Atlanta-Based Startup Targets Electric Car Market

by Charles Molineaux for Business to Business

Meet Wheego, a product of former Mindspring founder Mike McQuary

When it comes to selling mainstream American consumers on an electric car, Mike McQuary, the CEO of Atlanta-based Wheego Electric Cars, reveals he has infused his creation with a clever special feature. “It’s a real car,” he says with a smile.

As McQuary, the founder and former CEO of the blockbuster Internet pioneer Mindspring, insists that was the response he got in mid-December when he invited a dozen consultants and prospective dealers to see and test drive the vehicle. A stubby, two-seat subcompact doubtless in perpetual danger of being labeled “cute,” the Wheego Whip nonetheless impressed a tough audience in that debut, he says. “These people probably sold 75 percent of all the electric cars sold in the U.S. of the past two years. It almost became comedy repetition. Every single one of them when they got out of the car, they got out and said ‘it’s a real car!’”

RTEV plans to start sales of the Wheego Whip in May for a sticker price just under $19,000, minus a 10 percent federal and (in some states sizeable) tax incentives. Claiming a range of 50 miles on a battery charge, the car is – in its current incarnation – classified as a Low Speed Vehicle (LSV) or Neighborhood Electric Vehicle (NEV), restricted by law to speeds of 25 or 35 MPH (The limit varies from state to state) and restricted to streets with speed limits below 35. Over the next year, the company is plotting its truly revolutionary step, upgrading the car to highway ready model, for sale some time in 2010.

RTEV president Jeff Boyd says he already sees interest. “Not only is the market out there for the LSV we’re launching in May,” he says, “but the number for the full highway speed capable plug-in electric is enormous. In California alone, it would have a market of about 275,000 units.”

In late February, the company began soliciting applications for Wheego dealerships, but also heard from people who wanted to buy, not sell, the new all-electric car.

“It was a nice by-product of putting up the announcement of our dealers’ network launch,” Boyd recalls. “So we decided to go ahead and put up a reservations system. To our pleasant surprise, we’ve had about 30 inquiries a week.”

“In my general opinion that’s the best electric car that I’ve seen ever,” says veteran car dealer John Esche, one of the dealers at the Wheego unveiling. After running more than a dozen car franchises over his career, Esche now sells electric vehicles and says he’s eager to get his hands on the Whip. “I’ve already got cars sold. I’ve got 10 of the cars spoken for already and I’ll be lucky to get five cars in the initial allocation.”

The green movement

With environmental consciousness achieving a growing priority in the auto industry (and a new administration in Washington putting a premium on green initiatives) literally dozens of car makers, large and small, are working to get either full blown all-electric vehicles or new gas/electric hybrids onto the market.

“It’s anybody’s game right now,” says Constantine Samaras, research fellow at the department of engineering and public policy at Carnegie Mellon University. “The right vehicle will have to be a mix of something average consumers can see themselves driving and can be afforded. If a company big or small can come up with an aptly-sized plug in hybrid or electric vehicle at the right price, they’re poised for success.”

McQuary brought his entrepreneurial background to bear on the challenge when he bought a stake in Wheego Electric Cars which, up to now, has made golf carts and electric recreational vehicles.

He reports the company has raised a modest $2 million over the past two years and is now into a private placement memorandum to raise another $6 million to pay for the engineering and rigorous crash testing necessary for the Whip to be approved for full speed highway use. “It’s really a group of investors,” McQuary says, “mostly out of Atlanta, who, I would say, for the most part came from a media or technology background. They understand the possibilities of the car and they got excited. It really is sort of a ‘who’s who’ of what I would consider the best and the brightest folks in Atlanta.”

The Wheego Whip takes its body shape from the gas powered Chinese-made Noble, made by Shuanghuan. Wheego imports the raw Noble chassis and, at its California manufacturing facility, outfits the body with an electric motor, dashboard, wiring harness, batteries and interior. Its current AGM “dry cell” lead acid batteries lag the state of the art lithium ion cells, to which McQuary hopes to offer an upgrade in the future.

