Investor Q & A's

We understand that you may have many questions.  Here are some questions and answers we would like to share them with you.  But please, if you have a question, ask it!  The transportation and manufacturing business is very complex and do not be afraid to ask questions.  The reward is worth it!

Q:  Why a Low Speed Vehicle (LSV)/Neighborhood Electric Vehicle (NEV)? Why not standard highway capable cars like Tesla and the GM Volt?

A:  We are a low volume (<30,000 vehicles/yr) niche manufacturing company looking for our niche.  We believe strongly in the future of electric vehicles, but to build one to compete with the big Original Equipment Manufacturer’s (OEM’s) is not smart and takes a lot of money and resources.  So is there a LSV (Low Speed Vehicle) market?  Yes, there is!  It is estimated today that there are about 50,000 LSV/NEV’s registered on America’s streets with about half in California.  Our projections based on market research by ourselves and our advisors are 200,000 units/yr in the fleets and 2 to 3 times that in private retail.  These markets will take some time to develop and they only partially exist today because the market does not have an EcoV like vehicle available.  But the fleets are hungry for an alternative that offers operational cost savings and is budget and environmentally friendly.  They want an alternative that provides the design elements to safely and reliably serve their needs everyday.   This has been missing until EcoV.  And we welcome competition, since this will open the market faster.  We do not need World domination to be successful and profitable, just 10,000 to 20,000 units/yr.  If the market expands to be larger than that, we can add capacity to build more.
     Alternative energy is going to be the new dot-com (but without the down side at the end).  Opportunities to get into the transportation business are going to be limited, particularly if you want to compete with the big OEM's.  Roadworthy LSV's are an immature market because the products being offered today are not meeting buyer expectations.  There is a strong desire for something better and affordable, and EcoV is exactly that.  It is a low volume niche and when the OEM's start producing standard electric vehicles the price is going to be double or triple EcoV's price.  Charging full electric standard vehicles will also require special charging infrastructure which EcoV does not need.  The next generation of EV’s will be very costly to produce and will take many generations of redesign and tooling as volumes grow to get even close to where internal combustion engines are today.   All these new parts take massive, expensive engineering, development, testing, tooling, and TIME! GM is talking about $500M invested in 2007 and another $500M for 2008 to get the Volt ready.  This creates an opportunity for us and there is a very definite market niche for a LSV like EcoV.  No OEM will do a LSV because they can't afford to do low volume, low price products that potentially take sales away from more profitable products.  OEM's need high volume, high price products to cover their overheads.  Tesla has spent over a $110M and they are still not done with their $98,000 sports car.  Charging will remain an issue since Tesla will start with charging only at home.  There will be no infrastructure in place to charge away from home.  LSV’s do not have these issues to deal with; they charge in any standard wall outlet.
        There have been numerous studies looking at NEV’s, but most deal with products not designed to be operated on mainstream public roads.  They have focused on resort, recreational, master plan and closed communities.  Great applications for NEV’s and LSV’s but these products do not feel comfortable, safe or useable in downtown areas for city services or commuting.  EcoV has taken that next step.  We have talked with fleet customers in numerous States including Michigan.  We have commitments in Michigan to test EcoV as soon as it is available.  We have an electric utility, two community cities, a major city parking enforcement division, two college campuses, a security patrol company and the US Postal Service.  The fleets need to control their operating costs and fuel is going out of sight for them; they are hungry for the operational cost savings EcoV can provide.  EcoV can be paid for in less than a year over any other choice of roadworthy product.  EcoV has an annual “fuel” bill of under $100!  But recognize that EcoV will not do everything; it works only in the right applications and that is what our sales team has identified.

Q:  Why should we believe what you say?

A:  We are a team of people who have been involved at the OEM’s (original equipment manufacturers, like GM, Ford, others) or Tier 1 suppliers.  We have seen it all, many times over.  Doing a new product is never easy, but having done it before makes it easier.  We understand where the “landmines” are and how to avoid them.  We are not a bunch “engineers” or a bunch of “salesmen,” in fact we are a full range of people and experiences from the Board Room to the showroom.  We have significant sweat and money equity in this and will not let it fail.  We have backup plans for any possible circumstance.

Q:  How can you do a new vehicle for so little capital?

A:  Anyone can do a new car programs for $1B to $2B!  But to do one for $5M is quite different.  We are highly leveraged with partners who bring skills, talents, and facilities to our program.  For example, our assembly partner brings an established business doing a world class assembly job in a world class assembly facility to our program.  We pay for space and labor, they bring everything else! 

We have designed our product around existing current technology, proven, off-the-shelf high volume automotive and industrial parts.   This saves very large amounts of money and time to design & tool for new parts.  Lastly, we are doing a Federal Motor Vehicle Safety Standard class of Low Speed Vehicles, which requires much less design and testing to be certified as a street legal vehicle.

Q:   If it is so easy, why wouldn’t a major OEM do this?

A:   Our product is low volume and low price in a somewhat undeveloped market segment.  OEM’s need high volume and high price to cover their high fixed costs.  If they do niche markets, they need very high prices.  OEM’s do not want to develop a new market segment particularly when it could take sales away from higher priced products they are currently selling.   With sales of 20,000 units per year, EcoV can be very successful and profitable in our niche because of who we are and how we do things.  OEM’s can’t do this.

