Electric Vehicle Firm Struggles to Keep Going : Energy: Electricar has laid off a third of its 300-member staff. It says it needs $15 million by the end of July to stay in business.


The nation's leading builder of electric vehicles, Santa Rosa-based U.S. Electricar Inc., has dramatically cut back operations after two years of aggressive expansion and now needs a cash infusion in order to survive.

Only a drastic reorganization and an interim loan from its Japanese partner is keeping the company "a going concern," the firm said in a statement. A company spokesman added Monday that the firm needs another $15 million by the end of July to remain in business.

U.S. Electricar, established as Solar Electric Engineering Inc. in 1976, is easily the most visible and ambitious conversion firm in the fledgling industry of small alternative-fuel car companies and one of the first modern companies to convert gasoline cars and trucks to run on electric batteries.

"We are taking the very difficult steps necessary to substantially restructure our company," said Ted D. Morgan, U.S. Electricar chairman and chief executive. "The challenge is whether or not we can convert debt, restructure current liabilities, and adequately fund this company to continue operations beyond the interim funding commitments we now have."

The company has laid off a third of its 300 workers nationwide and expects more layoffs. It has closed its Florida plant as well as a conversion facility in South-Central Los Angeles once billed as an economic boon for an area badly hurt by the 1992 riots.

It is reviewing the conversion of cars and light trucks to see if these businesses are viable, the company said.

U.S. Electricar has also halted production at an electric bus and industrial vehicle plant it acquired in Redlands, but the spokesman said the firm expects to reopen that facility at a future date.

The company posted a net loss of $16.5 million in its most recent quarter, ending Jan. 31, more than quadruple the loss over the same period a year earlier. Revenue rose from $1.4 million to $3.7 million in the same period.

The company has announced that the giant Japanese trading company Itochu Corp., once known as C. Itoh & Co., has agreed to provide interim funding of $3 million and to exchange $8.9 million in debt for as-yet-undetermined common stock in the company.

Last May, the two companies announced a joint venture to market electric delivery trucks in Japan, with Itochu investing $15 million.

"I think it's a body blow but not necessarily a death blow," said Diane O. Wittenberg, division vice president for electric transportation at Southern California Edison Co., which is in the midst of receiving some vehicles from the company. "They have told us that they plan to follow through with all their commitments."

From August, 1994, through February, 1995, the company shipped 190 converted vehicles, seven electric buses and hundreds of industrial and commercial off-road vehicles, a spokesman said.

Mike Gage, president of Calstart, the public-private consortium promoting an alternative-vehicle manufacturing industry in Southern California, said that U.S. Electricar has simply suffered the same problems that other fast-growing companies have experienced.

"I think U.S. Electricar's problems are their own, not essentially the industry's," Gage said on Monday. "They have grown . . . helter-skelter."

But other electric-car proponents place the larger blame for the company's troubles on investor uncertainty about putting money into an industry that is under attack by big U.S. auto makers.

U.S. Electricar has been seen as one of the prime beneficiaries of mandates to offer electric cars in California, New York and Massachusetts, beginning in 1998. The mandate in those three states would require the seven biggest U.S. and Japanese auto makers to offer electric cars in 20% of the U.S. market. The auto makers have been uniformly skeptical that their technology is advanced enough to successfully develop a market for electric cars on that scale, that soon.

Detroit car makers have dug in particularly in the Northeastern states, and Massachusetts Gov. William Weld said two weeks ago that he might favor at least a four-year delay in that state's mandate.

"We're most concerned about the things that are adding uncertainty to the political climate, that would make people hesitant to invest," said Cecile Martin, deputy director of the California Electric Transportation Coalition.

"Of course," Martin added, "we're concerned about layoffs, and this closure in Southern California, but it's part of the development process. And certainly (U.S. Electricar has) a level of expertise that is somewhat unparalleled."

But Gage doubts that big-auto maker pressure to change state electric car mandates has hurt U.S. Electricar in particular.

Copyright © 2019, Los Angeles Times
EDITION: California | U.S. & World