By on April 4, 2008

new-zap-alias2.jpgJim McGreen wanted to make some money in a green business. A craftsman-like mechanic, he had success making and selling electric bicycle kits out of his Alameda garage. Like so many others, he thought electric vehicles (EVs) were the obvious answer to pollution and expensive fossil fuels. In 1992, McGreen founded ZAP (Zero Air Pollution) Power Systems. But he needed more capital. 

Gary Starr had started an EV division at Solar Electric Engineering, a struggling solar cell firm later renamed US Electricar. In 1994, Electricar sent Starr packing, but not without plenty of cash to invest. Starr soon found McGreen. ZAP incorporated with McGreen, Starr and their wives as the board of directors.

Two years later, ZAP went public, clearing over $2m. McGreen invented the Zappy upright scooter in 1997. The $650 15 mph two-wheeler caught on with celebrities and public alike. Kevin Spacey rode his on Letterman, and Edward Norton called ZAP, asking them to make his go faster (than Spacey's).

ZAP sold over 2k Zappy scooters in 1998. But even $1.4m in sales wasn't enough to turn a profit. Starr argued that ZAP could cut costs by outsourcing production to Asia. McGreen was committed to quality. Starr, however, had masterminded adding three directors to ZAP's board. Late in 1999, Starr, his wife and his three new board members voted Jim McGreen out as president and CEO, putting Gary Starr in charge.

Under Starr, ZAP attempted to replace McGreen’s production expertise by purchasing Global Electric Motorcars (GEM), successful builders of low speed EVs. Failing there and elsewhere, ZAP's share price plummeted from a peak of $13 to $5.50 by April 2000.

Starr brought in John Dabels, former Marketing Director for the GM EV Program, to manage operations. As President, Dabels managed to double sales, raising annual revenue to $12m, but also resisted outsourcing to Asia. Dabel soon tired of butting heads with Starr and resigned in January 2001. (He later was a suspect in Who Killed the Electric Car?)

Zappy knockoffs drove stock prices under 50 cents a share. So Starr axed 80 of ZAP’s 100 California workers and outsourced to Taiwan. Almost immediately, cheap Asian copies– selling for a quarter of the “real thing”– flooded the market. With annual revenue falling below $5m, ZAP filed for Chapter 11 with a suspended Nasdaq share price of 21 cents.

Somehow, Starr emerged from Chapter 11 as board chairman. He brought in used-car dealer Steve Schneider. Between them, they gained controlling interest of Zap. Issuing stock as payment, ZAP went on a buying spree and learned the power of the press release to impress new investors.

Announcing the $99k fuel-cell Worldcar for 2003 pushed the stock price to $1.85 a share. Announcing their rights to sell smart cars– though later debunked by Daimler– drove it to $2.60. By 2005, ZAP's stock price was back down to 26 cents. A sympathetic USA Today article in 2006 raised ZAP's stock up to $1.23. Eventually, both the Worldcar and the flex-fuel, Italian-built Obvio (announced for 2005) faded into the ether.

ZAP has actually sold an EV: the Xebra, a three-wheeled Chinese EV with a Daktari paint option. As reviewed on TTAC, its lethargic top speed, limited range and cheesy detailing does not impress. The Xebra’s poor reliability also turned out to be the bane of unwary dealers that sank hundreds of thousands of dollars into Starr and Schneider’s promises– only to find themselves selling cheap EVs that had to be repeatedly towed back to the dealership.

And yet ZAP is still attracting investors on the vapors of green PR, promising two "fast, sexy and affordable" EVs within only two years.

For their $32,500 three-wheeled Alias sports EV, ZAP claims 321hp and 156 mph. Albert Lam, chairman of ZAP's joint venture with Chinese coach-builder Youngman said, "I believe we can go into production by the second quarter of 2009."

For the $60K Zap-X CUV EV, ZAP claims 644 hp, 0- 60 in 4.8 seconds and 155 mph, performance comparable to a Porsche Cayenne Turbo. Even less believably, ZAP claims a 350 mile range and a ten-minute recharge.

