## ZAP and Anuvu Shoot for a Consumer H2 FCV in 2005

##### 16 December 2004

ZAP, an electric vehicle distributor, says it intends to create fuel cell-powered vehicles for delivery to consumers in 2005 by working with PEM fuel cell manufacturer Anuvu.

ZAP (Zero Air Pollution) is a ten-year old company that started by distributing electric bicycles and folding electric scooters. In 1999 ZAP added electric motorbikes; in 2001 it added electric drive scooters; in 2003 ZAP announced its first electric automobiles; and in 2004 ZAP introduced electric ATVs and the fuel-efficient SMART Car.

Anuvu, also ten-years old, designs and manufactures its Power-X fuel cell stacks, engines and systems, and provides custom solutions for a variety of clients. Anuvu has already designed and assembled a few fuel cell-powered vehicles.

Anuvu’s prototype “Clean Urban Vehicle” (CUV)—a Suzuki Esteem wagon modified with Anuvu’s fuel cell system—picked up five gold and one silver awards in the small fuel cell car category at the 2003 Challenge Bibendum. (Those results tied with Honda’s FCX.)

The company’s first commercially available fuel cell hybrid (for fleets) is based on a Nissan Frontier pickup.

The current Frontier-based CUV uses two 6kW fuel cell stacks in parallel for a combined 12 kW output. The CUV pairs this with lead acid gel batteries and Anuvu’s own hybrid power management system for a peak 100 kW to drive a Solectria AC 90-C motor. The motor delivers 400 Nm of peak torque, 90 Nm of continuous torque and 40 kW of continuous power.

Regenerative braking contributes to recharging the batteries. Anuvu plans a subsequent CUV model with a 24 kW fuel cell system and NiMH batteries.

The vehicle uses gaseous hydrogen stored at 350 bar (5,000 psi). This CUV has a range of 250 miles, with a top speed of 75 mph and a 0–60 time of 10 seconds and lists for $99,995. Anuvu has plans for a full-range vehicle in the future. Anuvu has also kitted out GEM neighborhood electric vehicles (NEV) with fuel cell systems and 1 kg H2 storage to triple the GEMs’ range. The Anuvu-modified GEMs also feature a 110 VAC power outlet, providing mobile power for work tools. Zap wants to package and market this capability as part of its portfolio, and has signed a purchase order for an undisclosed number of Anuvu Power-X fuel cells. ZAP’s goal is to dominate the niche for advanced transportation. Our philosophy is to partner with all of the market players that promise near-term solutions. ZAP had the first practical electric bicycle, first practical electric scooter, first practical electric car, and recently the first federally approved SMART Car in the United States. Now, with Anuvu, we have set a goal of marketing the first practical hydrogen fuel cell powered car by 2005. —ZAP CEO Steve Schneider ZAP is a persistent and creative promoter. It started selling its personal electric vehicles on the Internet in 1995. Earlier this year, it signed a distribution agreement with Costco for the ZAPPY scooter, auctioned its Americanized SMART cars on eBay, and has recently inked$2.98 million worth of wholesale purchase orders for the SMART car from US dealers.

Once ZAP received a Letter of Conformity for those SMART cars from the EPA this year, it was able to begin organizing U.S. marketing and distribution for the car. ZAP has a near-term goal of 150 dealer outlets by second quarter of fiscal year 2005.

Those initial outlets are to be the foundation for ZAP’s plans to build a dealer network catering to “socially responsible car buyers” with advanced automotive technologies, including fuel-efficient automobiles powered by gasoline, electric, hydrogen and other fuels. Any product resulting from the partnership with Anuvu would thus end up in those dealerships.

The barriers and obstacles to a hydrogen fuel cell vehicle on the dealer lot in 2005 are many and obvious—especially price, vehicle performance and fueling infrastructure. All those constraints help form the strategy of mainstream fuel cell vehicle makers of shooting first for combinations of multi-year trials and fleet leasing.

There’s something to be said, though, for just going for it. If ZAP and Anuvu can package a reasonably-priced  vehicle and offer a solution to the fueling issue (perhaps by providing on-site generation at the ZAP dealerships) they probably can build a small, niche market in the near term. Whether that can be a profitable and sustainable market at this stage is another question.

Another issue for ZAP could be its capitalization. The company (publicly traded, ZAPZ.OB) lost $10 million on$4.87 million of revenue (trailing twelve months as of 30.Sep.04), and has only \$2 million in cash on the balance sheet. Financing an aggressive expansion into dealerships and rolling out new lines of advanced technology vehicles will require large amounts of creativity, sales ability,  financial gymnastics, and tolerance for risk. Of course, depending how ZAP prices its dealer franchises, those 150 outlets may be part of the financing solution as well as the distribution and sales solution. It will be interesting to see how ZAP tackles this.