Is Detroit Electric Struggling to Finance Its Manufacturing Facility?

Is Detroit Electric struggling to finance its manufacturing facility?
Is Detroit Electric struggling to finance its manufacturing facility?

Only a few weeks ago, the management of Detroit Electric, one of the oldest names in the electric car industry, confirmed that plans to introduce the eye-catching and very fast Detroit Electric SP:01 were being impacted by an inability to close a deal on manufacturing facilities. The company confirmed that the manufacturing facility in question will be shared with a third party and the agreement, which was supposed to be in place early this year, has still to be signed.

The company has been very vocal of late about the potential for the Detroit Electric SP:01 and its plans to bring out a range of other electric vehicles. However a number of requests to comment upon the lack of manufacturing capacity at this moment in time appear to have gone unheeded by the company which is leaving an information vacuum.

Is Detroit Electric struggling?

There is no suggestion that Detroit Electric is in financial trouble, although the ongoing difficulties in securing manufacturing facilities in America are causing concern. The fact is, that the longer the award-winning Detroit Electric SP:01 remains out of production the more this will cost the company and put yet more pressure upon cash flow in the short to medium term. This "information vacuum" is causing concern across the electric vehicle industry, an industry which is currently riding high on the crest of a wave of optimism.

Quote from ElectricForum.com : "Those who follow the EV industry will be well aware that Detroit Electric has this week announced a one-month delay in the production of the Detroit Electric SP:01 which was due to begin in September. The company has been forthright and upfront about the reasons, which relate to a sharing arrangement with joint facilities, but is this just another nail in the coffin of the electric vehicle industry?"

The reality is that Detroit Electric cannot afford to let this ongoing confusion continue and one way or another we will hear clarification of the company's plans very soon.

Is Detroit Electric too late to take on Tesla?

When you bear in mind that the Detroit Electric SP:01 is priced at around $135,000 it is most certainly going head-to-head with Tesla’s more luxury vehicles. While there is no doubt there is more than enough space for a number of manufacturers at the top end of the market (BMW and Audi spring to mind) there will need to be confidence going forward that the companies in question can deliver. The longer it takes Detroit Electric to secure manufacturing capacity, the more electric car enthusiasts will look at other companies and other vehicles.

It is also worth noting that Tesla, while still set to be a major player at the luxury end of the electric vehicle sector, is now targeting an affordable electric vehicle by 2017. While this should not deflect from the enormous potential at the luxury end of the market it does show that companies which "put all of their eggs into one basket" will need to be careful and potentially spread their risk and exposure.

There will be issues as the EV industry grows

In a perfect world it would be great if the electric vehicle industry continued to grow, finance was made available to all, and there were no short to medium term issues. The reality is, and sometimes we need to remember this, the industry is still relatively new to the motorist of today and there will be ups and downs with regards to popularity, demand for vehicles and ultimately, finance for the industry.

Even in the most traditional, yet competitive, of business sectors we see leaders fall by the wayside, companies fall out of favour and, while there is no suggestion at the moment that Detroit Electric is suffering financially, not all of the big names we see today will make it to the promised land.