"This is vaporware," responds auto industry analyst Aaron Bragman, of Global Insight. "The claims they've made just don't jive with the current state of technology."

Despite the long development times seen with the Tesla Roadster and Chevy Volt, Youngman promised China Daily last October that, "the sample vehicles will be finished at the end of this year (2007) or next January" and "two or three months after testing, the electric powered sedan under the Lotus brand (Zap-X) will be the first to go into mass production."

But even the $40m Youngman has invested isn't nearly enough to actually deliver radical new EVs in that time frame. At least we'll know who killed this electric car.

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20 Comments on “Zap Electric Vehicles: We Won’t Get Fooled Again...”

  • avatar

    There is an excellant article about this in a recent issue of Wired magazine. Besides the whole sordid tale of coporate deceit and backstabbing, one thing I noticed was that ZAP didn’t want a negative article from Wired (no surprise) but their resoning was (paraprhrased) “You shouldn’t put us down, we’re a ‘green’ company trying to do something ‘good’ for the planet”. I’m glad Wired rsisted that twisted logic to twist their story.

  • avatar

    From Hype Machine: Searching for ZAP’s Fleet of No-Show Green Cars

  • avatar

    Fools and their money are soon parted.

  • avatar

    Well that’s certainly a very thorough retelling of the Wired article. Um, were you going to mention the Wired article??

  • avatar

    I would like an electric car, but after reading this stuff, it’s tainted my thinking about buying one from a non-mainstream manufacturer.

    OK, Mitsubishi, Subaru and Nissan. Get your “stuff” together and start selling pure electric cars within a few years and we’ll talk.

    I commute 35-40 miles per day, no faster than 55 mph. Need two seats, four would be better.

    I need heat and a/c, need sub-zero degree capabilities.

    And a price tag no more than 10% higher than Prius.

    It’s soon time for electric cars. First one off the pot gets the prize.

    And it isn’t just one guy waiting, either. There are TONS of us ready to pull the trigger and go electric.

  • avatar

    starlightmica Thanks for the link, that is another good read.

  • avatar

    Reminds me of the whole dotcom bubble a few years ago. Lots of promises with very few actual deliveries. Amazing how short the memory is of these venture capital folks.

    Too bad, really, as I’d be in the market for a decent electric car. My wife and I share a 32 mile round trip commute each day. An electric car with a 50 mile range, 65mph speed, and a decent heater would fit nicely. 2 seats would be fine as well. Every promise of one of these seems to be all hype though.

  • avatar

    I’m not convinced there is a very large market for a pure electric car. People want the ability to go on a road trip with their car, even if they rarely or never do, or even if they have a second vehicle. Kind of like how people buy SUVs that never leave the pavement.

    I think plug in hybrids are where it’s at. The Volt, if it was a Prius-sized and Prius-priced, would be a huge hit. However, it’s smaller and will cost twice as much, apparently. I suspect the next generation Prius will be a plug in hybrid that will hit all the right notes in terms of range, mileage, and price.

    You’ll note that Toyota almost never discusses their long term projects. You hear nothing about their future models until three to six months before they show up at your local Toyota dealer.

  • avatar

    The story of ZAP is so convoluted, I’m surprised Malcolm Brocklin wasn’t involved.

  • avatar

    TTAC user jdriver, let this be a wake up call to you.

  • avatar

    These guys remind me of Vancouver exchange penny stock flim-flam artists. What is amazing is how many should-know-better people they have bamboozled over the years.

  • avatar

    Yes, starlightmica tipped us off to the long Wired piece, and I found a shorter Wired blog piece, and thought a “readers digest condensed” version of both would be useful. Somehow the attribution fell through the cracks.

    I’m not convinced there is a very large market for a pure electric car.

    The more I learn, the more I agree. Up until last year, I really wanted an EV, but batteries don’t seem to be all that flexible. I do like the idea of the Twike, which you recharge by pedaling while you drive, but until I can actually see one I’m withholding judgment.

  • avatar

    Randall Sullivan the esteemed writer of the Wired article was written by some is a known plagiarizer and will use any source that meets his criteria no matter how illegitimate.

