Solar vehicle street legal in Illinois, but is it economical?

Source: 
Crain's Chicago Business
Date: 
12/21/2009

By: Paul Merrion December 21, 2009

A new state law that makes it legal to drive glorified golf carts on city streets may give a jolt to a Chicago entrepreneur's quest to win the electric-vehicle race.

Larry Spatz, co-founder and CEO of Solar Electric Vehicle Co., hopes to begin selling his sunshine-powered buggies at a suburban car dealership in 2010, following the Jan. 1 change in Illinois law.

Mr. Spatz has been producing electric vehicles for four years. His clients have been non-profits, including the Chicago Botanic Garden, which used a $20,000 Solar Electric trolley on its grounds this year. He's giving away 14-passenger trolleys to 16 U.S. zoos next year — and seeking corporate sponsorships to offset his costs.

Mr. Spatz says he's close to signing a computer maker or soda company, which would pay to have signs and taped spiels onboard the trolleys touting the sponsor's green credentials. He won't name the potential sponsors.

He's hoping the growing environmental awareness among consumers and corporations will fuel a much broader market. "The public's aware, and they're concerned," he says.

Still, Mr. Spatz faces an uphill battle — one that many entrepreneurs in "green" businesses are fighting. The biggest problem: Green technology is expensive, making clean vehicles more costly.

"Nobody has been able to make a commercial case for these applications," says Veerender Kaul, director of automotive and transportation research at Frost & Sullivan, a California-based market consulting firm. "The cost of solar cells is still too high."

The Chicago Botanic Garden can't afford its Solar Electric shuttle and will go back to using a gas-powered tram unless Mr. Spatz lines up a corporate sponsor to cover the lease.

"It seemed like a perfect fit because it's solar-powered," says Harriet Resnick, the nature center's vice-president of visitor experience and business development. But "gas is considerably cheaper."

GREEN-CAR COMPETITION

Mr. Spatz and other environmental entrepreneurs hope the Obama administration bolsters electric-vehicle sales with federal subsidies, which offset purchase prices by as much as 25%.

The competition for green-car sales is dominated by Toyota, which makes the gas-electric hybrid Prius. General Motors will introduce the plug-in Chevy Volt late next year. California-based Tesla Motors Inc. is opening a Chicago dealership in January for its high-powered, high-priced electric sports cars. And even Warrenville-based Navistar International Corp. has plans to build all-electric trucks in a new joint venture with U.K.-based Modec Ltd.

Mr. Spatz, a longtime Chicago floor trader and futures industry exec who went on to build and sell a successful nightclub chain called Baja Beach Club, believes he can fill a niche with his carts, which are built in China and assembled in Wisconsin.

He hopes to sell the four-seat vehicles for about $10,000 each to environmentally inclined Chicagoans who do a lot of short-distance driving. The new law authorizes the vehicles on public streets where the speed limit is no more than 35 mph.

"More important than the technology is the business plan," says the 66-year-old entrepreneur. "It's one thing to have the product. What we've done is also figure out a way to get them on the streets."

©2009 by Crain Communications Inc.

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