Nov. 30 (Bloomberg) -- Smith Electric Vehicles Corp.’s expansion into Chicago gives the maker of battery-powered commercial trucks an urban hub to target new customers, the company’s chief executive officer said.
The company’s Chicago factory will help it service large, existing customers and boost sales to smaller ones, Chief Executive Officer Bryan Hansel said in an interview yesterday.
Smith, based in Kansas City, Missouri, may use the same strategy in other large cities as demand for electric vehicles grows, Hansel said.
“Today, I wouldn’t sell to a small fleet because I don’t have a practical way to service them,” Hansel said. A local plant “will absolutely increase the number of customers we have in that market, because we can effectively sell to small fleets.” The company announced plans to build a Chicago factory Nov. 28.
A Smith customer such as Coca-Cola Co., which has hundreds of trucks in Chicago, can maintains its own fleet, while a local business with 20 trucks can’t, Hansel said.
“If we’re sitting in Kansas City and they’re in Chicago, and they have a truck go down, they’re going to have to wait for me to send technicians,” he said. “Previously, there’s probably a half a dozen customers total I would have done business with in Chicago.”
Selling commercial-scale, zero-emissions trucks to smaller companies in dense cities where Smith already has established national customers may prove a winning strategy, and it’s one the company has discussed for several years, said Josh Landess, an analyst for Bloomberg New Energy Finance.
“It’s hard to argue with the business model -- if you have a large customer, that can allow you to have many smaller customers,” Landess said in a phone interview today. “And they have earned a certain amount of respect, because they’ve been making and delivering vehicles a lot longer than most of the startups.”
Smith was also drawn to Chicago by a $15 million voucher program aimed at encouraging individuals and companies to switch to all-electric trucks from diesel, which have higher operating costs, Hansel said.
Chicago also is considering additional incentives such as preferential loading zones for no-emissions trucks and decreasing registration costs for electric vehicles, according to a statement from the office of Chicago’s Mayor Rahm Emanuel.
“There are a number of cash and non-cash incentives,” Hansel said. “Not only is this important for the city of Chicago, but it’s also important, as a trend, to show that markets need to be aggressive to get this kind of technology out on the street.”
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