RTEV: From Golf Carts to Electric Cars

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"Golf Carts on Steroids"

McQuary got into the business through a friend who had recently talked with a South Carolina entrepreneur looking for financiers to back a startup to design and sell golf carts made in China. After a bit of research, McQuary concluded that making carts was a losing proposition: The golf-cart market was flat and dominated by two entrenched players. But he was intrigued by the possibility of using the technology for other electric vehicles. In 2006, McQuary approached the entrepreneur, Bo Huff, and proposed retooling the business to sell a broad line of electric vehicles—including cars. "We started throwing numbers around," Huff says, and the outfit soon had a new direction, with McQuary as chief executive.

The Winnsboro (S.C.) company sells a line of what McQuary calls "golf carts on steroids." These can be used as utility vehicles by outdoors-based businesses. One fast-selling model is a four-wheel-drive cart called the Hunter that has become popular with sportsmen: It's painted in camouflage colors and allows hunters to travel up to 50 miles on a single charge. By yearend, RTEV hopes to roll out a line of "Wheego" scooters that can hit 40 mph. The low-speed street car is slated for next year.

Electric vehicles are starting to gain traction with consumers. A rival, Global Electric Motorcars, a subsidiary of Chrysler, sells six models with a top speed of 25 mph for urban settings. RTEV hopes to sell 2,500 of its electric vehicles this year and 4,000 in 2009, as it is struggling to turn out enough vehicles to meet demand. "We're way oversold," says Preston Wrenn, RTEV's vice-president for engineering and product development. Revenues are small but growing: Last year RTEV, with 22 employees, booked $8 million in sales, and McQuary believes the company will hit $12 million this year and is capable of growing 50% each of the next few years. He isn't sure if RTEV will break even this year. "If we grow as fast as I want to grow, we may lose a couple of million dollars," because of costs to boost production, he says. "Certainly, next year we will be cash-flow positive."

The Battery Problem

But for McQuary and RTEV, the big payoff will come if they can design and develop a street-legal electric vehicle that can give consumers relief from $4-a-gallon gasoline. The company has several prototypes for a low-speed street vehicle that can go up to 35 mph and be used by urbanites making short trips around town. One model is a two-seat hatchback called the Noble, which was converted from a gas-powered car sold in China. McQuary admits that a big challenge has been that most of the electric batteries available aren't powerful enough to provide the creature comforts most drivers are accustomed to. "Air conditioning is a big draw of electricity and power, so our test cars don't have them. In the very first cars, we probably won't have a very sophisticated heating and cooling system. Eventually we will, as technology evolves," he says.

Wrenn says battery technology is "changing by the minute right now." He sees potential in lithium ion batteries, which RTEV is testing. Small versions of the batteries are used in laptop computers, but they aren't capable of powering cars over long distances. "It requires a lot of complicated technology to maintain the thermal stability of those batteries," Wrenn says. And while the battery makers claim they're nearing a breakthrough, Hall, the auto industry consultant, notes that battery companies have been making big promises for years. "There are liars, there are damned liars, and there are battery engineers," he says.

Holden is an intern in BusinessWeek's Atlanta bureau.