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Summary:

Upstart Saba Motors, a finalist in the $10 million Automotive X Prize competition, is looking for cues in Dell’s business model as it sets out to build an electric sports car.

Saba RoadsterTesla Motors took cues from Apple in designing the business model for a new kind of electric car maker. Early-stage upstart Saba Motors, a finalist in the $10 million Automotive X Prize competition, has a different computer giant in mind, with its contract manufacturing and modular components: Dell.

Based in San Jose, Calif. and working on a lightweight electric sports car, Saba Motors aims to limit costs by assembling its so-called Carbon Zero Roadster (which will be on display at our Green:Net conference on April 29) from several portions designed for relatively simple and inexpensive outsourcing to manufacturers. “What’s really special about our car is we’re changing the way cars are built,” founder and CEO Simon Saba told us in an interview on Monday. That’s the goal, anyway.

OK, So What’s Different?

For a typical vehicle from one of today’s legacy automakers, Saba explained, much of the manufacturing equipment is customized in some way to build an automaker’s unique motor, driveshaft and styling. By contrast, Saba said he approaches suppliers and asks, “What is your highest-volume product that will work in these parameters?” Rather than “tooling up another big factory,” Saba said the startup aims to tap existing production lines, hiring suppliers to build Saba components when they might otherwise sit idle.

Saba compared the custom tooling approach to the way computers were made 30 years ago. But if you “look at the guys that won,” he said, noting Dell, Sony and HP, they make very little hardware, pointed out Saba. They assemble and ship computers using chips, motherboards and other parts from outside suppliers, Saba said. Using Dell as a role model, while developing all of the software and battery controls in-house, he said Saba Motors will be able to build cars with “a lot less capital than anybody else out there,” and scale up very quickly.

In a time-sensitive environment, Saba believes “no name” new green auto ventures are “doomed to fail” if they require 3-4 years to ramp up production — by then, incumbent players will have their own plug-in models on the market. So he’s aiming to have Saba Motors’ first model “mass produceable” within the next 12 months. With no funding, a small team and no manufacturing experience or resources, however, the company has some serious hurdles standing in its way.

Belly of the Beast

Saba Motors claims its Roadster will max out at 105 MPH and be able to go 0-60 MPH in five seconds. In terms of range, the company expects an average average 120 miles for city driving or 140 miles for highway driving with a full charge of its “brick-shaped” lithium iron phosphate battery pack.

That battery chemistry is inherently more stable than alternatives like lithium cobalt (used in Tesla’s battery packs). According to Saba, this allows the startup to use a lower-cost, simpler air cooling system for the battery instead of “very complicated liquid cooling.”

Using lithium iron phosphate and the air cooling system means one less “major thing that can go wrong in the vehicle,” said Saba, but requires a sacrifice when it comes to energy density — the battery’s relatively heavy. But Saba says the car, at least as currently designed, clocks in at about 2,000 pounds — nearly 1,000 pounds less than the Audi e-tron.

One money saver in the design, said Saba, is that underneath the curvy fiberglass exterior, the Saba Roadster is “the boxiest car underneath…it’s all straight lines, 90-degree angles,” which cuts out the need for a “million dollar press” to stamp the body into shape.

Ready, Set…Fundraise

All of that is the dream. Now, what will it take to execute? The company is just over a year old and bootstrapped with only five people on staff (all engineers). Saba Motors has the ambitious game plan of signing up 50 dealers by the end of 2010, producing at least 300 vehicles per month by this time next year. The company’s aiming to have at least 100 dealers onboard and production levels reaching 500 vehicles per month by the end of 2011 — ramping up to at least 1,000 a month by the end of 2012.

Those are small numbers compared to the production volumes that Nissan, Tesla and Coda Automotive are targeting for their upcoming electric sedans in coming years, but ambitious for such a young automaker when you consider Tesla Motors didn’t deliver a thousand vehicles until earlier this year, about seven years after its founding. Plug-in hybrid vehicle startup Fisker Automotive, which was founded in 2007 and raised about $100 million in venture capital before scoring a federal loan last fall, has not sold a single car.

Saba said the company’s targeting customers — first in the U.S. and later in Europe — who might be looking at a new, say $50,000 Porsche Boxster, but would consider an electric vehicle that offers competitive pricing and performance.

Despite the startup’s efforts to keep capital requirements low, of course, reaching that goal will take money. Saba tells us the company is now trying to raise its first round of investment to finance further development and testing of a prototype.

If and when that funding comes through — which in this environment is far from guaranteed — Saba said the company will “instantly start working” to finance the production phase of the Roadster. At this point, Saba has the all-too-familiar plan among green car startups to seek funding from Uncle Sam — an option that would keep early backers from seeing their stake in the company get diluted by later equity financing rounds.

Saba would not be the most obvious awardee under programs like the highly competitive Advanced Technology Vehicles Manufacturing loan program, given the combination of a short track record, limited recognition among consumers and relatively meager financial resources — a recipe that proved deadly for 4-year-old auto startup V-Vehicle’s bid for funding under the ATVM program. Saba acknowledged, “Our government is fairly broke, so that funding may dry up.”  

Photos courtesy of Saba Motors

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