Originally published on Gas2.
Smith Electric Vehicles of Kansas City has suspended production of its electric trucks and vans. While executives remain optimistic about Smith’s chances, even they had to acknowledge that building a handful of electric vehicles at an extremely high just isn’t a sustainable business model.
Smith Electric Vehicles started in 2009 with around 100 employees, and in 2010 Smith Electric was award a $32 million grant from the U.S. Department of Energy to develop electric utility vehicles. In 2011 Smith Electric planned on opening two additional plants in New York and Chicago, even meeting with The Bronx Overview Economic Development Commission and Chicago Mayor Rahm Emanuel.
Meanwhile, orders from big-name clients like Coca-Cola and Frito-Lay were coming in, and Smith Electric vehicles could even be found on military bases. The future seemed bright for Smith Electric Vehicles, at least until last week when Smith Electric suspended operations on its EVs due to a lack of capital.
So what the hell happened happened?
Blame competition. Natural gas powered and hybrid trucks are becoming more available and more popular in the trucking industry, and companies like VIA and AMP are also trying to edge into the commercial truck market. Smith may have had a head start, but the competition has accelerated past Smith since then.
Blame the business plan. Smith Electric relied heavily on the $32 million grant from the U.S. Department of Energy, allowing Smith to actually subsidize the purchase of electric vehicles to entice customers. In other words when a company like Frito-Lay purchased a Smith EV, they didn’t pay full price. While it may have gotten some customers through the door, it didn’t bring them back for more.
Blame a lack of understanding and interest in the EV market. Smith surely had grand ambitions and sales projects, but since 2010 the company recieved just 510 orders for its electric vehicles, of which only 439 have been built.
There’s plenty of blame to go around, but despite all this, Smith Electric Vehicles still hasn’t closed the door to its factory for good – production has just been stopped. Currently Smith Electric is in a state of reorganization in an attempt to make the business viable. Only time will tell if we’ll see any new Smith Electric Vehicles rolling out of the Kansas City plant.