Wired Zaps Zap - Expose on the ZAP fraud

[spdickey]

Hype Machine: Searching for ZAP's Fleet of No-Show Green Cars

http://www.wired.com/cars/futuretran...urrentPage=all

Originally Posted by wired.com

While ZAP execs worked at getting the Smart cars it already owned to pass US emissions standards, company reps traveled to Germany on March 21, 2005, to propose a direct relationship with DaimlerChrysler. Daimler executives heard the pitch but said they wouldn't consider a deal until ZAP signed a nondisclosure agreement and revealed more about its plans. Schneider refused to sign the agreement. Instead he simply submitted a purchase order to Daimler for 76,500 Smart cars — worth more than $1 billion. Never mind the fact that ZAP had only a few million in cash and the garage it was using to bring Smart cars up to US standards could convert only 15,000 vehicles a year.

The audacious move was met with silence. "Steve heard nothing," Kim recalls. "It was obvious the company was blowing him off." Early on the morning of May 24, 2005, ZAP turned up the pressure, publicly announcing the deal with a florid press release. Later that day, DaimlerChrysler informed Reuters that the company had no idea what Schneider was talking about. Two weeks later, DaimlerChrysler made its first formal statement regarding ZAP. Ulrich Walker, head of DaimlerChrysler's Smart division, said he and his associates had decided not to sell any Smart cars to ZAP. The automaker had taken a closer look at the California company, Walker explained, and "decided that we do not want to have any kind of business relationship with ZAP, either now or in the future."

By June, after touting its Smart car distributorships for more than a year, ZAP had sold just one of the vehicles. Nevertheless, Schneider told the Press Democrat that ZAP was negotiating with unidentified secondary dealers for the purchase of Smart cars to meet US demand and even claimed ZAP would begin delivering vehicles to dealers within the week.

Eventually, ZAP would manage to buy and sell just over 300 Smart cars through the gray market. But without Daimler's support, ZAP wouldn't come close to delivering as many cars as the company had promised.

In October, ZAP sued DaimlerChrysler in Los Angeles County Superior Court. In the complaint, ZAP claimed that it had been "systematically targeted for destruction by one of the world's largest auto industry conglomerates." More specific charges included defamation and unfair business practices; ZAP was seeking more than $500 million in damages. DaimlerChrysler filed a motion to dismiss the lawsuit, declaring that ZAP's behavior revealed "both the sham nature of its purported business and a lack of trustworthiness that is nothing short of stunning." Daimler's filing also said that the company's Smart division never had any intention of engaging in a partnership with ZAP, despite ZAP's "misleading press release clearly issued to create the false impression that ZAP would have a steady supply of Smart vehicles." In June 2006, a superior court judge ruled that ZAP had no jurisdiction to sue Daimler in a California court. (ZAP lost its appeal and is taking its case to the California Supreme Court.)

I, myself, visited ZAP's Santa Rose headquarters in April of 2006. I drove a ZAP converted (by G&K) 450 smart to New York City for the NY Auto Show. We faced emission control problems (clogged cat converters) on four of the six cross country cars within a couple of days after leaving Northern California. ZAP made sure we didn't mention the problems while blogging about the cross country trip.

ZAP is very good at issuing press releases, pumping its stock price, while the head honchos sell their shares at inflated prices.

Its a long article, but very detailed at how this "company" promises much but delivers hardly anything.

[jonnysan]

Interesting article, Dickey. I have been watching this company since 2005. Too bad it has become so infested with greedy owners.

[jwight]

They are still at it; they supposedly will have an entry for the Automotive X Prize.

[Fredvon4]

I read somewhere that UPS bought 42 or so cars from Zap

I admit until I started researching for the smart fortwo a few years back I did not know much about Zap... But I did get a spider sense tingle from their over hyped press releases and pseudo advertising ...enough so that I decided to wait for the real deal from a more reputable company

[rgaus]

Thanks for that article, spdickey. First time I've seen someone explain it in such detail. Didn't know you were on that first journey to New York. Were those 2002/2003's or the 2005's? Thanks again.

Ron Gaus, asmartcar.com

[Springlering]

I admit until I started researching for the smart fortwo a few years back I did not know much about Zap... But I did get a spider sense tingle from their over hyped press releases and pseudo advertising ...enough so that I decided to wait for the real deal from a more reputable company

ditto here. We had been following them for several years, have been on their email list. Had they been anywhere but California, we might have bit, but many years ago I had a friend who gave a California "dealer" cash money for a new Porsche 911, and you can guess the rest. It left me with a bad taste for a.) giving someone cash in advance for a car and b.) buying a car from someone on the opposite side of the country.

Those ZAP emails? They just got stranger and stranger, to the point they were laughable. I saw a better looking car built on the "I Built it Myself" page of Popular Science a couple of months ago. Oh, wait.... it was a motorized ATV skateboard. And it still looked better than anything ZAP was offering.

[spdickey]

Originally Posted by rgaus

Thanks for that article, spdickey. First time I've seen someone explain it in such detail. Didn't know you were on that first journey to New York. Were those 2002/2003's or the 2005's? Thanks again.

Ron Gaus, asmartcar.com

I think mine was a '03 that had sat in the G&K shop for about a year until I took it out of the Santa Rosa building with about 35 miles on it. I turned it in to NYC with over 3500 miles in six days. Luckly I had no problems with mine (other than fussing with the terrible aftermarket radio, the crummy padding on the moon roof and pillars and the wierd kinks in the fueling system so I had to baby the gas pump to get it filled up.

Three of the other cars died on the road, one in No. California, one in Arizona and the other in El Paso, TX. We left one car behind at the Phoenix dealer (nice guy, hope he was able to recoupe his investment) and our "mechanic" blew out the insides of the cat converters from the other two so we could get to NYC.

I loved the smart, hated ZAP for what they do.

[rgaus]

Thanks for that update, spdickey. You really were one of the few on the leading edge of the US smart entry on that trip. Despite the problems, that initial trip is something you'll have the rest of your life. Pretty neat.

Ron Gaus, asmartcar.com