    For example:

    Randall sullivan wrote a book called LAbirynth, its about Thug life in the streets of La and mainly covers the rap music industry and crooked LAPD back in the day of Tupac and Biggie.…

    in his book randall explains and reinforces prior interveiws with a prison inmate whom allegedly worked very closely with sug knight a rap label representitive. the inmate mark hylland who insists he was present when suge knight put the hit out on smalls. hylland according to sullivan, says he met knight in a denny’s parking lot where knight opened the trunk and passed out cash to a crooked lapd officer whom then gave it to hylland to pass to the man who would buy the gun used to kill biggie smalls.

    Recently The La times released an apology to sean “diddy” combs whom was accussed of taking part in the set up of tupac shakur’s assault

    ““The Los Angeles Times apology is, at best, a first step,” according to a statement from Howard Weitzman, attorney for Combs, “but it doesn’t undo the false and defamatory nature of the story, or the suspicion and innuendo that Mr. Combs has had to endure due to these untruthful allegations and the irresponsible conduct of this particular reporter. We have nothing further to say at this time.”

    The Smoking Gun said the documents seemed phony because they appeared to be written on a typewriter instead of a computer and included blacked-out sections not typically found in such documents, among other problems.

    The Web site claimed the documents were fabricated by a prison inmate with a history of exaggerating his place in the rap music world.

    The Times said its March 17 story was based on FBI records, interviews with people at the scene of the 1994 shooting, and statements to the FBI by an informant.

    None of the sources was named.”

    That inmate one Mark Hylland is the same inmate who told Randall sullivan about the biggie murder set up.

    This Goes to show that Randall will acuse someone of murder just because a crazy ex druggie Wannabe rapper told him it was so.

    im wondering if most of his sources that are disapproving of zap are as valid as the inmate’s claims.

    This guy will write anything for a quick buck, how can you trust anything that he wrote.

    LA times apologie…

  • avatar

    There you go. He’ll even tell you what pieces you need. It’s on YouTube too.

    It’s exactly what I need. Similar performance in a vintage VW Beetle wrapper would be even better. 130K miles would last me a long, long time.

    By the way that expensive battery they use? Still about $4-5K cheaper than the gasoline you’d use at 30 mpg and $3.25 a gallon.

  • avatar

    It seems like ZAP might be a company more worried about it’s stock prices than it’s product. I think the 2.8 automakers and a laundry list of other American companies have demonstrated why this is bad…

  • avatar

    Brace for the onslought of snake oil salesmen that are going to populate this market for the next few years, there’s a lot of money to be made on promises alone.

  • avatar

    Where did you get this information? I was working at ZAP during this time period and it sounds like you got Jim McGreen’s side of the story, but not Gary’s. I have a great deal of respect for both of them, but you have reported a one-sided story here that makes ZAP look very bad. I can’t imagine why Jim McGreen, who resigned but could have stayed at ZAP to this day building EVs, would say such things when he is probably one of the only people who became wealthy as a result of working at ZAP. Last I heard he was investing in dot com companies and now suddenly this!?!? Something is not right here.

  • avatar

    Is anyone else at all concerned about the fact that there is an active link in this article that goes to a paid advertisement for Daimler Chrystler. As far as I’m concerned you loose all credibility right there.

    Also, there are three people quoted in that Wired article, Scheider-Basin, Brandao, and Ehab…who formerly worked with or for ZAP and have now started their own EV companies with a vested interst in eliminating ZAP as a competitor.

    It’s like basing your view of electric cars from an oil executive.

    Personally, I love my Xebra pick up truck!
    It’s not a cadalac, but I don’t need one anyways. Everywhere I go people complement me on it, and I am saving about $200 a month!

    Have fun waiting for Big Auto to deliver a real alternative, and have fun at the pumps at $4.00/gal!!

  • avatar

    I would not trust any company which Gary Starr in involved with. My experience buying an electric vehicle from him was a tremendous disappointment: promised the moon, delivered next to nothing. I have heard of too many investment scams by him in the ensuing years to trust ZAP or any of the vehicles he is connected with.

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