A glimpse of Manhattan’s past and possibly its future was on display in New York’s Times Square Wednesday — a selection of electric step vans, buses and trucks.
“Electric trucks tend to be magnetic,” said Bryan Hansel, CEO of Smith Electric Vehicles. “People are intrigued, especially when they see the size of them.”
Hansel was in New York for an electric commercial vehicle showcase in the heart of Manhattan and to detail his company’s plans to build trucks in The Bronx.
The company also is working on an initial public offering to help shore up troubled finances and fund expansion as it tries to plug into urban distribution.
Smith Electric Vehicles has made New York City its second home base in a sense, using the Big Apple as a testing ground for plans to open new U.S. markets.
“Localization is fundamental to our strategy,” Hansel said in a telephone interview. “This is the first demonstration. By being in the local market, you open up opportunities.”
Electric trucks were common on New York City streets in the early 20th century, before gasoline and diesel-powered units literally ran them off the road.
Hansel said New York is ripe for an electric truck comeback. “It ultimately comes down to density. It doesn’t take long sitting in Times Square to see the opportunity.”
Last month, Kansas City, Mo.-based Smith Electric signed a lease on a plant in The Bronx that eventually will turn out 100 trucks per shift a month, said Hansel.
Hansel hopes to have the assembly plant up and running by the end of the year, and he’s looking for other potential sites. “It’s got to be in an attractive market.”
As of June 30, the company had an order backlog of 404 vehicles, up from 145 in March. SEV sold 360 vehicles in 2011 and the first six months of 2012.
“One of our key indicators is reorders,” Hansel said. “We’ve seen a good consistent pattern of customers like Duane Reade, Frito Lay and Staples coming back.”
The $49.9 million company hopes returning customers deliver some profit. SEV had net losses of $52.5 million in 2011 and $27.3 million in the first half of 2012.
SEV is cutting costs, the company said in a preliminary prospectus for an IPO filed with the U.S. Securities and Exchange Commission last year and updated Sept. 4.
Many of its costs and losses are associated with setting up a truck manufacturing business in the U.S. from scratch, starting in 2009, and developing new technology.
The company switched the powertrain and battery system in the Newton to its own Smith Drive and Smith Power technologies in the fourth quarter of 2011.
That meant integrating new vendors into a supply chain already stressed by costly shortages of components including batteries and key electronic controls.
SEV expects to sell its vehicles at a gross loss through the fourth quarter, turning to positive gross margin in the 2013 first quarter, according to the updated prospectus.
The company cut back production in the first quarter of 2012 and now expects to build 380 vehicles this year, SEV said in its prospectus.
Despite SEV’s losses, investments, private stock sales and loans have infused more than $40 million in liquidity into the business this year, and Hansel is “feeling very good” about the business.
“We’re getting a good amount of miles on the fleet,” he said. “Frito-Lay alone has more than a million miles on its trucks.”
As electric fleet miles mount, Hansel anticipates increased repeat demand from major fleet operators such as Frito-Lay and FedEx, keeping capital flowing to the truck maker.
“In general we feel the market is comfortable this (the electric truck) is a great option,” he said. “We’re most excited about those customers coming back.”