ZAP: Then and Now
A short history of a pioneering company and the development of the Alias.
In order to provide some history of the ZAP Alias entry in the Progressive Insurance Automotive X Prize (PIAXP), one needs to appreciate the origins of ZAP, which is a challenge unto itself since ZAP was founded in 1994, over 15 years ago, making it one of the earliest companies to enter the EV business. So, please be patient, this could take awhile.
ZAP was founded in September 1994 as ZAP Power Systems in Sebastopol, California, a venture started by EV entrepreneur and ZAP PIAXP Team Captain Gary Starr, with his previous experience in electric vehicles, as well as other electric vehicle developers and advocates. Starr had previous experience with electric cars including Solar Electric Engineering and U.S. Electricar, which is currently known as Enova Systems . Starr was involved in more than 600 electric car conversions between 1989 and 1994 from Ford Escorts, GEO Prizms, Chevy S-10s, Toyota Paseos, S-10 Blazer SUVs, Pontiac Fieros and various kit cars, with sales to Hollywood celebrities, government agencies, military bases, the US Post Office, Ford and GM. He left that venture to start ZAP believing there was a growing opportunity in smaller bicycle and scooter EV designs that could be affordable for a greater number of people.
In the summer of 1995, ZAP Power Systems moved into a location in Sebastopol, California to expand manufacturing of electric bicycle systems and integrating them into bicycles built to ZAP’s specifications by various manufacturers. These products included the ZAP DX and SX bicycle kits as well as the ElectriCruizer, Powerbike, Smith & Wesson Patrol Bike, ZAPTRIKE, and others. ZAP began selling electric kits all over the world, including to Thailand. ZAP was one of the first to suggest to China manufacturers that they should move away from gas powered bikes and scooters, successfully selling 500 electric bike kits to the largest and oldest bike manufacturer in China, Forever Bicycle. Although electric bikes at the time were still new, today there are over 100 million on the road in China. This shows what a seed of pioneering technology can help create.
After some success with electric bikes, and wanting to expand into larger vehicles, ZAP sought to attract more capital by tapping into the red hot IPO market of the 90s and taking the company public. In 1996 ZAP launched innovative direct initial public offering in which it managed its own IPO without the retention of an investment banker, virtually unheard of in the investment world. Today, ZAP has over 15,000 shareholders (stock symbol ZAAP). This coincided with the release of the innovative ZAPPY® folding electric scooter and thereafter ZAP became internationally known, manufacturing and shipping tens of thousands of electric scooters and bicycles to all corners of the world.
It could be said that ZAP almost became a victim of its own success, moving electric vehicles from a cottage industry into a major tech trend. On the verge of the year 2000, ZAP had over 150 employees in Sebastopol with a small factory churning out as many as 100 electric scooters per day with several additional EV designs under active development. ZAP helped fuel a global craze for stand-on scooters, but it was not long before low-priced, off-shore Asian competition started copying ZAP’s patented systems, a painful lesson in highly competitive global marketing that nearly put the company out of business.
ZAP had been selling its US-made electric scooters for over $500, when offshore replicas started flooding the US market through several large retailers for around $200. Although ZAP sued and prevailed against
some high profile knockoffs, the expense of legal fees to assert all its patent protection would have been overwhelming. At the time, ZAP had a ‘Made in the USA’ philosophy to support domestic job creation but quickly faced the reality of global competition and worked to outsource parts production in Asia with final assembly in the USA. Also, the company began further diversification with other vehicle designs, including the sale of over 100 LECTRA motorcycles and other vehicles like go-karts, Powerskis, and over 10,000 Seascooters even electric roller skates. ZAP signed a binding agreement to merge with Global Electric Motorcars (GEM) in 1999 as a way to enter the neighborhood electric car market, but unfortunately the company was out-bid by Chrysler’s $30 million offer.
At the time, ZAP was widely regarded for its quality scooters, but when faced with two similar choices, consumers and especially chain stores demonstrated that price trumps quality. Sales plummeted and layoffs followed. By 2002, ZAP was turned upside down, helped in part by falling share prices, differences in management, the Dot Com crash and even 9/11. Over the next year ZAP voluntarily sought protection under Chapter 11 Reorganization, entering February and emerging with the backing of stakeholders in May 2002. Although most reorganizations leave the old shareholders with no equity position, ZAP’s plan was one of the few that gave all old shareholders a stake as well as stock options in the reorganized ZAP. ZAP’s plan of reorganization coincidentally enough was to get back into electric cars through new leadership and investment from current CEO Steve Schneider who had been looking to enter the electric car market with his own company Voltage Vehicles in nearby Santa Rosa.
