Mobile Register 5 August 2001
Fairhope-based electric bicycle company moving to establish national network of dealers
They call it the "eGO smile."
August 5, 2001
By GEORGE TALBOT
Mobile Register, Mobile, AL
It's the look that customers get when they take their first ride on one of the electric bicycles now being manufactured in Fairhope by eGO Vehicles Inc. And it's the look that Allen Smith, the bicycle's designer, recognizes as yet another sure sale.
"People can visit our Web site, they can read one of our brochures, or they can listen to us describe the eGO, but there's nothing like actually taking one for a spin," said Smith, 37, a former engineer for the Army Missile Command at Huntsville's Redstone Arsenal.
"Once they get on board, the bike just sells itself."
eGO began production of the bikes in April, and has sold and shipped about 150 so far. A number of them can be seen whizzing around Fairhope, where their popularity is growing through word-of-mouth.
Smith and his co-workers at the company's manufacturing headquarters, in a small warehouse on Bancroft Street near downtown, have become accustomed to greeting curious folks who show up at their front door wanting to know more about the bike.
eGO's product is a sort of battery-powered moped that tops out at around 20 miles per hour and has a range of around 25 miles on a single charge. When the batteries run down, they can be fully recharged in about six hours using common AC outlets.
The bikes cost around $1,600 and, at least for now, are sold primarily through the company's Web site, www.egovehicles.com, or right out of the warehouse. But not for long.
Andrew Kallfelz, the company's president, is working to establish a nationwide network of dealers, mainly at bicycle and surf shops on the East and West coasts and in Florida. So far, he's lined up about a dozen, but said many more will soon follow.
"Now that we're in production and things are going well, we feel more comfortable getting our dealers in place and putting the bike out there in front of people. We're ready," he said.
Following a dream
Kallfelz, 34, a former engineer and patent attorney from East Greenwich, R.I., was a longtime friend of Smith's who decided about a year ago to give up his steady job with the American Power Conversion Corp. and help sell Smith's design. The company was incorporated last fall, and the two have since been joined by two more friends -- Jim Hamann, 34, also of East Greenwich, serves as vice president of marketing, and Tad Boreck, 34, of San Francisco, is eGO's lawyer.
Smith said he tinkered with the idea of creating an electric vehicle for years, an itch that led the Tuscaloosa native to leave his well-paying but unsatisfying job at Redstone.
"I was the guy with the pocket protector and the pens and the goofy clothes, and it was a good job that made my father happy," he said. "Then one day it sort of struck me what I was doing -- designing missiles, you know, weapons of mass destruction. And right then I said 'The heck with that,' and decided to follow my dream."
Smith had a prototype of the bike by 1998 and then spent months refining its design, showing sketches of his ideas -- often hastily drawn on bar napkins or scraps of paper -- to almost anyone who showed an interest. He said George Henley, 57, a friend and Mobile native, was particularly helpful in creating the eGO's design.
By 1999, a few early versions were sold to friends around Fairhope like Mike Lyons, the owner of the Lyons's Share gallery and Beth Goldberg, owner of the Coffee Loft.
After about 25,000 miles of testing and fine-tuning, the eGO was ready for mass production by late fall of 2000. The company got a kick-start from the Baldwin County Economic Development Alliance, which provided eGO a low-interest, $150,000 loan through a U.S. Department of Agriculture program designed to help fledgling businesses in rural areas.
"They are a true Baldwin County success story, and we have great expectations for them," said Lance Lacour, the alliance's executive director.
Another $100,000 came through a small stock offering to private investors, most of whom found out about the company through its presentation at a Seed Investors Forum held in Mobile in February. But Kallfelz said the four partners own 95 percent of the company and are committed to keeping it under their own control -- though none has yet to draw a salary from the venture.
That may be changing soon, however, as the bike's popularity grows.
"Right now, not many people know about us besides our core supporters in Fairhope and some enthusiast groups who found out about us through the Internet," Kallfelz said. "We're working now to raise the awareness of the vehicle, probably through a national ad campaign. But that takes money, and it's our next big hurdle."
Beating the competition
Kallfelz said he is encouraged by the fact that the eGO compares favorably to its competitors in the electric bicycle market. The most high-profile manufacturer, EV Global Motors Co., is led by former Chrysler chairman Lee Iacocca and has been in production for about a year, claiming it has sold about 10,000 bikes to date.
