Forbes takes on Zap's vaporware business model
Here at AutoblogGreen we've given a lot of coverage to Zap and in particular their announcements about the Zap-X. The operative word in that first sentence is "announcements", because that's all that exists right now. Unlike the Tesla Roadster or Phoenix SUT or even the UEV Spyder all of which exist at least in a drivable prototype form, the Zap-X is limited to a really remarkable spec sheet, some design sketches and a Lotus design concept that is supposed to provide the basis for the new electric crossover.
Zap does sell some electrically powered vehicles built in China and classed as motorcycles by virtue of the missing fourth wheel thus exempting them from automotive safety regulations. They also re-sell repossessed cars, but the bulk of the transactions on Zap's balance sheet stem from activity in their stock.
Disclaimer: By no means am I an expert in finance as my abortive attempts at individual investing can attest to.
Continue reading about Zap after the jump.
[Source: Forbes, thanks to Darryl for the tip]
Having said that, a perusal of some of Zap's SECs filings and the way the company uses stock to pay employees and others seems to indicate that the issuing of press releases is a necessity to prop up their stock price long enough to pay some bills. Zap issues a lot of convertible debt that can be redeemed for shares if the stock price reaches a predetermined level. A steady stream of overwrought press releases often repeating the same information that came out a few weeks before on the off chance that someone missed it helps to drive the price up from it's roughly $1 a share price point long enough to convert some of that debt before the share price settles back down. Zap also utilizes the services of paid stock promoters to help boost their share price.
As I said I'm not a financial expert or a lawyer and to the best of my knowledge, they are doing nothing illegal. However, the string of abortive ventures over the last several years combined with these financial transactions does little to inspire any confidence that the Zap-X will ever be anything more than the EV equivalent of Duke Nukem Forever. Forbes Jonathan Fahey has some more details on the numbers behind Zap including their recent $79 million "order" for electric vehicles.
As I said I'm not a financial expert or a lawyer and to the best of my knowledge, they are doing nothing illegal. However, the string of abortive ventures over the last several years combined with these financial transactions does little to inspire any confidence that the Zap-X will ever be anything more than the EV equivalent of Duke Nukem Forever. Forbes Jonathan Fahey has some more details on the numbers behind Zap including their recent $79 million "order" for electric vehicles.
Reader Comments (Page 1 of 1)
PM 2:05PM (3/17/2008)
Zap has a bright future. "Zero emissions" is something that's going to be required by law one day (you know it will). Making the decision to go electric is far cheaper anyway, like 10 cents on the dollar vs. gas. (source: zapworld.com)
Reply
Tman 12:49PM (6/02/2007)
Not surprised by this finding at all. Zap has done a lot of talking and not much doing for the past years. Its definitely not a company that can bring any real revolution in the automobile industry. Most of what they say is just too unrealistic.
Reply
George Krpan 1:04PM (6/02/2007)
Well...either they are a sincere company believeing
in their cause and doing everything in their power be around long enough to see it become a reality or they're....?
Reply
COINTELPRO 1:32PM (6/02/2007)
There is nothing wrong with paying your stakeholders with stock (Microsoft, Apple). There is nothing wrong with promoting your stock to the public. Small OTC companies don't have access to the media and resort to promoters to get the word out. It is only a problem when their claims are false.
This company has stated they will be using Altair Nano batteries. If Phoenix can get 130 miles from a >6000lb vehicle, than the Zap-X vehicle could double the range since it is 2/3 less. Additionally, Altair is planning to release a 70kw battery that will have double capacity. I would verify the terms of any deals they have with Altair.
Zap should exhibit a working prototype first before issuing press releases about the car. They had a video of the car at a show; however, it was on display only.
Reply
Sam Abuelsamid 4:05PM (6/02/2007)
When I interviewed Alan Gotcher CEO of Altairnano http://www.autobloggreen.com/2007/05/07/autobloggreen-qanda-altairnano-ceo-alan-gotcher/ a few weeks back he said that Zap had spoken to them but there was no deal to supply batteries for the Zap-X or any other vehicle. As I said there doesn't appear to be anything illegal about what Zap is doing, it's just that combined with their track record it doesn't help their credibility.
I sincerely do hope a vehicle with the specs of the Zap-X does come to fruition. I just don't believe it will come from Zap.
Reply
COINTELPRO 7:33PM (6/02/2007)
They are making their product claims (Zap-X) based on the individual technologies developed by other companies. As a result, nobody can accuse them of fraud since they made their product claims based on another company technology. If they had made false claims based on their own internal development of a component, than it would be an open and shut case. Therefore, if they are unable to obtain agreements for key component from these companies, Zap insiders can cash out on the pumped up stock and not worry about lawsuits.
AltairNano should tell this company not to make claims based on their product unless they have a deal in place and getting paid. Even though AltairNano is not mentioned on their website, they are the only company that has claimed and proven they can charge a lithium ion car battery in 10 minutes. I can see a remote possibility that Altair could get dragged into court by investors or reservation customers of Zap if they are scammed because of this indirect link to them.
No deal, No Money, No indirect claims based on your product to pump and dump stock. In short, be careful of companies that make claims based on other companies products without a deal in place.
Reply
Bill 8:17PM (6/23/2007)
Isn't their basic 35kW pack more expensive than Tesla's?
At what price will they be selling the 70kW pack?
>Altair is planning to release a 70kw battery that will have double capacity
Reply
Alex Campbell 5:58PM (1/08/2008)
Please, you read this and you would think that ZAP has nothing but smoke and mirrors. It would be hard to stay in business since 1994 and deliver over 100,000 electric vehicles if that were true. But, no one ever said building a car company was easy. It takes R&D, stock compensation, press releases and much, much, more.
Call ZAP if you have a question about our business practices. I promise we won't try to sell you stock or vaporware.
~ Alex Campbell, ZAP, 707-525-8658 x 241, acampbell@zapworld.com
Reply