For Scandinavian electric car maker Think, the moment of truth for its ambitions to produce electric vehicles in the U.S. could be a mere months away. When it comes to financing a planned manufacturing project in Indiana, the company’s new chief marketing officer Michael Lock told us in an interview, that everything rides on federal support. “Plan A is the only plan,” he said, revealing that Think expects a final yea or nay on its loan application by the end of 2010.
On the other side of the pond, some government funds have already come through, with the UK’s Technology Strategy Board awarding £9.5 million in grants recently to a consortium that includes Think, Jaguar Land Rover, Lotus Engineering, Nissan and others developing technology for plug-in hybrid vehicles. Think, in which battery maker Ener1 holds an approximately 32 percent stake, formed a U.S. joint venture two years ago with Kleiner Perkins and RockPort Capital Partners, and it has requested low-interest loans under the Department of Energy’s highly competitive Advanced Technology Vehicles Manufacturing Program.
If the feds do approve Think’s loan request, then the company, like loan recipients Tesla Motors and Fisker Automotive, will be under the gun to quickly ramp up manufacturing. As a result, Think plans to start work on the Indiana plant within 60 days, said Lock.
Think has said it would invest $43.5 million into improving and equipping a plant in Elkhart, Indiana to achieve annual production capacity of 20,000 vehicles at the facility by 2013. Today, said Lock, “the plant really is an empty box.” So if Think is going to hit its target of beginning production early in 2011, he explained, then work on “long lead-time items” at the facility and efforts to get a team in place needs to start now.
If the loan does not get approved, Think CEO Richard Canny has said previously that the company’s move into the North American market will be “slower and shallower.” With or without DOE support, however, Canny told us in an interview this spring, Think plans to ship 500 units of its Think City model — assembled by Finland’s Valmet Automotive – to lead markets in North America. And then depending on how the market shapes up and the loan shakes out, Canny said Think may opt to import more vehicles from Finland at some point.
For now, Lock told us this week, Think is ratcheting up efforts to establish credibility in the U.S., “before we descend on the market.” Pike Research analyst John Gartner agreed this will be an important nut for Think to crack. “They don’t have nearly the same legitimacy even as some U.S. startups,” said Gartner. Given the company’s relatively low profile among U.S. consumers, it’s crucial for Think to gain recognition early on while virtually all automakers are still new to the EV game. “They have to be at the table,” when these models start coming out, said Gartner. The window of opportunity for Think to build its reputation, he predicts, is a slim 9-12 months.
According to Lock, part of Think’s cred-building effort will involve expanding the company’s U.S. focus beyond engineering and government relations, “really putting roots down,” in the form of sales, marketing and service operations, and communicating to prospective buyers that Think electric vehicles sold in Europe have already logged some 30 million miles.
Some key issues will have to be sorted out for Think to achieve similar numbers in the U.S. In addition to the overarching financing question, Think has yet to solidify a distribution plan. Back in May, Canny told us Think had also entered talks with distribution partners including car sharing providers and companies that would offer battery leasing. And this week Lock commented, “I’m instinctively minded against using the existing dealership model.” It perpetuates what has been a largely negative consumer experience and relationship with car companies, he said, and “doesn’t play to our advantages,” as a more nimble outsider.
Instead, Think is considering setting up its own stores and service centers, similar to Tesla’s network of retail locations, which have been modeled after Apple stores. That would be relatively expensive, admitted Lock. Alternatively, the company is also looking into securing a “single retail partner” with national reach who would be willing to roll out Think’s cars regionally, similar to Brammo’s distribution of electric motorcycles through Best Buy.
During the next three months, according to Lock, Think hopes to vault itself into the battle among automakers to position their respective electric vehicles. In Lock’s view, all of this jockeying may be necessary, but it amounts to a “phony war,” at this point. “Everyone’s struggling for a piece of action that doesn’t yet exist.”
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