Steve Schneider’s vision was to put ZAP firmly back into the automotive market, with a business strategy of setting up electric car dealerships for advanced technology vehicles, including electric vehicles. To build cars efficiently and profitably from scratch requires significant capital, so instead ZAP sought opportunities to import and distribute fuel-efficient vehicles from outside the country. We don’t have time to tell the tale of the hundreds of vehicles sold by ZAP, but these included the Teener (aka ZAP Intimidator L.U.V.), the WORLDCAR from Heibao of China, and the Heartland NEV. ZAP even secured an exclusive
relationship with a new company in Brazil, Obvio ! Automotoveiculos S.A., to build two new alternative fuel vehicles, although that fell through when Obvio was never able to produce the vehicles. ZAP even created its own hydrogen hybrid WORLDCAR in 2004 in partnership with Anuvu Fuel Cells because of the popularity of hydrogen fuel cell technology at the time, a vehicle that is sitting in its Santa Rosa Headquarters.
During that time ZAP moved its headquarters from Sebastopol to its current location in downtown Santa Rosa where it houses a corporate showroom to display its complete product line. Through its merger with Voltage Vehicles, ZAP became the owner of an auto dealership nearby in Santa Rosa. ZAP also leased facilities in the nearby warehouse district of Railroad Square for final assembly, storage and service for its electric vehicles, as well as a location for research and development on future vehicle projects.
ZAP’s most ambitious attempt to distribute energy efficient cars was through its pioneering work with the first micro car to sell in the USA, the Smart Car. ZAP funded all of the original engineering, crash tests and emission tests to bring the first vehicles from Europe to the USA. Smart had test marketed the cars in the USA, but pulled the plug saying there was no market as Americans appeared to prefer big cars. ZAP believed differently and the first Smart Car sold legally in the USA was delivered by ZAP to a customer in Nevada on May 17, 2005. ZAP created a cross country tour and created one of the very first internet registration systems for cars. ZAP sold over 300 units, and received orders for thousands more, before Daimler/Chrysler suddenly decided to change their plans and market the vehicle directly. But ZAP fought on, continually finding a persistent demand for even more fuel efficient cars, especially electrics.
Another approach where ZAP had some success was started in the 90s: (1) designing electric vehicles in the USA and contracting factories in China to build its vehicles, and (2) designing electric versions of Asian-made gas model scooters, motorcycles, dirt bikes and ATVs. This resulted in the ability to market EV designs like the Sea-Doo Seascooter for diving, the Zappy3 scooter/personal transporter, and the Zapino moped-class scooter. It was this idea that eventually led ZAP to start work on the Xebra sedan and truck in 2005, which is where the story of the Alias begins to unfold.
One of the primary inspirations for the ZAP’s three wheeled approach was the Corbin Sparrow, which sold well during the late 90s, but the company closed shop as it could not create enough demand to lower parts and production costs. The vehicle worked like a car, but because of the three-wheel design it was classified as a motorcycle, making it less costly to bring to market. ZAP also noted the strong following by its owners and the low price tag, and ended up buying, selling, and refurbishing many of them before attempting to acquire the remnants of the company. The molds of the Corbin Sparrow were eventually sold off to a group in the mid-west, ending up as Myers Motors in Ohio.
Another inspiring car sits in ZAP’s showroom in downtown Santa Rosa. The Sam Cree was a connection with some of the first designers of the Smart Car, a group of former Swatch engineers in Switzerland who had developed the Sam Cree/Swatchmobile three wheeled electric car, and thereafter partnered with Mercedes and became a four wheeled gas car. A remnant of that company who had been trying to get this vehicle back on the road in its original three-wheeled electric form contacted ZAP in 2004 when it heard about efforts to sell the Smart Car, and ZAP acquired one of the original models. There are reports that the vehicle is currently available through a new Polish company.
ZAP believed the underlying drawback of both the Sparrow and the Sam Cree designs was limited passenger capacity, but ZAP noticed that three-wheeled sedans and trucks were common in Asia. If lower speed versions were sold in the United States at affordable prices, ZAP believed they would be well received in an era of record gas prices. Although, most Chinese thought that the idea of an electric car made no business sense, ZAP was eventually able to negotiate a manufacturing agreement with a small automaker in China that made three wheel gas taxi sedans and utility trucks, and worked with ZAP to create one of the first low cost electric vehicles.
