A teaser image of the new Detroit Electric sports car. The Wayne County facility will have an annual production capacity of about 2,500 vehicles. (detroitelectric.com)
An old Detroit name backed by Chinese investment has plans to produce a high-priced electric sports cars somewhere near the Motor City.
Detroit Electric, which made electric vehicles here in the early 1900s before disappearing for seven decades, has been resurrected, at least in name.
And it is on a mission to become a global manufacturer of electric vehicles — without taking a penny from the U.S. government.
"We really want to change the world in the bigger sense," said Don Graunstadt, CEO of North American Operations at Detroit Electric, in a telephone interview on Tuesday. "We intend to make practical, affordable electric sedans and crossover vehicles for people to drive."
Detroit Electric says it has four vehicles in the works for the next two years: There's the high-priced sports car and another sports car, to be built by Detroit Electric. And there's a high-volume crossover and sedan, which Detroit Electric says it will build in conjunction with a "major Chinese" automaker.
But first the company will have to raise a bit more capital.
Detroit Electric has raised tens of millions of private equity, according to Graunstadt, mostly from investors based in Hong Kong and from the bank accounts of the management team, which includes Albert Lam, former group CEO of the Lotus Engineering Group and executive director of Lotus Cars of England.
But Graunstadt said Tuesday the startup automaker does not want funding — and nor will seek any — from the federal government, unlike the electric vehicle makers Fisker Automotive Inc. and Tesla Motors Inc. (Detroit Electric previously paid back a loan from economic development agency Ann Arbor SPARK, and could seek local and state incentives when selecting a manufacturing site.)
The rest of the money needed will come from initial sales of a limited-edition electric sports car in the U.S., Europe and China beginning this summer, Graunstadt said. The two-seater, built on the same platform as the Lotus Elise, will be unveiled next month at the Shanghai Motor Show and will cost "in the neighborhood" of $135,000, when it goes on sale later this year.
Profits achieved from that car should allow the automaker to accumulate enough to build another sports car early next year. And profits from that sports car will help launch a higher-volume crossover and sedan in late 2014, Graunstadt said.
"It's kind of a feed-forward scheme," he said. "The further you get along, the more interest you have."
The sports cars will be built in two locations: The Netherlands for the European and Chinese markets; and at a still-to-be-determined location in Wayne County for the North American market. Graunstadt expects more than half of the nearly 900 initial sports cars to be sold in North America.
The automaker will set up its world headquarters at the Fisher Building in Detroit, and plans to fill 180 sales and manufacturing positions by the end of the year.
The Wayne County sports car facility will have an annual production capacity of about 2,500 vehicles, Graunstadt said. He said it is likely a larger facility would be necessary for the crossover and sedan.
"We don't have any definite plans, but if you follow the dots, someday we will have to have a major facility here for that product," he said.
"But we won't have to buy a $480 million plant in Delaware to build cars," he said, taking a jab at Fisker, the California automaker which bought a former General Motors Co. plant in 2009, but has not produced any cars there.
The comparisons between Tesla, Fisker and now Detroit Electric are similar.
"Starting a car company is not easy and it's very expensive, and what we have seen from Tesla and from Fisker is that it's a roller-coaster of trying to get money," said Michelle Krebs, senior analyst at Edmunds.com. "It always takes far more than anyone anticipates."
Detroit Electric previously existed from 1907 through 1939, at its peak selling about 2,000 electric cars annually, mostly to women and physicians who wanted to avoid the physically demanding hand cranks required for the era's internal combustion engines.
During that time, many famous people owned Detroit Electric cars, including Thomas Edison, John D. Rockefeller Jr. and even Clara Ford, the wife of Ford Motor Co. founder Henry Ford, according to company records.
In 1929, the company filed for bankruptcy, but was kept afloat and produced a small number of cars for the next decade.
The brand was then revived in 2008 by former Lotus executive Lam, whose goal is now to capitalize on an untapped premium electric-vehicle market.
"These are not going to be quirky runoffs, they are going to be very credible, real cars," Graunstadt said.