Electric Cars Get a Zap!

(page 2 of 2)

Brazil is considered by many the world leader in renewable ethanol fuel. Together, the companies, with help from the government, have converted a 5 million-square-foot manufacturing facility, a former Alfa Romeo plant, to build the Obvio car for export to the U.S.

That model can burn gasoline, ethanol, or any blend of the two, unlike flex-fuel vehicles available from major manufacturers. It's also more car-like than Zap's electrics. Although it's still ultra compact by American standards, about 5 feet tall and 8.5 feet long, it has four wheels and an internal combustion engine.

The Obvio has a surplus of whiz-bang. On top of Lamborghini-style scissor doors, a built-in Windows XP computer, GPS, satellite radio, and wireless Internet and Bluetooth connectivity, the $14,000 model due next year sports a peppy 175-horsepower engine and gets about 46 mpg.

Growing Niche

Even as a niche, the market for electric and alternative-fuel vehicles is growing. Brian Wynne, president of the Washington (D.C.)-based Electric Drive Transport Assn., says there are about 70,000 electric vehicles on American roads today, up from 56,000 in 2004.

"We've hit the tipping point for alternative fuels," he says. "The volatility of gas prices alone makes them extraordinarily compelling."

Wynne says the growth of mainstream gas-electric hybrids like the Toyota Prius has helped, not hurt, companies like Zap, by stimulating the market. Key electric components and technologies are now less expensive and more readily available.

And recent developments in the auto industry at large may offer more good news for Zap. As the company was showing off its all-electric vehicles, GM CEO Rick Wagoner announced plans to develop plug-in hybrids, marrying the virtues of hybrids like the Toyota Prius with those of all-electric vehicles like the ones sold by Zap.

Schneider admits that Americans aren't likely to trade their SUVs for the speed- and distance-limited electrics any time soon. "Americans do have a love for their cars as they are," he says. Then again, it's hard not to love driving at 3 cents a mile.

Matt Vella is a reporter for BusinessWeek.com in New York.