ElectraMeccanica’s Vancouver-based founders, Jerry Kroll and Henry Reisner, had hoped the Solo would spark a revolution in commuting and light commercial transportation. But Kroll, who remains a company director and major shareholder, said he was not sad to see the Solo scrapped.
ElectraMeccanica Vehicles Corp. is giving up on its problem-plagued Solo three-wheel, single-seat electric vehicle — its only product — and staking its future on a yet-to-be-developed four-wheel EV.
The Solo suffered from slow sales and problems that buyers had insuring, financing and servicing it. The final blow came with a recall of all Solos due to unexplained power loses resulting from claimed part defects in the Chinese-built vehicles.
• 2015: ElectraMeccanica Vehicles Corp., founded by Jerry Kroll and Henry Reisner in Vancouver.
• 2017: Company goes public on Nasdaq Capital Market.
• 2017: Company signs manufacturing agreement with Zongshen Industrial Group for its automotive unit to assemble Solos at Chongqing, China, plant.
• 2018: Solo three-wheel, single-seat commuter EV debuts officially at AltCar Expo in California with initial price of US$15,500. First units built in Vancouver.
• 2018: Trump administration imposes tariffs on Chinese imports, imposing $5,800 levy on Solos.
• 2020: Production begins at Zongshen plant; EM sets up U.S. sales outlets, mainly mall kiosks, in California and other U.S. states, searches for U.S. base, settling on Mesa, Arizona.
• 2021: Solo Cargo model introduced, aimed at fleet and commercial customers for commercial and service applications, makes refinements to Solo design.
• 2022: Former General Motors executive Susan Docherty is hired in December as CEO, the fourth since the company was founded. She cuts 98 positions, halts Zongshen production ahead of assembly transfer to Mesa.
• Feb. 17, 2023: Company announces voluntary recall of latest Solo (G3 model) due to sudden power losses.
• March 14, 2023: Company announces deal to assemble recreational off-road EVs for Volcon/GLV, with another contract added in April, begins winding down Zongshen agreement.
• April 14, 2023: Recall expanded to cover earlier G2 model built from 2019-22, totaling 429 units, with plans to focus on developing four-wheel EV.
CEO Susan Docherty, who took over the Burnaby, B.C.-based company last December, opted to buy back all 429 Solos sold since 2019, including earlier versions unaffected by the recall, at full price, including taxes and fees.
Docherty, who headed Chevrolet and Cadillac in Europe and launched the Chevrolet Volt there, said nothing was wrong with the Solo as a concept.
“The product absolutely delivered a lot of joy,” Docherty said in an interview.
The challenge for a startup like ElectraMeccanica was to build not just a product but also a vehicle category, and do it profitably.
“When we did the deep dive on this product in terms of what was required to build the category of three-wheel vehicles, which we were tasked with, it wasn’t going to work,” Docherty said.
Solo, sold exclusively in the United States, had an initial MSRP of US $15,500 and as recently as February was offered starting at US $18,500.
Production was halted at the company’s new Mesa, Arizona, assembly plant after Docherty took over last December. Most Solos were produced in China under a manufacturing agreement with Chongqing Zongshen Automobile Industry Co. — an agreement that was cancelled. Imported Solos were also slapped with a $5,800 tariff imposed in 2018, a year after the agreement was completed.
PLAGUED BY PART DEFECTS
In its Form 10-K filing to the U.S. Securities and Exchange Commission in April, ElectraMeccanica said it was raising potential claims with Zongshen related to defects in the vehicles it produced, actions that it suggested led to the recall.
Also, ElectraMeccanica set aside US $15.7 million for outstanding obligations to Zongshen, but it claims it’s owed US $22.8 million. Both disputes may be settled through arbitration.
ElectraMecchanica booked an US $8.9-million estimated cost for the buyback. The company also has about 800 unsold Solos, which the filing said had a net realizable value of US $13.8 million. Docherty told Automotive News Canada that the company has a letter of intent from an unidentified foreign purchaser to acquire them all.
The cost of the recall, Solo’s lack of profitability and problems that owners faced were reasons for killing it and proceeding with the four-wheel vehicle, ElectraMeccanica said in its filing. The company gave no development timeline for the new two-person model, dubbed Project E4.
Meanwhile, to keep the Mesa plant operating, the company has contracted with Volcon Inc., which markets off-road recreational e-motorbikes and ATVs, and its manufacturing partner GLV to assemble their products starting in late May.
GLV will also help ElectraMeccanica develop the E4, for which Docherty gave no specific timeline, saying only that “we’re going to bring that to market very quickly.”
Designing, validating, producing and commercializing a vehicle is always difficult, expensive and fraught with risk, said J. Bruce Chan, an analyst with Stifel, a U.S.-based wealth management and investment banking firm that has also done business with ElectraMeccanica.
“So going back to square one significantly increases the risk potential for the company,” said Chan, adding that Stifel has downgraded ElectraMeccanica’s stock from buy to hold.
CUTBACKS IN CANADA
As it consolidates in Mesa, ElectraMeccanica’s presence in Canada is shrinking.
The company last year ended production at Intermeccanica, which made high-quality replicas of Porsche 356 sports cars in New Westminster, B.C. Intermeccanica, founded by Frank Reisner in the 1960s, was rolled into ElectraMeccanica in 2015 with plans to produce high-end electric versions called eRoadster and Tofino.
Docherty cut 98 positions, many in Canada, leaving the company with a head count of 104. Its Burnaby headquarters is closing and its remaining Canadian staff moving to a WeWork shared-office rental site in the Vancouver suburb.
“We’re still a Canadian company,” Docherty said. “We’re incorporated in Canada, and we’re going to have a presence in Canada. I’m not going to get into the numbers.”
ElectraMeccanica’s Vancouver-based founders, Jerry Kroll and Henry Reisner, had hoped the Solo would spark a revolution in commuting and light commercial transportation. But Kroll, who remains a company director and major shareholder, said he was not sad to see the Solo scrapped.
“The mission of the company when I started it was to close the last gas station,” he said. “If it has two wheels, three wheels, four wheels or 18 wheels, if it’s electric and not a fossil-fuel combustion engine, I couldn’t be more thrilled.”
Kroll blamed a lack of federal and B.C. government interest for the exodus, adding that ElectraMeccanica wanted to build EVs in Canada. “We got absolutely nowhere” lobbying Ottawa and Victoria for help, he said, while Arizona and Mesa officials welcomed them with open wallets.
“These guys,” he said, “are forward thinkers.”