Q:  I have heard about foreign car companies building $2500 complete vehicles; wouldn’t they take over this market if they wanted to?

A:  Electric vehicles are more expensive to build even in foreign countries, particularly if you want to build a robust, roadworthy commercial vehicle.  EcoV is actually slightly larger than these $2500 vehicles.  These $2,500 vehicles are designed to be one model and built in 1,000,000 units/yr to get to low costs.  EcoV is a family of vehicles designed for a niche market and low volume.  These $2,500 vehicles are not designed and built for US market and if brought to US would require major expenses in shipping, sales, service, marketing and distribution.   And again, LSV’s are a niche market not a high volume market to cover these expenses.  And we know the US market well.  As the Low Speed Vehicle market grows, there is always a threat of more competition, but as sales volume grows, so do the opportunities for us to lower our costs with higher volumes.

Q:  I don’t get it; why do some of these low volume niche electric car companies in California need $100’s M to bring a car to market and you need $5M?

A:  It is not a fair comparison.  They are trying to build a full FMVSS (Federal Motor Vehicle Safety Standards) certified vehicle that is capable of doing much more than an electric Low Speed Vehicle. They also require the design, development, and validation of all the new components their vehicles require.  This takes lots of time and money.  They are also learning how to do automobiles from a design and validation stand point, while we already know how.  We picked a LSV first because it is much simpler and lower cost way to start.  LSV’s our also lower risk for our investors, and there is a solid potential niche market for EcoV.

Q:  What is the basis for the financial numbers?

A:  The financial model was put together by a team of people including an ex-CFO, ex-financial executive from an OEM, marketing research, engineering, manufacturing and purchasing inputs.  We have continued to refine and update the model as new data is acquired.
     We have a running Proof-of-Concept prototype that continues to represent the size, function and performance of EcoV as we use it to show and do testing and development to continuously improve.  We have a complete Bill of Materials with 80% of suppliers identified and 90% of the costs quoted or estimated.
        Yes, there is more to be done and more to be redone to confirm our financial projections, but that is the first major task once funding is in place.

Q:   What is the basis for the marketing numbers?

A:   We have been conducting marketing clinics over the last 5 years, in Florida, North Carolina, South Carolina, Indiana, and Michigan.  We have listened carefully to what our prospective customers say and based on our understanding of the auto industry, we have been able to translate those comments into a product concept and design.  EcoV is the second concept vehicle that came as a result of these discussions.  Now EcoV gets very favorable reviews, so we have hit the targeted markets.

      We are marketing EcoV to a different type of buyer than most LSV’s target.  Most LSV’s are the original paradigm of a dual purpose vehicle to use on the golf course playing golf and on restricted access public roads as in a closed community.  They work very well for that purpose but they don’t feel roadworthy outside the closed community on public roads.  EcoV was design to be roadworthy and EcoV feels safe on all public roads, 35 mph or slower.
     With this understanding of the potential market acceptance, we identified key customers and quantified the numbers of vehicles in their markets.  It is EcoV’s ruggedness and perceived safety that allows us to expand the LSV market.

Q:  The domestic auto industry is going down the tubes, why would anyone jump in?

A:  We are not an “automobile company” in the sense that we don’t compete directly with products the auto companies’ produce.  We are an environmental transportation solution, just as our company name states.  We still need city/ urban transportation solutions that are easy on the pocketbook and the environment.  EcoV is that and more, a true alternative energy solution for city transportation.
    We run our business as a lean “virtual” company that does not require a lot of fixed assets.  Because of this we can breakeven on 1,050 units annually.
    We are based in Detroit and SE Michigan where the talent pool, supplier community, and knowledge of assembling transportation products is strong.  We are ”Motor City” for a reason!

Q:  I don’t know anything about the auto industry.  Why should I invest?

A:  Number 1 reason is we can provide a great return on your investment; just ask for the details.   The financial return is what you take to the bank, but being at the fore front of the shift to zero-emission electric city transportation, you take to your heart.  EcoV represents the start of a new thinking about the old gasoline engine, do-all vehicle solution that is dying. All the auto companies are “electrifying” their fleets and EcoV is already there with proven off-the-shelf technology.
     If you don’t understand, ask why five times and you will understand.  Remember, you are not investing in a group who has not done auto-like products before; we are not amateurs at introducing new products to market.  The opportunities to invest in “green technology” are growing daily.  EcoV represents a lower tech, lower risk opportunity to get into something the market is screaming for: environmentally and budget friendly urban transportation alternatives.

Q:  Where does EnVironmental Transportation Solutions go in the future?

A:  We are not a one trick pony.  As EcoV launches and goes into production, we will be able to grow and expand further.  We could perhaps add a second plant to better service other areas in US.  We will have options to license the technology overseas or set-up manufacturing in 3rd World countries where the demand for LSV’s could be even greater than US.   We will have the financial reserves to develop new products.  EcoV is technology neutral and as new batteries, motors, controllers become available we can explore extending the range or performance of EcoV.
     We are interested in moving to the next level which would be an urban commuter vehicle capable of operating on expressways.  We are currently converting an older gas engine vehicle to electric drive to better understand the technology, components and trade-offs with today’s parts and systems.  EcoV’s technology could be extended to a full FMVSS certified standard street product.

If you have further questions contact: info@EcoVElectric.com