The Los Angeles-based company makes a bicycle that offers riders the option of pedaling or using battery power to propel them along the road; a basic ver sion of the bike sells for around $1,000 and tops out at about 15 miles per hour.
Other competitors include ZAPworld.com of Sebastopol, Calif., and Currie Technologies Inc. of Van Nuys, Calif.
"We believe our design is much more robust and user-friendly," Kallfelz said. "The bottom line is, it just so outperforms every other vehicle in its category, and we've gotten to this point with just a fraction of the money that they've had. Allen's design is just superior."
Kallfelz said the eGO vehicle is more durable, comfortable and travels farther and faster than the other bikes in its category.
The 100-pound bike comes in nine different colors -- yellow is the best-seller -- and can be upgraded with a variety of features including cargo baskets, rain covers and auto racks. The bike carries a payload of about 250 lbs., and its twin batteries are expected to have a lifespan of about two years, costing about $250 for replacements.
Basic repairs can be made by most traditional bicycle repair shops, Kallfelz said.
Scott MacGregor, who sells all varieties of the electric bikes through his Boston-area dealership and Web site, www.evdeals.com, said eGO may be the new kid on the block but already has established itself in a class of its own.
"It fills a void for people who don't want to pedal, like they have to do with most of the other e-bikes," said MacGregor, who recently purchased one of the bicycles and already has put it through a series of preliminary tests; the results are available through his Web site.
"I'm very satisfied with the performance. I've taken it up and down hills, off-road and it's done well. People like the way it looks, it's comfortable and practical, and it's going to sell. It's just a matter of time before it really takes off."
In addition to the four partners, eGO employs another four full-time workers at its warehouse in Fairhope, led by production manager John Griffen. The workplace, a converted garage, is neatly organized but decidedly laid-back -- T-shirts and sandals are the uniform of choice, and the selection of music for the stereo is given ample consideration each morning.
The group can crank out about 200 bikes a month and is working at full capacity. Most of the bicycle's components are imported from Asia, though eGO relies on a recently formed subsidiary of Mobile's Bender Shipbuilding and Repair Co. to cut and assemble the bike's aluminum chassis.
"We're some of their biggest supporters," said Bob Lewis, general manager of Bender's Cutting Edge Metal Processing Inc., which employs about 10 workers at a 60,000-square-foot warehouse adjacent to Bender's headquarters on Royal Street.
"They are very bright young men with a good product, and we're pleased to play a small part in any success they have," said Lewis.
'Wide-open' market:
Kallfelz said eGO is targeting urbanites tired of the cost and trouble of keeping a car, and residents of vacation and retirement communities like Martha's Vineyard, Mass., and Seaside, Fla. The typical customer is a middle- to high-income American age 30-70 -- a profile that matches about 55 percent of the U.S. population.
Secondary markets include college campuses, industrial plants, boat and recreational vehical owners and rental companies in resort towns.
The bikes are street-legal in all 50 states and, in most, don't need to be registered, Kallfelz said. Alabama law requires the eGO to be registered.
He said the market for vehicles like the eGO is enormous and will only expand as Americans become more comfortable using alternatives to their cars for getting around. Personal transportation, he said, is a $275 billion industry dominated by automobiles, which account for almost 100 percent of the U.S. market. Cars account for only about 40 percent of the market in most European countries, Kallfelz said.
He said about 50 percent of personal trips involve just a single driver, and the average trip length is less than seven miles.
"It's just ridiculous that we drive these hulking, two-ton SUVs around the corner to pick up a gallon of milk," he said. "Especially when you consider what's happening with the price of gas and the growing awareness of the problems of air pollution. But we're not asking people to give up their cars, and we're not trying to replace them. We're just offering another alternative."
"The biggest challenge for electric vehicles, including bikes, cars and scooters, is increasing the distance they can travel before needing to recharge," said Kateri Callahan, executive director of the Washington DC-based Electric Vehicle Association of the Americas.
"For the cars, in particular, that's a dilemma that hasn't been completely solved," said Callahan. "But the technology is growing by leaps and bounds, so that products like the bicycle are at a point now where they can meet the growing demand for mobility at a reasonable price."
She said the fact that corporate giants like Ford Motor Co., Honda Motor Co. and DaimlerChrysler AG are developing their own electric bicycles is evidence that a market exists for products like the eGO.
"They wouldn't invest in it if the demand wasn't there," she said.