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Report: Costs for New ZAP EV Plant More Than 2x Initial Estimates

Greentechmedia reports that the currently projected cost for the plant for Integrity Automotive, a new joint venture to produce ZAP electric vehicles in the United States, is more than double the initial estimate.

The new plant is expected to begin rolling out vehicles in a year, said Randall Waldman, CEO of Integrity Automotive and Integrity Manufacturing, who added that the plant will have an initial production capacity of 300 vehicles per day.

On Monday, the state of Kentucky said it plans to provide Integrity Automotive with $48 million in tax incentives to help build the plant. When it first applied for the state incentive, Integrity estimated that the project would cost $84 million. But now, after settling on a location, the company expects that construction will cost more than double that initial estimate. Waldman said the projected cost is now $175 million, and added that he hopes the project will be eligible for more state aid.

The plant is slated to ZAP products ranging from scooters to the three-wheeled Xebra, currently manufactured in China.

Comments

K

"more than double the initial estimate."

Merely double is pretty good for these ventures.

When you spend your own money estimates need to be right or unhappiness follows.

For ventures involving public subsidy it is far more important to get the subsidy than to accurately estimate costs. And a low estimate helps you get the subsidy.

Otherwise be as vague as possible for as long as possible.

To minimize consequences create a new company. And form a consortium. That automatically gives you whatever political clout the partners possess.

Soon the locality where jobs will be created is also providing direct or hidden subsidies. And lobbying on your behalf in the state capitol.

This story sounds like a textbook example of public funding for private profit.

"Waldman said the projected cost is now $175 million, and added that he hopes the project will be eligible for more state aid."

Those are great names: "Integrity Automotive." and "Integrity Manufacturing"? Well, with twice the cost you get twice the integrity.

Wired Magazine had a great expose of ZAP. Investor/buyer beware. Even $175 million sounds really cheap for 300 cars/day. Is it just a prefab part assembly plant or vaporware?

HarveyD

USA is just not the proper place to economically produce ZAP vehicles.

The same financial resources invested in India, China, Korea, Brazil, Eastern Europe, or Mexico etc would be much more productive.

Andrew

I'm supposing you get a bigger chunk of a Burmese/ Paraguayan worker for your dollar.

Not that a Burmese/Paraguayan is always more productive than an American.. You can just buy more of them.

Lulu

Although it may be cheaper to produce thing over-seas, there is the argument that an United States that do not produce anything interesting won't be a strong country. If anything important is made over-seas, then the synergy of manufacturing derived innovations are lost to us.

This is the "hollowing out" of America that some have raised as a concern.

Now, on the ZAP case, there are some questionable business dealings that are well documented on the Wired Magazine. I don't know if this is a continuation of the mis-steps or not.

Can you spell SKAM?? Low quality crap from hucksters.

K

Yes, the "hollowing out" does weaken us. I have never grasped how we can evolve into a service economy and produce nothing material.

But economists assure me it would be fine.

As US manufacturing declines because of cost our government - at all levels - tries to prevent job loss. And what we end up with are favors, subsidies, and giveaways. Generalizations are best avoided, but most of this does not end well for a locality or a nation.

Business people, some honest and some rascals, quickly grasp that tales of gloom and threats to go elsewhere work. And not all are manufacturers. Look at sports.

I don't see a reason to give a $300m stadium to a baseball team. Yet we have more than once. And today we have such differing - dare I say diverse - opinions that one can get shot for saying so. (near the stadium they might use a bat, not a gun).

Elliot

Until they get serious about producing the Zap-X concept they had, or something of that quality, I just don't trust Zap. That Wired article was pretty damning, and there's been no accusation of libel as far as I know. Not that I'd follow it very closely, those Xebra's don't make me pay much attention. They could hurt the EV movement though, and that's no good.

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