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Summary:

Is it a good time to be an electric truck maker? The answer depends on who you ask. For Smith Electric Vehicles, it’s a resounding yes. But for Modec, which just entered administration (ie bankruptcy proceedings), not so much.

Smith Electric Vehicles Revs for Acquisition, IPO

President Obama at Smith's facility in Kansas City, Mo.

Is it a good time to be an electric truck maker? Well, the answer depends on who you ask.

According to Bryan Hansel, the chief executive of Smith Electric Vehicles U.S., the answer is a resounding yes. The company has seen demand grow “exponentially” over the last year, he told us in an interview recently, and along with government support, $58 million in new funding from private investors, and the recent uptick in oil prices, times have never been better.

But times are quite a bit tougher for another electric truck maker: Modec, based in Coventry, United Kingdom. The 7-year-old company reportedly has £40 million (about $64 million) in debt and has just entered administration – a process similar to bankruptcy filings in the U.S. According to representatives from Zolfo Cooper, the firm appointed to try and save Modec, the electric truck maker is experiencing “severe cashflow difficulties.” (Navistar and Modec have not responded to requests for comment as of this writing.)

Common Ground

The surprising thing is that Smith and Modec actually share some common ground. Both companies trace their roots to the UK and in recent years have moved into the U.S. Lord Jamie Borwick, former head of the London taxi maker Manganese Bronze, founded Modec in 2004 in Coventry. Then in 2009, the company formed a joint venture with Navistar to build electric delivery trucks for North, Central and South America. That same year, the UK’s Tanfield Group, which makes aerial work platforms, formed SEV U.S. in 2009 through its British electric vehicle unit, Smith Electric Vehicles UK.

Setting up shop stateside allowed the companies to benefit from government investments in electric vehicles under the Recovery Act. The U.S. Department of Energy awarded $32 million in stimulus grants for Smith to build 510 trucks with on-board telemetry systems, and $39.2 million for the Navistar-Modec EV Alliance to build electric trucks at an old RV plant in Elkhart, Indiana.

In addition, Smith and Modec have each delivered vehicles for major corporate fleets. For Modec that includes FedEx, UPS and supermarket giant Tesco. Smith counts Coca-Cola, Staples, Frito-Lay and AT&T among its customers. The companies’ trucks are even said to travel the same distance: 100 miles on a full charge.

Paths Diverge

Despite their similarities, some key differences have set the two electric truck makers on divergent paths. Hansel tells us he believes Modec missed the boat on some crucial design specifications in light of the U.K.’s driving license categories. The U.K. license requires vehicles weighing between 3.5 tonnes and 7.5 tonnes to have a commercial vehicle license, which adds cost for fleet operators. While Modec’s trucks weigh 5.5 tonnes, they offer a payload (2 tonnes) comparable to trucks in the lighter vehicle class, says Hansel. So buying a Modec truck essentially forces a customer to commit to not only go electric, but also to pay the extra cost of a driver carrying a commercial license, without getting a bigger payload, says Hansel.

Smith, on the other hand, offers a range of vehicle sizes and payload capacity, points out Hansel: “I think they had the wrong product. We’re more accessible to fit the general marketplace. If I’m going to pay for a commercial driver, I want more payload.”

Modec began producing vehicles in March 2007, after investing $30 million in research and development over five years, including a 6 million effort to make the final product at least 98 percent recyclable), according to the company’s website. Modec has sold just 400 of its electric vehicles, the Financial Times reports. UPS, which began testing a Modec van in early 2008, placed an order for 14 vehicles last month. Tesco, meanwhile, has not come back for more since its initial order of 15 Modec electric vans back in 2007, according to FT.

Smith, meanwhile, is gearing up for expansion. The company’s latest $58 million financing round will help fund its January 1 acquisition of Tanfield’s British electric vehicle unit, SEV UK (Tanfield retains a 49 percent stake in the combined company). Smith is now producing more than 40 trucks per month, according to Hansel. While the company is “predominately” focused on building its U.S. business and setting up decentralized, regional manufacturing, Smith is also “actively looking at new markets.”

The Future of Electric Trucks

Modec’s troubles do not bode well for electric truck makers. “You never want to see anyone fail. It’s not good for the industry,” said Hansel. Modec‘s position on the financial brink could have a silver lining, however, if it spurs more public investment in commercial EVs in the UK, suggested Hansel. “There’s not a lot of us out there,” he said, expressing hope that the UK will see a “big outcry” from people questioning, “Why would we let a company like this go?”

When it comes to government support and private investment, U.S. electric vehicle companies “definitely have an advantage,” compared to competitors across the pond, said J.D. Power and Associates powertrain analyst Michael Omotoso. Europeans are generally “happy with their diesel trucks and passenger cars,” and are less compelled than the U.S. to subsidize electric vehicles, he said, offering a note of skepticism that Modec’s fate will trigger a rush to subsidize the UK’s plug-in vehicle market. Given the state of the economy in the UK and other EU countries, Omotoso added, “I don’t think the atmosphere is right for a push towards EV subsidies in the car or truck market.”

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  1. In reviewing your blog it appears that you print what you are told and you really dont do the research necessary to confirm that the information you are spewing is false or just plain wrong. You should find a new line of work. Remeber being an honorable human being is more important than collecting a paycheck for poor or misleading work.

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