“I refer to it jokingly around the office as a bit of the United Nations car,” he says, with a laugh. “The dashboard is out of Ohio, the engine is out of Wisconsin. The batteries are actually from a Canadian company. The controller is actually manufactured Puerto Rico. It’s componentry from all over.”

It is to that “fit and finish” that McQuary repeatedly refers, when comparing the Wheego Whip to its electric competitors, and to its more modest cousin, the golf cart. “The slam of the door, the acceleration, the amenities that you expect in a real car. This really is the first car that gives you all of that.”

During a exclusive March 2009 test drive, the Wheego Whip offered a sensation much more like riding a very small automobile than a country club toy. It handled city streets so much like a conventional car that it was easy to forget that stepping on the gas doesn’t involve any actual gas. Of course, the prototype does feature a few distracting quirks.

The seat belt was unusually difficult to reach and, instead of a conventional lever, the gearshift was just a small switch on the floor that flipped between “forward” and “reverse.” McQuary says those and other issues have already been addressed for the Whip’s production models.

“We hear this so often,” Esche underscores, “a comparison between these units and a golf cart. This is all steel-enclosed, roll-up windows, air conditioning, power windows incidentally, power mirrors … This is a real, honest to goodness, automobile.”

Road ready?

Is an all-electric automobile just one year away from graduating to full-speed highway-ready car?

“There is an awful lot of overpromising and under delivering happening,” cautions a skeptical Daniel Davids, Northwest Regional Director with the non-profit electric vehicle advocacy organization Plug-In America. Himself the owner of a Toyota Prius hybrid and a battery powered Toyota Rav 4, Davids says prospective electric vehicle buyers and dealers alike have been repeatedly burned by promises of a breakthrough electric car almost, but somehow never quite, ready for market. “There are a lot of charlatans out there.”

Davids wonders if RTEV’s determined plans for introducing a low speed vehicle in 2009 and stepping up to a highway ready car in 2010 might be too ambitious. “People arrive and say they’ve got something which is, today an NEV with lead acid batteries in it. And somehow, within a year, they’ll have it licensed and on the road as a full performance vehicle? It’s just not doable. Unless someone is throwing hundreds of millions of dollars at the problem, I just don’t see something like that happening.”

Samaras wonders too. “Anything is possible,” he says. “It sounds very aggressive. I’d be cautiously optimistic. In a business where technology is changing quickly you want to get out and kick the tires, in this case literally.”

“We’ve been pretty quiet so far. They don’t know us yet,” McQuary responds. “We’ve already got the engineering done. If you take the equivalent of a governor off of the car right now it would run 55 MPH. We’re testing lithium ion batteries now. We’ve got the motor, the drive train and the power pack. It’s just a matter of getting over the hurdle of crash testing.”

The Wheego Whip does approach a market full of promise from a wide array of competitor vehicles, most of them billed as “just around the corner.” “I think we are probably 18 months to two years ahead of who we think are real competition is going to be,” says McQuary.

Competition

To name one of the top headline-makers, General Motors Chevy Volt remains Detroit’s marquee electric vehicle project. Projected to reach the market in late 2010, the Volt is actually a plug-in hybrid with a promised range of 40 miles on a charge before its onboard gasoline engine kicks in to extend its range. Yet its anticipated price hovers in the daunting range of $40,000. An increasingly high profile centerpiece in GM’s struggle for survival, the Volt took a painful hit from a new study by Carnegie Mellon which concluded that the expensive and heavy batteries it uses to achieve its range keep the car from being cost effective.

Still the Volt has fans even at RTEV, watching to see if GM can pull it off. “Maybe it can’t,” admits Boyd. “Maybe the larger the company, the slower the change and that’s the benefit of small entrepreneurial companies like us. We applaud their efforts. It’s great. They’ve raised the level of awareness with their public relations and the millions of dollars of press they’ve put out.”

