Is the Detroit Electric Phoenix Set to Fail Again?

Is the Detroit Electric phoenix set to fail again?
Is the Detroit Electric phoenix set to fail again?

It seems only a few days ago that Detroit Electric muscled itself into the middle of the electric sports car arena with the introduction of the Detroit Electric SP:01. This was an all singing, all dancing, electric sports car which was supposed to be a major challenge to Tesla Motors. While, rather bizarrely, the Tesla Roadster and the Detroit Electric SP:01 are broadly based upon the same power system, how differently they have performed!

Detroit Electric has today confirmed that due to "manufacturing issues" it will be an extra month before the Detroit Electric SP:01 goes into production. In reality, at this moment in time there is no need to be concerned about Detroit Electric as the issue seems to revolve around shared production facilities which are taking a little longer to negotiate than first thought.

Why are people so worried?

We have seen many delays in the electric vehicle market and on many occasions these delays have led to severe problems in the longer term. However the situation with Detroit Electric is a little different because it does have a high-quality team behind it. This is the same team who reinvigorated and breathed new life into the old Detroit Electric brand name, which had seemingly died many years before.

The company may well get the benefit of the doubt with regards to the current one-month delay but if this timescale was to slip there would be major concerns from backers, suppliers and ultimately, consumers. What began as a simple straightforward delay could very quickly evolve into something more damaging unless the company keeps control of the issue and informs the motoring public every step of the way.

Quote from ElectricForum.com : "Can the Detroit Electric SP:01 take on Tesla Motors? With a top speed of 155 mph, acceleration from a standing start to 62 mph in just 3.7 seconds and a journey capacity of almost 190 miles, are we finally seeing the emergence of a competitor for Tesla Motors?"

An information vacuum must be avoided

Detroit Electric has been very cute by announcing this one-month delay well before the original September deadline at which the company was to begin production. The company has also explained in detail what the issue is and how it will be resolved, so long as the directors issue updates along the way, they should avoid the dreaded information vacuum.

When we talk of information vacuums perhaps a perfect example is the General Motors EV1, which was supposed to be the new up-and-coming electric vehicle in the 1990s. Even today there is very little in the way of detail about why the car was so suddenly recalled from the market, why all EV1s were destroyed and what prompted the company to step back from electric vehicle market. This "information vacuum" has led to all kinds of rumours and conspiracy theories and while General Motors has attempted time and time again to refute these rumours and allegations, the time for explaining has long gone.

Financial backing is essential

Whether you are looking to invest in shares, property or any other asset, there are a number of common factors you will take into consideration, one of which is the risk/reward ratio. If the perceived risk in investing in the electric vehicle market increases then investors will want a greater return, which may not always be possible over their investment timescale. This would then lead to a reduction in financial backing for electric vehicle manufacturers and could be the start of a slippery slope downwards.

Confidence is one of the major factors which have held back the electric vehicle market over the last 100 years and the last thing we need is more problems with the likes of Detroit Electric. The company has played the public relations game perfectly today by announcing the one-month delay but it must be very careful not to antagonise investors, allow an information vacuum to emerge and ultimately allow the electric vehicle sceptics to take control.