EV truckmaker cancels its IPO but pushes ahead
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Bryan Hansel, CEO of Kansas City, Mo., electric-truck maker Smith Electric Vehicles, thought the investment community was on board with his plans for electrifying urban delivery trucks across America.
But on the night of Sept. 20, Hansel had to pull the plug on Smith's eagerly awaited initial stock offering, which was scheduled for the next day -- an IPO he hoped would raise $77 million.
His investors were wary that it would be mid-2013 before Smith could turn a profit on the hundreds of battery-powered commercial medium-duty trucks it has begun supplying the likes of Frito-Lay, Staples and Coca-Cola.
"They told me, as a private company, they love us and love what we're doing," Hansel says. "But as a $50 million public company, we're a risk, and they would have to discount our value. I didn't know that that was their exact opinion until then. And I decided it would be better to wait."
The electric vehicle market has been vexed with setbacks. And Smith's canceled IPO was immediately greeted in the media as further proof that EVs as a business model are unsustainable. But Hansel, a 47-year-old former product development manager for several Fortune 500 companies, remains bullish.
The company is going ahead with plans to build a small assembly plant in the South Bronx to supply New York City customers. It expects to have the plant up and running next spring.
A supply deal with FedEx has Smith exporting electric delivery trucks to Hong Kong, and Hansel will soon add Singapore to the list. He has linked up with Chinese parts conglomerate Wanxiang as an equity investor and joint-venture partner, and the pair now intend to build an electric-truck assembly plant in China.
Smith was a 90-year-old, family-owned British producer of electric vans for milk delivery when it was acquired and moved to Kansas City in 2009. Its new business model is an oddity in North America.
Smith gets truck chassis and cabs from Prague, in the Czech Republic, where they are made by a subsidiary of India's Ashok Leyland. It powers them with lithium ion battery modules from A123 Systems of Waltham, Mass. -- an EV supplier that also has received private equity investment from Wanxiang in recent weeks.
Hansel proposes to build small assembly plants all over the United States -- "roughly everywhere that's big enough to have an NFL team," he says. They would employ only a few dozen people each, assembling about 100 trucks a year from the outsourced components.
The South Bronx is the critical next step because of New York's huge demand for delivery trucks, and also because of the grass-roots support for zero-emission urban trucking.
That appeal is the real reason for the CEO's bullishness.
"Companies want to have a green footprint," he says. "Drivers like driving electric trucks, and your customers like you when you drive them."
This is not long-distance highway trucking, but short, daily and predictable routes such as grocery and bakery runs, package pickups and retail store deliveries.
"Commercial fleets travel the same five or 10 miles every day," he says. "It's perfect for battery power. What we're doing is really different from what automakers are doing with electric cars. That's really tough and I can't predict what will happen there.
Hansel says the EV business won't really take off until battery costs come down.
"It's a cost issue for consumers," he says. "I believe that battery costs are going to come down over the next two or three years, and when they do, consumers will really see what EVs offer." c
You can reach Lindsay Chappell at lchappell@crain.com.