For stunning looks, a stunning price and a vehicle that’s already available, Silicon Valley startup Tesla has become a darling of the electric vehicle set. After production and financing complications, its stylish all-electric roadster is in production and hundreds have been ordered already, although its fluctuating MSRP, just increased to over $100,000, certainly keeps it from becoming a high efficiency zero emissions alternative for more than a tiny niche of the market. The company has repeatedly announced plans for an all-electric sedan with a prototype now scheduled for unveiling in a matter of weeks. No date on when motorists can actually buy one of those and it’s expected to cost upwards of $50,000 to $60,000.

“The roadster is already there,” says Davids. “Phenomenal car. It is done. That’s an indication of what has changed. It’s a harbinger of things to come.”

Here too, McQuary is impressed, but not concerned. “I think Tesla has done a wonderful job of raising awareness. They’re making great-looking, really expensive, high-end sports cars. But as far as an electric car for the rest of us, I think we are leading the charge on that.”

The 2010 Fisker Karma, too, is a sleek, carnivorous-looking sports sedan, but still a plug-in hybrid with a gasoline burning engine to juice up the batteries for its two electric motors. It’s also expected to sell for close to $90,000. Not exactly a vehicle aimed at the economy-minded.

Farther outside the “box,” the Aptera 2e is expected on the market this October. Looking more like a small plane than a car, it certainly doesn’t resemble the standard sedan, or even subcompact, most buyers would find familiar. Running on only three wheels, it is legally considered a motorcycle which exempts it from a long list of safety standards but also disqualifies it from federal aid for car makers (unless executives can convince Washington otherwise). Its top speed of 90 MPH and range of 100 miles on a charge offer substantial reassurance for those unsure about the capabilities of an electric. The price, still loosely projected up to $40,000 could still become an obstacle. There’s also the small matter that, in its initial release, it’ll only be sold in California.

Among those closer in configuration to the Wheego is the two-seat Th!nk City subcompact from Norwegian car maker Think Global. Formerly owned by Ford, the company is now in talks to develop a U.S. factory. The Th!nk City is capable of speeds up to 70 miles an hour and a range of 112 miles on a charge. Actual U.S. Sales are forecast to start in mid 2010. The target MSRP is somewhere below $20,000, with the caveat that such a price already factors in federal incentives and doesn’t include the lithium-ion batteries, which would have to be leased.

BMW has one option on the road already in the iconic subcompact Cooper Mini, now available as an electric. With a top speed of 80 MPH and a range of 100 miles between charges, the car makes a tempting offer, until you get to the price. Now available only for lease, the Mini EV will set you back $850 a month, comparable to the rent for a high-end luxury car instead of a subcompact.

Last year’s miniature phenomenon, Daimler’s gas powered Smart car is also headed to market in an electric incarnation. Bearing a remarkable resemblance to the Wheego Whip (or vice versa) the Smart ED promises a top speed of 70 mph and a range of 70 miles is already being road tested in Europe. It too is expected in the U.S. next year.

But the makers of the Wheego Whip are keeping an especially close eye on a lower profile competitor, Miles Electric Vehicles out of California, Jeff Boyd’s automotive alma mater (He used to be its CEO).

Miles may be the first to break through with a new generation highway ready conventional (or at least conventional looking) electric passenger sedan onto the market. The company is still promising its Miles Highway Speed will be available early next year. Looking much like an Accord or a Camry, the Miles Highway Speed will be manufactured in China for delivery to the U.S. and McQuary salutes it.

“We are not necessarily trying to the first,” he says. “We’re not necessarily trying, as a company, to be the biggest. We are trying to be the best. If we are, we’ll find plenty of customers who like our cars and create a community, almost a cult of drivers. If we can do that, we’ll be very successful as a vehicle.”

Samaras says small, entrepreneurial companies like RTEV can survive and thrive in the new automotive paradigm, but suspects some accommodation with the automotive titans will ultimately have to come.

“I think the little guys are going to be really good at innovations and the big guys are going to be good at selling cars, selling lots and lots of cars,” he says. “There’s got to be a sweet spot in between where they can come together.”

“I take the tack that a rising tide lifts all boats,” says McQuary. “So if there is increasing awareness of electric cars and a neighbor sees another neighbor with an electric car, any brand of electric car, I think it’s going to increase the overall acceptance of them as a viable means of transportation. That just helps everybody.”