Zap was started in 1994 and is in Santa Rosa CA. According to the Mercury News, Zap has lost money every single year since 1995, but has managed to sell 100,000 electric vehicles, mostly things like scooters and ATV, as well as about 600-700 Xebras. One dark part of Zap's past is $2 billion in unfulfilled orders for smart car imports from Europe. Now, magically, $79 million dollars could be coming from a large "order" by the Electric Vehicle Co., a Chicago start-up. As we mentioned at the time, the $79 million was subject to meeting the performance criteria of EVC and certain terms of ZAP.

Who is behind the Electric Vehicle Co.? Why, it's Larry Spatz, who is a paid consultant for Zap. According to the EVC website:

To further advance the company Mr. Spatz has been hired by ZAP to consult on marketing, promotions, public relations, corporate awareness and sales.

Mr. Spatz sees the founding of Electric Vehicle Company as a unique opportunity to create a successful business model while protecting the environment and bringing economical transportation to the public.

This is the guy who's making the demand for Zap vehicles go "crazy" (to use Schneider's words)? A paid consultant? The $79 million that's going to make Zap profitable for the first time in 12 years is money coming from someone Zap pays to promote Zap cars? Seems like there's a circular cash flow here. To Zap's credit, they did disclose Spatz's relationship to Zap in the original announcement of the $79 million order. Schneider has been willing to talk about the $79 million, but we haven't heard a peep out of Zap since April about these "thousands of vehicles" that are supposed to be delivered to EVC in 12 months for an eight percent discount. The silence is odd, to say the least. Where are these cars? Who's going to be driving them? What's up, Zap?

The other angle with which to understand Zap's promotion techniques is to look at RenewableEnergyStocks.com. This pay-to-play site "is a global meeting place for investors and industry following the sector. Renewable Energy companies can contribute content: submit renewable energy news, articles, research and links to our site," according to the blurb at the top of the page. What that really means is that companies can pay $75 to have their press releases promoted by RES. The paid relationship is disclosed, but if you're not careful, it can look like RES is a third party verifying whatever claim a company wants to put forth. There are currently two companies that are "featured companies" on RES: Zap and Rotoblock. And look, Schneider is a director for Rotoblock and was once interim president of the company.

I'm not charging Zap with anything illegal in any of this. As I've said, they're good at disclosing the relationships between the intertwined companies we're talking about (I mean, a lot of the links to verify this information go directly to the company websites). Instead, I'm trying to draw these connections into the light, make them really easy to grasp.

Finally, let's return to that San Jose Mercury News article that prompted all this investigation. Here's a lengthy clip from the middle:

In 2008, Zap, which stands for Zero Air Pollution, will bring over vehicles built by Obvio Auto motoveiculos of Brazil. The Obvio 828 is called a tri-brid because it can be powered by gasoline, bio-ethanol or natural gas. But Zap, Obvio and Lotus Engineering, which is developing the car, have decided to first sell it as an electric vehicle.

Zap and Lotus also have announced separate deals to create two more vehicles. The Zap-X, an electric crossover utility, will generate the equivalent of 644 horsepower, have a potential top speed of 155 mph and a 350-mile range, the company said. The Zap-X's target price is $60,000, and it's slated for 2009.

The Zap Alias will cost about $30,000, and have a target top speed of 100 mph and a 100-mile range. It might go on sale before the end of 2008.

Knowing what we know now, what do you think of all that possibility? Will you be driving a Zap Alias in 16 months?

The bottom line is that I want Zap to succeed, for no reason other than I think the more players there are in the electric car business, the better. If they can get their hype department to work part-time on the vehicle delivery side of things, they just might be in good shape. We'll see.

At the very least, one thing no one can take away from Zap is that their cars make great pizza delivery vehicles.

[Source: San Jose Mercury News, Zap, Electric Vehicle Co., Renewable Energy Stocks]