Is This the Next Tesla (NASDAQ: TSLA)?

Brian Hicks

Written By Brian Hicks

Posted March 21, 2013

Detroit Electric is vying for another shot at glory as it announced Tuesday its launch of a brand new line of electric vehicles (EVs).

I say “another shot at glory” because it’s not the first walk in the park for Detroit Electric. Believe it or not, way back at the turn of the twentieth century, electric cars were produced under the Detroit Electric name. One traveled at a whopping 20 MPH, and the company was able to peak production at around 2,000 cars in one year.

Detroit Electric CoupeUnfortunately, the combustion engine came along, the country suffered through the Great Depression, and by 1939 the company just wasn’t fast enough to keep up and fell by the wayside.

Now – the better part of a century later – it’s remarkable that with all of our technological advances, EVs still seem to be sitting on the side of the road. Companies, despite efforts, have been unable to produce an EV that can stand the test of time.

Building a new car from the ground floor is a troubling feat, and thus far many start-ups have run into problems with one of three things: capital, technology and engineering, or a combination of all three.

Presently, the only independent, high-volume EV builder is Tesla Motors (NASDAQ: TSLA), which is backed by billions of dollars in private capital but also has a government loan for $465 million, according to Yahoo! Autos.

Surprising virtually everybody in the industry with the announcement, Detroit Electric is returning to where it all started – Detroit, Michigan.

There, in the Fisher Building where they have leased offices on the 18th floor, development will take place, and Detroit Electric will aim to be the innovative electric car manufacturer that it once was. The plan is to have 180 non-unionized employees on board by the end of the year, comprised of a sales and a manufacturing team.

And a deal is close to being finalized for a facility in Wayne County that would be set for assembly sometime in August, with the capacity to produce 2,500 vehicles, reports Michigan Live.

It was 2008 when the idea to revive the Detroit Electric name came to fruition. Albert Lam, the former group CEO of the Lotus Engineering Group and Executive Director of Lotus Cars of England, is the man behind the plan, Michigan Live reports

The company will be funded through private equity – a $50,000 loan from an Ann Arbor-based company called Spark, which has already been paid back – and the kicker: absolutely no assistance from the federal government.

Detroit Electric’s CEO of North America Operations Don Graunstadt says that tens of millions in private equity has already been raised – primarily from China, according to Michigan Live – and no additional funding will be sought from the government.

Avoiding any government assistance is a sign of strength and a surefire way to avoid any public and/or political scrutiny that a company often faces when tied up in government money.

There has been contact with Proton Power Systems Plc (LON: PPS) of Malaysia for overseas production, as well as Dongfeng Motor Group Co. Ltd (HKG: 0489), the Chinese automaker, reports Yahoo! Autos.

Detroit Electric’s first electric vehicle is being kept under wraps for now, but we do know that it is a two-seat sports car that will hit the market by the end of this coming August. It will be the first in a line of 100 percent EVs that will likely see production by the end of 2014.

Graunstadt says the car will outperform the Nissan Leaf’s range of 75 miles, be built with a carbon-fiber body, and its first edition will only be produced at a limited quantity of 888, according to Detroit Free Press.

On paper, it should look similar to the Tesla Roadster, which uses the same base platform – the Lotus Elise.

Its grand unveiling will be held on April 3 in Detroit before it makes a splash at the Shanghai Motor Show on April 20 – where Detroit Electric will make an announcement that it’s teaming up with a global producer. The anticipation of its new partnership has speculation swirling that it’s with one of the large manufacturers from China.

For now, Detroit Electric is licensed to use the Lotus platform for at least its first two vehicles.

The limited edition first model is running in the ball park of $135,000.


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