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Should You Be Skeptical of Electric Vehicle Startup Companies?

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author photo by Brian Moody August 2017

Here's a brief list of recent failed electric vehicle startups: Aptera, Coda, Corbin, Better Place, Fisker, Li-Ion Motors, Manhindra E2O, Human Car, and Spyker. I'm sure there are others I don't know about because they never made it to the place where they hire a low-level marketing shop to spin stories and stretch the truth in order to prop up a financially shaky organization. Think Ben Affleck's character in "Boiler Room," but with the facade of being an automotive company.

What's True?

Bottom line, If you ever read long and glowing predictions of a prosperous future for any of these companies or their cars, you should be mad. You should be mad at the company marketing and PR reps who repeatedly pitched the story knowing they were low on cash or that an actual car was 12-18 months away (if ever), and you should be mad at the writers and journalists who, at best, enabled them by not asking the right questions or, at worst, ran a story they knew or suspected wasn't true.

Sure, there are some who use their own money to build a prototype. Even they will need investors and a manufacturing plan, but respect the guy who believes in his project so much he puts up his own money first. For example, when I read about the Bollinger B1, I don't hear a lot of talk about cash reserves or pre-orders or, worse, "investment opportunities," just "Here's this cool truck I made, I hope people like it." I trust that approach a lot more than when I see the PR spin-machine kick into gear. If you see a Facebook page or ad with an "Invest Today" link -- run, don't walk, away.

Talking Points

I admit it; I'm also to blame. I'm one of those people you should be angry with -- several years ago, I did a video report for an enthusiast-oriented website on the Aptera 2e, a 3-wheeled electric car with lots of big promises.

Looking back, I don't know what made me think "4,000 pre-orders" was an important detail to include in the video story about an electric vehicle -- it's meaningless, and I simply didn't ask enough questions.

The truth is, "4,000 pre-orders" was a PR and marketing talking point designed not to help consumers, or even journalists, but to wind up investors and potential buyers by reassuring them that the car and company were NOT about to fail ... which they did, about 24 months later. Today, I would not do the story, at least not that way.

I drove the 2e and thought it felt kind of shoddy for a car that was set to be priced at $25,000 -- honestly, if people want to save gas, why not just buy a Chevy Volt or a used Nissan Leaf? Company officials assured me the 2e I was driving was an early prototype, and that the production versions would be much better. I bought the spin. I know, it's my fault, but I think I wanted the new era of startup EVs to be true so badly that I overlooked obvious flaws.

I mean, the Li-Ion motors Wave II won the Automotive X-Prize, so certainly they have some credibility, right? There's even a Green Car Reports article from 2011 detailing Li-Ion Motors' brand of PR and truthiness. By the way, kudos to Green Car Reports for bringing authentic journalism to the world of EVs. They have a passion for telling the truth and a heart for all things automotive, and it shows in their work.

Here's a good barometer for these types of cars and companies. If they have a website or press release or Facebook page where they prominently mention pre-orders, investor capital or cash reserves, it's a no-go.

Healthy Skepticism

Sure, General Motors has an investor-relations component, and they want to keep their shareholders up to date on how the company is doing. All automakers do this -- but you don't see Toyota putting that info on the homepage of Toyota.com or in a Corolla news release or alongside a Prius feature description.

The only reason cash reserves or pre-orders need to be mentioned is because there's an issue or fear that cash reserves and interest in the car are weak. Want to fix the problem? Great, go tell your investors with some kind of PowerPoint presentation and pepper it with words like "learnings" and "throughput." Don't lie to me in hopes of boosting revenue and easing the nerves of investors -- I know, today it's called "spin" or "massaging" or "messaging" or "nuanced." Today, using the work "lie" is kind of icky.

I like technology. I thought the portable nav system Dash Express was brilliant. I'm amazed that Subaru can offer thoughtful EyeSight safety and semi self-driving features in new cars costing thousands less than average, I love AppleCarPlay despite its quirks, and I'm really into Nissan's Predictive Forward Collision Warning, which (somehow) warns the driver of a possible emergency that's happening in front of the car in front of you -- no, that's not a typo, it watches two cars ahead all the time.

But given the track record of some new EV vehicles, I'm skeptical, and you should be, too. The only reason you'd have to tell the people "I'm not a crazy" is that 1) you've supernaturally landed in the movie "Hush Hush Sweet Charlotte" and someone IS trying to make you crazy, or 2) you're probably a little crazy and don't want anyone to know -- I'm going with number 2.

Think about this the next time you hear a new EV startup touting their pre-orders or financial stability. Ask yourself, "Why are they telling me this?"

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Should You Be Skeptical of Electric Vehicle Startup Companies? - Autotrader