Two presentations given at the EV Battery Tech 2011 conference in London this week illustrate the new business opportunities presented by the emergence of electric vehicles. Operating under revived brand names, but bookending the vehicle sprectrum, Detroit Electric and the Lightning Car Company discussed their strategies for bringing battery electric vehicles to market.
At one minute to midnight on Thursday 31 March, the Lightning Car Company will see its first road-legal, pre-production car roll off the line. Its Lightning GT is an all-new, four-seat electric supercar, developed from the ground-up. Targeting the vehicle at buyers prepared to pay an estimated GBP180,000 (approximately US$290,000) for a supercar with zero-emissions at point of use, the company is unapologetic about its approach: to sell expensive technology to people who can afford it.
Detroit Electric’s chairman and chief executive, Albert Lam, is a former chief executive of Lotus Engineering, giving him close links to Proton; unlike the Lightning GT, the company’s first car is a much more modest family sedan, based not on a new platform but on the Proton Persona. For cost reasons, Lam has chosen a two-stage business model, the first stage of which involves the adoption of an existing platform, rather than the development of an all-new platform.
Despite their differences in pricing, target market and volume, however, there are some key similarities in the two small companies’ business models. Both have chosen to pursue a collaborative business model, and both have chosen to outsource production.
In the case of Lightning Car, it is working with Getrag for the powertrain, Altairnano for the battery, Idiada for engineering and CPP for production.
With Detroit Electric choosing to build its car, the e63, on an existing Proton platform, it is unsurprising that Proton is also a key partner. Around 70 Proton engineers are involved in the programme, and the car will be built by Proton at its Tanjung Malim, Perak plant in Malaysia. Given that the car is being positioned as a family sedan, its choice of battery supplier, Dow Kokam, is particularly interesting. Dow Kokam batteries are widely seen as delivering high performance at a high upfront cost. Indeed, Dow Kokam’s chief executive, Ravi Shanker, recently told AutomotiveWorld.com that “there are chemistries which are cheaper, and constructions which are cheaper. We do see ourselves as being more expensive than those. But … we expect to be able to deliver better value.”
Both cars are due to hit the market within 12-18 months. Lightning Car has not revealed plans beyond the Lightning GT, but has indicated ambitions for future models. It is targeting production of no more than 250 units annually. Detroit Electric has numerous models in its plan. The company’s chief executive, Albert Lam, told AutomotiveWorld.com that following the launch of its first car – for which it is targeting around 6,000 units in the first year – it is close to signing a Memorandum of Understanding on the supply of an A-segment model. Beyond that, the company’s two-phase plan calls for an in-house developed model, expected in or after 2014.
Each company is gambling on the success of its first product, with Lightning’s all-or-nothing approach balanced by Detroit Electric’s more cautious adoption policy. However, regardless of whether either business ultimately succeeds, what is clear is that leading suppliers and OEMs are willing to consider, or even risk, new business models. Iain Sanderson, chairman of Lightning Car, calls himself a risk-taker. Clearly, this time of caution offers good reasons to take some calculated, strategic risks.
Martin Kahl
The AutomotiveWorld.com Expert Opinion column is open to automotive industry decision makers and influencers. If you would like to contribute an Expert Opinion piece, please contact editorial@automotiveworld.com
