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Electric car maker Coda Automotive to open showroom in mall

Coda Automotive will begin selling its $44,900 electric compact sedan at the Westfield Century City mall in July.

April 18, 2011|By Jerry Hirsch, Los Angeles Times

Kate Spade, Tiffany & Co. and Louis Vuitton — tony retailers at the Westfield Century City mall — are getting a new neighbor, but it won't be another fancy brand. In an unusual move for an automaker, electric car company Coda Automotive Inc. will open its first showroom at the shopping center in July.

The automaker is hoping the glitz of those names will rub off on Coda, providing a marketing aura far bigger that what could be expected for a tiny, start-up automaker.

Analysts are skeptical.

The Santa Monica auto and electric battery company has signed a lease to open a 900-square-foot store at the shopping center. Visitors will be able to kick the tires on its $44,900 electric compact sedan, learn about the vehicle and test drive one housed in a pavilion in the parking lot.

"It is a great opportunity and is a relatively low-cost market approach," said Phil Murtaugh, Coda's chief executive.

Coda says its all-electric sedan will have a 120-mile range and a top speed of 80 mph. The cars are built on a chassis manufactured in China and based on a design licensed from Mitsubishi Motors Corp. but greatly modified by Coda, which has designed the battery pack and drive train for the vehicle.

Coda missed a December target for launching sales. It also has yet to sign a deal to install the battery pack and some options. The company expects the work to be done by an auto import processing company in Benicia, Calif.

Analysts say the company faces large hurdles breaking into an auto market dominated by giant companies with well-known consumer brands and market clout.

Nissan already sells the Leaf, an all-electric vehicle that retails for about $10,000 less than what Coda plans to ask for its vehicle. Chevrolet now sells the Volt – essentially a plug-in hybrid that can travel up to 40 miles on battery power before a small gasoline engine kicks in as a generator, extending the range beyond 300 miles.

Ford and Honda are readying electric offerings for the market next year. And other large auto companies are all developing electric cars they plan to bring to market in subsequent years.

Coda "will have a hard time with established players coming in," said Oliver Hazimeh, a partner at PRTM, a global management consulting firm.

Among the obstacles Coda faces are its lack of an automotive track record, a sales and service network, and consumer brand awareness, said Daniel Gorrell of AutoStratagem, an industry research and consulting firm.

"People are going to buy new technology from a company they trust, and that suggests that it will be very hard for companies such as Coda to sell many vehicles," Gorrell said

Murtaugh, who previously worked for General Motors Co. and Chrysler Group in Asia, said Coda understands the challenges and has a growth strategy. He said the company has enough cash to fund its plan. Private investors have already put $81 million into the business, and Coda is trying to raise an additional $44 million.

To jump-start sales, Coda is negotiating fleet deals with companies looking to increase their use of alternative fuel vehicles. Both Hertz Corp. and Enterprise Holdings Inc. have expressed interest in placing Coda sedans in their rental fleets once they go into production. This will get cars on the road where consumers will see them.

The company plans to supplement the Westfield Century City showroom with Internet sales and the development of an alternate sales network, probably through other auto distributors or the big car dealership chains, Murtaugh said.

Murtaugh said he is confident the car will prove itself in the marketplace. The Coda is designed with a thermal management system that regulates the temperature of the battery to enhance performance and produce a more consistent range than the Leaf or other vehicles in development, he said.

Coda's battery technology — it uses lithium-ion cells — also is more efficient that what's in other electric vehicles, Murtaugh said.

The company wants to leverage that technology — developed with Lishen Power Battery, a joint-venture partner in China — to develop electric batteries and drivetrains for other manufacturers.

So far, the major Western automakers have shunned Coda. But Murtaugh said he is negotiating with several Chinese manufacturers and hopes to announce deals to provide electric propulsion systems to several automakers soon.

Coda also wants to increase manufacturing volume and drive down expenses by selling batteries for energy storage use outside of the auto industry. Among other uses, they could provide backup power for cellular telephone towers or store surplus electricity produced by windmills to be fed back into the grid at peak times, he said.

Eventually, energy storage could account for 50% of the company's business, he said.

But for now, Murtaugh plans to attack the electric vehicle market, where he believes Coda will attract customers because the demand for such vehicles is greater than the supply trickling in from Nissan and the other automakers.

"There is a significant segment of this population that just wants an all-electric vehicle and won't look at hybrids," he said.

The best way to capture those customers, Murtaugh said, is "to get our car in the market and prove our performance."

jerry.hirsch@latimes.com

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