US electric car startup plans China outsourcing

An electric car startup in Los Angeles is close to bringing the market something that the world's largest auto makers had failed to turn out: affordable all-electric, full-sized vechiles for ordinary consumers.

Miles Automotive Group, with only about two dozen employees but big ambitions, will have 25 prototypes of its Highway Speed Sedan tested in the United States, Europe and China this month. It plans to sell 9,000 such cars almost exclusively in California, mostly in the Los Angeles area, next year.

And through outsourcing its assembly work to China, the small company claims to have a big advantage over established automotive companies like Nissan Motor and other potential startup competitors in the field.

Miles might be the first carmaker to outsource its assembly work to China, a model that its Chief Executive Kevin Czinger said is no different from what Apple Inc. does with the iPod.

"Apple doesn't spend billions of dollars to create a factory. They focus on brand, design and intellectual property," Czinger told local weekly the Los Angeles Business Journal, which is available here on Monday.

Automakers have long been stymied by an all-electric car because of the difficulty and expense of building rechargeable batteries that can power a vehicle for long distances.

Until now, the most well-known electric car was General Motors's EV-1, which was lauded by alternative vehicle enthusiasts when it debuted to limited release in 1996 but failed to catch on with consumers.

With its cars being assembled in China, Czinger said his company would keep costs down and set a price of about 40,000 dollars, which is on the lower end of the price scale of other all-electric cars trying to hit the mainstream.

The core business of Miles so far has been importing Chinese-built low-speed electric vehicles and selling them to clients suchas UCLA, Yale University and the United States Naval Academy in Annapolis, Maryland for campus use.

And the Highway Speed Sedan is a significant departure from the company's early business. Czinger said such a move has been planned ever since the company was founded in 2004 by millionaire Miles Rubin.

An 80-year-old corporate attorney and business executive, Rubinis trying to take a low-profile role at the company, his spokeswoman said.

A former executive at international firms including Goldman Sachs and Bertelsmann Ag, Czinger said he joined Miles last year partly because he shares Rubin's passion for environmentalism. Rubin was one of the founders of the Energy Action Committee, which lobbied U.S. Congress to enact fuel economy standards in the1970s.

Miles' close ties to China grow from Rubin's experience there. He made arrangements for Chinese production when he was a top executive at Reliance Manufacturing Corp. and Polo Ralph Lauren Jeans Wear, the licensee of Polo Ralph Lauren.

According to Czinger, Rubin's relationships in China helped him negotiate deals with Hafei Motors Co. to assemble the Highway Speed Sedan and Tianjin Lishen Battery Joint-Stock Co. to supply rechargeable lithium-ion batteries.

The company expects Tianjin's batteries will give the sedan a range of about 160 kilometers after a charge between four to six hours, which the company said means an operating cost of about 2 cents per mile.

An Italian design firm helped devise the sedan and some of the vehicle's manufacturing would be done in the United States, said Czinger.

He said his company plans to sell the car primarily through the Internet and in-person meetings with potential buyers.