ZAP sees electric car boom, additional microcar sales

DETROIT -- ZAP, a California company looking to develop a market for electric vehicles, said it was nearing $1 million in orders for a Chinese-built battery-powered car it has begun selling in the United States.

Separately, ZAP's chief executive, Steve Schneider, said the high-profile announcement by DaimlerChrysler that it's bringing its Smart microcar to the United States in 2008 still leaves his company another full year to sell its modified version of that vehicle, the subject of a legal clash between the companies.

ZAP has been selling the German automaker's Smart cars in the United States after modifying the tiny cars to meet US regulatory standards, including meeting more stringent crash safety standards.

The Smart car gets over 40 miles to the gallon and is designed to fit in just half of a traditional parking space.

DaimlerChrysler said it would be marketing the next generation of its Smart ForTwo minicar in the United States through a partnership with United Auto Group Inc. beginning in 2008.

Schneider said the news from DaimlerChrysler left ZAP with an opportunity to sell its modified Smart cars through 2007.

ZAP sued DaimlerChrysler in Los Angeles last year, accusing the German automaker of interfering with its business and seeking $500 million in damages.

Schneider declined to comment on the lawsuit. At a news conference, DaimlerChrysler's chief executive, Dieter Zetsche, also declined to comment.

Smart has said that it was concerned in part about its liability for modifications performed by ZAP and the risk to its brand value because of the unauthorized import arrangement.

Meanwhile, ZAP is marketing the battery-driven XEBRA car, which is designed to travel at a top speed of 40 miles per hour with a range of up to 40 miles per charge.

Santa Rosa, Calif.-based ZAP is starting to approach commercial and government fleet buyers at a time when volatile gas prices have focused US consumer attention on fuel efficiency.

``We haven't taken a serious stab at the fleet market yet because we were still in [quality control] mode," said Schneider. ``Combined with the fact that it's street legal, this car can have a tremendous industrial appeal."

Schneider said that through ZAP's production partner in central China, the company has the capacity to produce up to 1,000 vehicles a month. The XEBRA is priced at $8,900.

``I really think this is where profitability in the automotive industry will be going -- 100 percent outsourcing of the automobile production," Schneider said.

ZAP said its sales for the first five months of 2006 were $5.5 million. It said it had sold more than 200 of the modified Smart cars.

The company is also working to develop an ethanol-ready hybrid car in Brazil.