RTEV From Golf Carts to Electric Cars Businessweek

10 Май 2014 | Author: | Комментарии к записи RTEV From Golf Carts to Electric Cars Businessweek отключены
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RTEV: From Golf Carts to Electric Cars

That’s the vision of Mike McQuary, whose experience managing Web service Mindspring is helping him run a small startup in South Carolina

As the Internet revolution gained steam in the mid-1990s, Mike McQuary walked away from a comfortable career as an operations manager for Mobil’s chemical division to join a small Atlanta dial-up service called Mindspring. That career gamble paid off in 1999 when the Internet service provider announced a merger with California-based EarthLink (ELNK)—leaving McQuary, by then Mindspring’s president, enough money to do anything, as he says, but not enough money to do nothing.

But what to do next? After seeing the merger through, McQuary, who is now 48, left EarthLink, started a small record label, and dabbled as an angel investor. But he didn’t really find his next calling until he stumbled on Who Killed the Electric Car. the 2006 documentary that chronicled the short life of General Motors’ (GM) EV1 electric car. As he watched the film, McQuary was struck by the zeal that the customers who leased the EV1 had for the project.

That passion—the only other time I’d seen that was in the early days of the Internet, he recalls.

Soon after, McQuary bought a stake in a small South Carolina company that made golf carts, and he has spent the past two years remaking it into a platform for his next big venture: the launch in early 2009 of a low-speed—but street-legal—electric car. By 2010, McQuary hopes that the company, RTEV (which stands for Ruff Tuff Electric Vehicles), will be one of the first companies to come to market with a full-speed electric car. We can make great cars that customers can actually get excited about, McQuary says.

Competing Against Giants

Still, the odds of success for McQuary’s latest venture are about the same as for, well, an Internet startup. Right now, battery technology is not advanced enough to power a full-size sedan for a long distance, and with McQuary admittedly relying on off the shelf technology, he won’t have a competitive edge when more powerful batteries do become available. Then there’s the cost: Because of the currently hefty cost of electric batteries, the 35-mph, two-seat model McQuary will launch in 2009 will run something less than $30,000—more than double the current price of a gas-powered compact, such as the Toyota (TM) Yaris or Hyundai Accent.

Even then, McQuary will have to convince consumers that RTEV’s cars are as reliable as electric cars being developed by such giants as General Motors (GM), Nissan (NSANY), and Chrysler, as well as such well-funded and higher-profile startups as Tesla Motors, whose sleek roadster zooms from zero to 60 mph in 3.9 seconds. The history of the auto industry is filled with companies like this, says James Hall, a principal at 2953 Analytics, a Detroit auto-industry consulting firm. Hall says consumers shy away from smaller automakers because [they] may have a nice early vehicle, but you may find they’re not around after a while. What’s more, building cars is psychotically capital intensive, Hall says.

I wish him luck.

McQuary is confident that his company can compete, even with less capital. You’ve got to make sure you’re spending wisely and being smart, he says. From his experience at Mobil, he says big companies have some inherent disadvantages in a fast-moving market.

RTEV will be able to do things more quickly, he judges, than a large company.

Golf Carts on Steroids

McQuary got into the business through a friend who had recently talked with a South Carolina entrepreneur looking for financiers to back a startup to design and sell golf carts made in China. After a bit of research, McQuary concluded that making carts was a losing proposition: The golf-cart market was flat and dominated by two entrenched players. But he was intrigued by the possibility of using the technology for other electric vehicles. In 2006, McQuary approached the entrepreneur, Bo Huff, and proposed retooling the business to sell a broad line of electric vehicles—including cars.

We started throwing numbers around, Huff says, and the outfit soon had a new direction, with McQuary as chief executive.

The Winnsboro (S.C.) company sells a line of what McQuary calls golf carts on steroids. These can be used as utility vehicles by outdoors-based businesses. One fast-selling model is a four-wheel-drive cart called the Hunter that has become popular with sportsmen: It’s painted in camouflage colors and allows hunters to travel up to 50 miles on a single charge. By yearend, RTEV hopes to roll out a line of Wheego scooters that can hit 40 mph.

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The low-speed street car is slated for next year.

Electric vehicles are starting to gain traction with consumers. A rival, Global Electric Motorcars, a subsidiary of Chrysler, sells six models with a top speed of 25 mph for urban settings. RTEV hopes to sell 2,500 of its electric vehicles this year and 4,000 in 2009, as it is struggling to turn out enough vehicles to meet demand. We’re way oversold, says Preston Wrenn, RTEV’s vice-president for engineering and product development.

Revenues are small but growing: Last year RTEV, with 22 employees, booked $8 million in sales, and McQuary believes the company will hit $12 million this year and is capable of growing 50% each of the next few years. He isn’t sure if RTEV will break even this year. If we grow as fast as I want to grow, we may lose a couple of million dollars, because of costs to boost production, he says.

Certainly, next year we will be cash-flow positive.

The Battery Problem

But for McQuary and RTEV, the big payoff will come if they can design and develop a street-legal electric vehicle that can give consumers relief from $4-a-gallon gasoline. The company has several prototypes for a low-speed street vehicle that can go up to 35 mph and be used by urbanites making short trips around town. One model is a two-seat hatchback called the Noble, which was converted from a gas-powered car sold in China. McQuary admits that a big challenge has been that most of the electric batteries available aren’t powerful enough to provide the creature comforts most drivers are accustomed to.

Air conditioning is a big draw of electricity and power, so our test cars don’t have them. In the very first cars, we probably won’t have a very sophisticated heating and cooling system. Eventually we will, as technology evolves, he says.

Wrenn says battery technology is changing by the minute right now. He sees potential in lithium ion batteries, which RTEV is testing. Small versions of the batteries are used in laptop computers, but they aren’t capable of powering cars over long distances.

It requires a lot of complicated technology to maintain the thermal stability of those batteries, Wrenn says. And while the battery makers claim they’re nearing a breakthrough, Hall, the auto industry consultant, notes that battery companies have been making big promises for years. There are liars, there are damned liars, and there are battery engineers, he says.

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