detroit Electric vehicles in North America. According to a ZAP press release that quotes Lam, China Youngman Automobile Group will also give up its ownership under a separate agreement. We are waiting to hear back from China Youngman on the situation.
ZAP CEO Steve Schneider tells us that the sale is part of ZAP’s effort to focus on electric car distribution and marketing. Schneider also says that the Detroit Electric joint venture fell apart when ZAP and partner Youngman Automotive Group, a Chinese bus maker, couldn’t agree on what vehicle to pursue first. “Most of it had to do with they wanted to do buses first and we wanted to do cars first.”
According to an SEC filing, the Detroit Electric joint venture, named after America’s oldest and longest-running electric car company, was launched in September of 2007 with Youngman. Originally called EV Holdings Ltd. and incorporated in Hong Kong, the venture was renamed Detroit Electric early this year. ZAP and Youngman had originally agreed to invest a total of $100 million in the venture, but the companies quickly agreed to revise that to just $5 million, $2.5 million each. However, even that truncated investment was never made, and both ZAP and Youngman were unsuccessful in securing outside financing to help float the nascent Detroit Electric, according to the SEC filing.
The reformed company could be faring better (well, it couldn’t do worse) and was unveiled at a press event at Malaysian automaker Proton’s test track today. The company is still led by Lam, former CEO of Lotus Engineering, and the venture has reportedly already entered into a partnership with several Dutch, American and Malaysian investors with an investment of about $300 million over the next five years.
But no business partners have been named and no actual Detroit Electric made cars were shown off at the event. So far the company seems to be just a lot of talk, though Lam himself could not be reached for comment.
As for ZAP, it’s had its fair share of trouble before. Under Detroit Electric, Zap was planning to sell its much anticipated, but yet to be seen, ZAP Alias, and Schneider tells us that the Detroit Electric sale won’t affect the Alias release date of sometime in 2009. He did tell us the three-wheeled electric vehicle will be manufactured in the U.S., but he said he doesn’t know which brand the Alias will eventually be sold under.
Schneider says that, at the earliest, he hopes to unveil the first running production vehicle from Detroit Electric at the National Auto Dealers Association convention in January of 2009. That’s just a few mere months away. While the big automakers are pushing their production plans forward, it’s still not clear what sort of backing Detroit Electric has that will allow it to reach its ambitious goals.