Time article: Vectrix's Vexing Problem

http://www.time.com/time/specials/2007/article/0,28804,1706699_1707550_1856547,00.html

James Morrison doesn't fill up at the gas pump any more. Instead, when the 37-year-old software programmer from Issaquah, Wash., needs more juice for the Vectrix electric scooter he bought in July, he rolls up to the nearest power outlet, uncoils the 8-ft. cable stowed under his seat and plugs in. "Once you start looking, you find plugs everywhere," says Morrison, who charges his two-wheeler at parking garages, outside Starbucks stores and even in gas-station parking lots.

Electric scooters are a booming business in China and India, where some 13 million sell annually. But their relatively slow speed and high price have stalled interest in developed countries. Vectrix, a start-up in Middletown, R.I., wants to break that barrier and got help when gas hit $4 a gallon this summer. But for alternative-energy vehicles, the breakthrough will come from striking the right balance between performance and affordability, a balance the company hasn't yet found. "Changing the way people make decisions on a day-to-day level for transportation is a daunting task," says Vectrix ceo Mike Boyle.

Conceived in 1996 by a group of engineers at Lockheed Martin and a former competitive sailor named Andrew McGowan, Vectrix spent 11 years and more than $50?million bringing its first product, the V1, to market in 2007. The original business plan was to develop the technology and then sell it to an existing scooter company like Piaggio, says Vectrix chief technology officer Peter Hughes. There were no takers. "They didn't have the vision. So we decided to manufacture it ourselves," he says.

Unlike the putt-putt scooters sold in Asia, which often max out at 30 m.p.h. (48?km/h), Vectrix has to meet the demands of speed-obsessed Americans. Styled like a motorcycle, the V1 goes from 0 to 50 m.p.h. in 6.8 sec., has a maximum speed of 62 m.p.h. and travels up to 65 miles between charges. It's also the only electric scooter that is legal to drive on the freeway in the U.S. and Europe. Weighing in at 500?lb. (200 of which come from its massive nickel metal hydride batteries), the $8,750 aluminum-frame bike even has regenerative braking, which uses the energy absorbed by braking to recharge the batteries. That's the same technology used in hybrid cars like the Toyota Prius.

The V1's acceleration is nearly as fast as an entry-level Suzuki or Yamaha, but few people have had a chance to experience it firsthand. Only about 1,000 V1s have sold so far, including a few to police departments in Providence, R.I., and New York City that were looking to boost their green street cred. Jay Leno, Leonardo DiCaprio and Jeremy Piven all have one too. ceo Boyle blames the meager sales on a flawed distribution strategy that relied on company-owned stores in just three cities (two of them in Italy). The high cost is a more obvious drawback. The V1 is fun to ride, but it's no Tesla. "They are pricing themselves out of the market," says analyst Matt Camp of Power Products International, who notes that a comparable 500-CC gas scooter sells for just $3,000.

To help steer Vectrix out of the red — it lost $26 million in the six months ending March 31, against sales of just $1.9 million — Boyle dropped the $11,000 asking price by $2,250 in July, laid off half his 300-person staff and added more than 100 dealers in the U.S. and Europe. A cheaper, better battery could also reduce costs. Next year Vectrix plans to introduce lower-priced models that are more closely aligned with competitors like the Zapino, from Zap in Santa Rosa, Calif., and the lithium-ion-powered X-Treme XM, from Alpha Products in Newton, Iowa. Both sell for less than $5,000.

That should help boost sales. Vectrix is also angling for the same incentives that helped spur the scooter industry abroad and hybrid cars in the U.S., such as tax credits and access to carpool lanes. Until then, only early adopters like Morrison will know what it's like to have people stop, stare and ask, "Where's the tailpipe?"