Cop-car firm: All we need is fed loan

Carbon Motors says first cruisers to be on road in 2013

CEO William Santana Li says Carbon Motors Corp. expects to be on track to deliver its first purpose-built police cars in 2013 if a request for a federal loan is successful.

Although the Indiana company has no orders, Li said, "We have over 13,000 reservations from 350-plus law enforcement agencies in 48 states." Those reservations are not binding and assume that the vehicles are competitively priced and meet safety standards, he said.

The first vehicle "will roll off the line 36 months after the Obama administration approves the federal loans," said Li, an ex-Ford executive.

Last year Carbon Motors applied for a $310 million loan from the federal government. The U.S. Department of Energy is in charge of lending $27 billion under the Energy Independence and Security Act of 2007. Li expects an answer this summer.

Carbon Motors is funded by private investors, Li said. He declined to reveal who they are, how many there are or how much they have invested.

On March 22, Carbon Motors signed a multiyear agreement with BMW AG to purchase 240,000 of the automaker's inline six-cylinder diesel engines, cooling and exhaust-gas systems and automatic transmissions over several years -- a contract estimated at about $1.2 billion.

The first engines are scheduled to be delivered in July 2013. Carbon Motors plans to refurbish a former Visteon Corp. plant in Connersville, Ind., to create an assembly plant for its E7 police car.

The company has said that since its founding in 2003, it has worked with more than 800 law enforcement agencies to create the vehicle. One running vehicle has been created for publicity purposes.

"We got the demand, we got the product, we got the team, we got 20-odd suppliers behind us. We got BMW. We got the local and state authorities, who have put up $28 million worth of commitments," Li said in a telephone interview. "Now we are just waiting for the federal authorities."

Prices for the E7 police car and its 50-plus options have not been announced.

The 13,000-plus nonbinding reservations from police agencies are based on "the assumption that the vehicle is competitively priced; two, it meets or exceeds all safety and regulatory requirements; and three, it will be backed by a comprehensive service plan," Li said.

Ready to patrol

He said a law enforcement agency now spends $20,000 to $25,000 to purchase a vehicle, then adds $10,000 to $80,000 worth of equipment that usually is installed by aftermarket companies.

Unlike the Detroit 3's police cars, Li said, the E7 is a vehicle "with all the street-ready, patrol-ready equipment already integrated."

Also unlike the Detroit 3, the cars will be sold directly to law enforcement agencies without a dealer network.

"We have a very stable customer base that happens to be the government. We look more like a defense contractor," Li said.

Unlike today's retired police cars, which generally end up in public hands, the agreement with law enforcement agencies is that Carbon Motors will buy back an E7 when it is taken out of service. Some will be reconditioned and sold as certified used vehicles to law enforcement agencies. Other cars will be dismantled and the parts sold.

The E7 will use an aluminum space frame with attached composite panels. Instead of paint, a thin-colored film will be applied.

The police car market is cyclical, ranging from 65,000 to 75,000 units annually in good economic times to as low as 30,000 units in bad times.

The favorite vehicle is the big, rear-drive Ford Police Interceptor, which at times has controlled 75 percent of the market, followed by the Chevrolet Impala and Dodge Charger.

Ford will discontinue the Crown Victoria-based sedan in 2011 and replace it with a car based on the front-wheel-drive Taurus.

General Motors Co. will add the rear-drive Caprice in 2011, engineered and assembled by its Holden subsidiary in Australia.

The Impala will be offered into 2012.

Li has held several positions at Ford Motor Co., including COO of GreenLeaf, a Ford subsidiary that recycled automotive components.

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