It might sound familiar: An ambitious startup sets out to build a high-performance electric two-wheel vehicle priced for the niche luxury market, hoping to establish its brand and business as it develops lower-end models for the mass market. Well, that’s the game plan for Mission Motors, which today announced a new speed record for electric motorcycles on the Bonneville Speedway track (150.059 MPH) with a prototype of its 2010 Mission One model.
The speed might be record-breaking, but the strategy echoes the one employed by electric scooter maker Vectrix — until it hit the skids this year amid “very disappointing sales” for its 70 MPH, $11,000 scooter, “challenging market conditions” and 13 years in the biz without a profit. Mission Motors co-founder and CEO Forrest North, however, thinks the market is now ripe for his 16-person startup, based in San Francisco, to find success with the strategy using a significantly higher-performance technology and an even higher price tag: $68,000.
As Edmunds Green Car Advisor put it this summer, Vectrix was partly “a victim of the ‘good idea a little too soon’ syndrome.'” Mission Motors, backed by angel investors, has come onto the scene more than a decade later, and so far it’s going like gangbusters.
In just the last year, North says the motorcycle industry has shifted from having large manufacturers generally disinterested in the startup’s plug-in technology, to many of them now calling up Mission Motors because they’re in a rush to develop electric models (Honda, Yamaha, Piaggio and others have announced plans to launch electric scooters or motorcycles), and they increasingly “see value in working with a startup” that’s nimble and “technologically focused.”
Of course, heightened interest in Mission Motors may have something to do with the unveiling of its Mission One prototype at the 2009 TED Conference in February, but North noted, “Building up the technology internally will take them much longer.”
Just look at Tesla, said North — a former Tesla engineer: When the electric car maker launched a few years ago, it might have seemed impossible for Tesla to compete with the resources of a major automaker like Mercedes-Benz, part of Daimler AG (s DAI). Fast-forward to today, and Daimler has invested $50 million in Tesla to use its battery pack tech and get an electric model to market as soon as possible, while the U.S. government has stepped in to help the startup realize those mass market goals.
Others in the industry see Vectrix’s financial troubles as an illustration of something other than bad timing, however. According to Rob Ferber, CTO of KLD Energy Technologies and Tesla’s former science director, the luxury electric motorcycle market that Mission Motors is eying as a stepping stone to the mainstream may simply be smaller than the market Tesla tapped with its $109,000 Roadster — too small, perhaps, to support a viable business at this point.
As the market develops, Ferber expects some of the earliest opportunities to arise in markets with lower performance and warranty expectations (that’s where KLD is hoping to grab a foothold with scooters starting at $3,288), allowing startups to go through a few iterations of their technology without disappointing customers or smudging their reputation.
Mission Motors is already working on a second model meant to be more competitive with gas-powered motorcycles, although North said customers will still pay a premium for the second-gen technology. But the startup is setting a high standard straight out of the gate. North said the company remains on track to sell 300 Mission One motorcycles in the 2010 model year, including 50 Premier Limited Edition models that are now open for reservation. While he declined to give numbers, he said some slots remain open and the company is about to launch a sales effort. As for the issue of financing, North said Mission Motors needs to raise less than $30 million over the next 3-5 years, and it has “really strong interest” now in pre-Series A discussions.
If the growing field of companies working like Mission Motors on electric two-wheelers in Vectrix’s wake can make the economics work, North said it could be a boon for electric mobility at large. “I don’t think we’re going to have (mass market) electric vehicles unless we have a really clear, profitable company. It looks much more possible for a smaller company to do that profitably,” he said, because of their ability to “maneuver on the edge of the technology more effectively.”