DaimlerChrysler Thinks U.S. Electric-car Unit Still A Good Idea

September 12, 2002

Auburn Hills, Michigan Bloomberg News is reporting that, DaimlerChrysler AG said its Global Electric Motorcars unit is profitable and won't stop selling battery-powered small cars, after Ford Motor Co. decided to halt Think electric-car sales.

Global has annual U.S. sales of about 5,000 of its cars, which resemble golf carts and have a top speed of 25 miles an hour, said Larry Oswald, vice president of hybrid and electric vehicles at the automaker's Chrysler unit and head of Global. He declined to give a profit figure, saying Global sells slightly more cars a year than its break-even point.

Ford on Aug. 30 said it would stop selling Think cars, including the low-speed Neighbor, because of lack of demand. Automakers sell the no-emissions electric cars in response to government pressure for cleaner-running vehicles. A California rule, challenged in the courts by automakers, calls for 10 percent of vehicles sold starting in 2003 to be no-emissions models.

Ford's decision helps Global "because the market won't be as competitive as it was before," said Thad Malesh, director of alternative-power technologies at J.D. Power & Associates, which studies the electric-vehicle market. "It was a shakeout."

Global has sold about 13,000 cars since the third-largest U.S. automaker bought the company in December 2000, Oswald said. The unit makes a two-seat version that sells for $6,995 and a four-seat model priced at $8,995. Most of the sales have been in Arizona and Florida, he said.

Residential Market

Global in May said it would be the main supplier of small electric cars for the 13,000-unit Playa Vista residential development near Los Angeles. The unit is negotiating with five other residential communities, including two that are larger than Playa Vista, Oswald said. He wouldn't name those projects.

Oswald said Global replaced golf-cart parts with more durable automotive-grade components in the past 18 months and has new models with heaters and better doors and seats coming in January.

Production of Ford's Think Neighbor began in October 2001 and the automaker this year through August sold 2,214 of the cars, priced at $6,495. General Motor Corp. distributes Pathway low-speed electric cars, made by Club Car Inc.

DaimlerChrysler, General Motors and Isuzu Motors Ltd. since June have won temporary orders in state and federal courts to prevent California from enforcing its mandate on "zero-emission vehicles" set to take effect next year. Battery-powered electric cars are the only vehicles that currently meet the requirement.

California officials have said they planned to appeal. The state's actions are important to the companies because California accounts for almost 15 percent of U.S. auto sales.

Automakers have had little success with larger battery-powered electric vehicles. General Motors halted productions of its EV1 electric car in late 1999 because of lack of demand, after introducing the vehicle three years earlier.

Stuttgart, Germany-based DaimlerChrysler's U.S. shares rose 58 cents to $43.59 at 3:10 p.m. in New York Stock Exchange composite trading. The shares have risen 4.6 percent this year.