The electric Xebra sedan can carry four passengers and is one of the only electric vehicles you could buy able to go faster than 25 mph. Later, ZAP created a Xebra truck, a popular choice with commercial users. As the only vehicle in its class they sold well until gas prices fell and the recession started in 2008, with the market for consumer based electric cars dropping all across the board forcing many electric car makers to cut back or cease production altogether. Also billions in stimulus money was loaned and granted to the large auto companies to create new full size electric consumer cars, as well as specialty electric and electric/hybrid sports cars, which affected the consumer market.
This forced ZAP to modify its strategy again in 2009. Although nearly 1,000 Xebras were sold in three years, ZAP believed a larger market opportunity was emerging to serve government and corporate fleets. ZAP today is a leader in providing low cost electric trucks and vans to government and private fleets. In 2010, ZAP was one of a handful of companies in the country selected to retrofit a USPS long life delivery vehicle. ZAP is also working to develop an electric SUV that will serve specialized high profile fleet markets through a new joint venture with Holley Metering, the world’s leading producer of power meters in China, as well as distribution through its partner Samyang Optics in Korea.
Today, ZAP has developed, designed, manufactured and sold over 117,000 electric vehicles to over 72 countries, making it not only one of the earliest pioneers in the EV industry, but one of the few that actually delivers EV vehicles for street use. Currently our larger ZAP XL LSV/NEV electric truck and Shuttle van have been popular with government and corporate fleet customers.
Which brings us to the Alias…
ZAP believes its current strategic direction will allow it to continue to explore the consumer electric car market with a vehicle that is a sensible blend of price, performance, and efficiency. The idea had been forming in 2006 when ZAP retained a respected European automotive engineering firm to conduct a feasibility study to develop an exciting, state-of-the-art electric vehicle design. The initial design was unveiled at NADA 2007, an electric crossover SUV called the ZAP-X that held massive appeal, but required significant capital in order to bring it to market. ZAP may reconsider a four-wheel SUV design for consumers, but in the meantime the company has shifted its focus and attention on a vehicle that builds on the success of ZAP’s three-wheeled electric vehicle designs: The Alias.
The meltdown of the auto industry has shown that the old way of making cars doesn’t work anymore and the industry needs a paradigm shift. Individual mechanics can work miracles in their private garages, but major corporations indicate they cannot be profitable making innovative designs — the basis of why something has to change. ZAP believes building a car from the ground up does not have to be prohibitively expensive and has put that idea to the test.
Veteran Detroit automotive craftsmen who had spent their entire careers building the best cars on the planet were now out of work or without contracts. After interview many individuals and groups, ZAP formed a relationship with a small prototyping group out of Maumee, Ohio. The owners had pedigrees from careers with General Motors and Magna, designing, building and prototyping many types of US-made automobiles like the Corvette as well as components, parts and accessories. Under secrecy and starting from scratch in early 2008 they began work and the first ZAP Alias was unveiled on June 16 of that year, a styling prototype in green/maroon two-ton
e pigment that brought the design to life. Additional prototypes were built over the next two years and ZAP moved the team to California in late 2009 to advance and accelerate the design, help ZAP with the PIAXP and work on other projects. The bottom line is that the Alias was brought to its current state of development with several drivable prototypes for approximately 20 percent of what it would have cost prestigious engineering firms to create just one vehicle. ZAP believed this was crucial to ensuring an affordable design for the future.
The timing with the Progressive Insurance Automotive X Prize could not a better opportunity for ZAP and its plans with the Alias. Meeting competition criteria for the PIAXP and following their guidelines and advice is an asset that far exceeds the investment in the competition. Things like design, safety, production, marketability, performance — many of the things the traditional auto industry look at when bringing a vehicle to market. The 100+ MPGe is an added challenge that makes the PIAXP a unique opportunity for the history of the auto industry.
The Alias was designed to give drivers what they were promised years ago: a futuristic looking vehicle that is fun, zero-emission, comfortable, yet affordable. The Progressive Insurance Automotive X Prize has brought more attention to the vehicle, and we feel the competition has helped us move the vehicle closer to commercialization.
The mood at ZAP is calm and professional, but underneath the surface you can sense a fierce competitive desire to perform well in the PIAXP, bring the Alias to market, and continue the lead the charge towards cleaner transportation. Our team is comprised of individuals from India, China, Sri Lanka, France, California and Detroit. Our members have worked on race cars, rockets, and roller coasters. The Alias design has already received global praise. Today ZAP is working with several partners around the world, creating localized jobs, and utilizing global engineering to advance the Alias and its other vehicles.
This is by no means a complete history of ZAP, but comments and questions are welcome. Thank you for reading and for your interest in energy efficient transportation, a pastime that many of us at ZAP have made our life’s work.