ZAP Struggles for Relevance

Poor ZAP Auto (ZAAP). Given a big head start (founded in 1992) in the race to develop alternative transportation systems, ZAP is getting lapped by relatively new entries into the market like Tesla Motors and Phoenix Motorcars.

Part of this problem is of their own making. The company is notorious for not delivering on promises. Witness the questionable decision to begin selling the Smart car without:

• Permission from brand owner Daimler-Chrysler;
• Approval from National Highway Traffic Safety Administration

No surprisingly, the resulting struggles left most people with certain lack of the faith in the company. Not that CEO Steve Schneider believes this is unjustified:

"Certainly, it would appear from a public standpoint we over-promised and under-delivered."

Not the kind of statement that rallies employees. Or investors.

Give ZAP credit, though: they're not going down without a fight. In recent months the company has:

• Announced development of a crossover type vehicle with Lotus that is theoretically capable of 644 hp, a top speed of 155 mph, and a range of 350 miles on a charge. Oh, and it'll charge in 10 minutes.
• Announced ANOTHER prototype car designed to compete directly with Tesla's roadster. Though it was announced after the aforementioned crossover vehicle, it is supposed to be ready prior, and cost around $30,000.
  
• Ordered $5 million+ of polymer lithium-ion batteries from China's Advanced Battery Technologies (ABAT.OB), the first order ABAT has had from a US company. The batteries will at first be used for testing in "a range of Zap vehicles."
• Launched their new corporate mascot: "Pluggy".
  

Now, I love mascots as much of the next guy. But it seems to me that if your company has a hard won reputation of not delivering on its promises, time would be better spent focusing on the core business model and producing a product that people will want to buy and can compete with in a rapidly growing market segment.

Until then, ZAP's relevance will always be in question.

China Says No to Corn Based Ethanol

According to the China Daily, China will eliminate corn as a feedstock for biofuels within the next 5 years. In corn's place, Chinese fuel producers will use sorghum, cassava and sweet potato, all higher yield plants that are not a staple food in the Chinese diet. From the article:

Part of the government’s efforts to develop bio-fuel without harming general food supply and security, the shift will ensure a healthy supply of corn both as food and fodder.

No big surprise, right? The rapidly growing and increasingly financially capable Chinese population needs to be fed, so diverting corn from food and fodder to fuel is by itself a risky gamble.

Add to this that last year China began importing US corn for the first time in 22 years, the result of tightening domestic supplies of grain. With escalating competition between the US and China almost assuredly the script that we'll all be reading from for the foreseeable future, there's no way China is going to put even a microscopic portion of their energy security in US hands and fields.

Right or wrong, the US market for corn-based ethanol certainly has a lot of room to grow domestically. There are too many politicians and investors right now with too much to lose and gain (respectively) but not allowing that to happen.

But for those who get this dreamy look in their eyes envisioning a OPEC-style corn ethanol cartel driven by the US, I have bad news: one of your biggest potential customers is missing.