Going Green, Gradually: Catching Up with Local Motors and Its Crowd-Sourced Car

The Rally Fighter is half dune buggy, half muscle car. Designed for off-road racing in the deserts of the Southwest, it looks a lot like any ride you might see on the cover of Road & Track. But what’s different about the Rally Fighter is that it’s a product of the Web 2.0 revolution: it was the winning design in an online competition that Wareham, MA-based Local Motors conducted last fall among its growing Web-based community of amateur and freelance automotive designers.

Crowdsourcing the design process through regionally-themed online design contests is half of Local Motors’ business model. The other half is “mass customizing” the actual vehicles at a network of what the company calls “micro-factories.” If you’re going to start a car company these days, you might as well try a radical new approach—and that’s definitely what co-founder, president, and CEO Jay Rogers is doing. My December 18 story has all the history and details.

On Friday, I reconnected with Iraq vet and Harvard MBA Rogers by phone to get the latest news about Local Motors—and to ask him for his opinion about other vehicle-related events in the news, including the first flight of Terrafugia’s “roadable aircraft” and this week’s unveiling by GM and Segway of the P.U.M.A., a multi-passenger vehicle that balances on two wheels like the famous Segway Personal Transporter. I also probed a bit about the seeming disconnect between Local Motors’ self-avowed green mission—he talked a lot back in December about the nation’s dependence on foreign oil, and about how to make cars lighter and more fuel-efficient—and the fact that the company’s first product is a racecar built to tear around the desert. He had some interesting responses, which you’ll see toward the end of the following transcript.

Xconomy: We last talked in mid-December. What’s been happening at Local Motors since then?

Local Motors CEO and co-founder Jay Rogers

Local Motors CEO and co-founder Jay Rogers

Jay Rogers: We just passed our first anniversary, and one of the big things that stands out is that on the day of our birthday, March 25, we were invited to a Web-based conference [organized by Canadian automotive journalist Michael Banovsky] with Bertone, one of the top two automotive design houses in the world. It was an incredible recognition of what we have achieved in just 12 months. We are known enough that people see us as a design firm that has put together something notable. It shows the power of Web 2.0 to create a new entity. These older design houses don’t have the bandwidth to create a lot of new concepts, and as governments and everyone else around the world are looking at how to reinvigorate stale parts of the auto industry, we make a very compelling alternative.

Since December we have also run two or three more competitions. We just finished Chicago and the Carolinas and are about to launch Detroit. That is going to be much more toward the practical end than the conceptual end. We are going to do a design for the budding entrepreneurs in Detroit. A lot of machinists and pattern makers, as you can imagine, are out of work. What they need is a jobber’s car—a coupe with a roach coach or a hold for a set of tools, something that’s economical and isn’t a big truck. It’s going to be a real exercise in how Local Motors can target a vehicle that is relevant to a local area, especially one that is as embattled as Detroit.

The other thing is that we are in negotiations right now in Phoenix, Arizona, and here in Massachusetts to place our first micro-factory. We don’t have anything to announce just yet, but we are in some very exciting negotiations and are going to end up with a very good location in one or the other place, or it could very well be both.

We were also applying for the federal assistance program from the Department of Energy for new vehicle manufacturing concepts. At the time we last talked, GM and Chrysler were looking to hog a lot of that money. But this week, those companies were determined to be non-viable, which means they are not eligible for those loans. Which means we have a much better shot at getting some money. That’s a very positive thing.

One more thing we did which was actually very exciting was that we began to flex our muscles in the competitions, and instead of just doing exterior design, we ran an interior design competition for the Rally Fighter, our first model. Critics were saying “You can’t open-source the design of a car,” but this showed an entirely different face of our design competition. The winning concept is now going to be the interior of the Rally Fighter.

We are also breaking down [the design competitions] into discrete parts. We needed an air extractor for our engine bay, and we got 50 to 60 side-vent ideas in about six days. We posted it Friday night and we were done by the next Wednesday. Because this was so successful, we are going to be running more discrete engineering projects as competitions, instead of us doing them ourselves. It’s great for us to go to the community like this.

X: How is the Rally Fighter coming? When I visited, you had a full-scale model, but it was made of blue foam.

JR: The Rally Fighter’s body is going to be frozen this week. That means the look and feel, all of the micro-details, which is a huge achievement for us. If you were to look at it today, you’d see a finished body and what would look like a finished chassis. It has a few tubes missing still, but we are on pace for seeing a Rally Fighter on the ground this summer.

X: I’m wondering if you know the folks at Terrafugia, out in Woburn. They recently announced the first flight of their “roadable aircraft,” the Transition. Both of your companies are building new kinds of vehicles—but what strikes me is that Terrafugia is taking a very hands-on, engineering-centric approach, controlling and testing every element, and you guys are just opening it up to the whole community. Engineers are control freaks as a rule, and I wonder whether you, as engineers, you ever get nervous about the open source approach.

JR: As new as Terrafugia may be, we believe that’s the old way of doing business. We do have that debate internally every day, of course. My head designer came up with a side vent, and I said “That’s nice, now let’s throw it out to the community and see if we come up with an idea that you like even better,” and guess what, we did find an idea he liked better. Now, I like what Terrafugia has done—I am a pilot, and I understand the rigors and the tolerances. Making an open source program part of the development of the first roadable aircraft would probably be a mistake for them. But it’s the right thing for us. Everyone talks about Tesla as a new American car company, but Tesla had Lotus make their car, and Fisker is having Magna International make theirs. Neither of them do what we do, which is outsource the design. I want us all to succeed—I just think they are going to need hundreds of millions of dollars to do it.

X: You probably saw another piece of vehicle news this weekend came from Segway and GM—they’re showing off a two-wheel, two-seater vehicle called the P.U.M.A. What was your reaction to that? It struck me, frankly, as GM’s attempt to cloak themselves in the aura of innovation that surrounds Segway.

JR: I know Segway very well, and know the team internally. I think the P.U.M.A. concept is something that’s fun, it’s to enlighten people’s minds. But GM is grasping at straws. The whole idea of an electric vehicle is great, but for the cost of all the engineering, you could just as easily achieve a vehicle with three wheels, and you wouldn’t need the self-balancing technology. I look at it as a very expensive toy. Segway developed a four-wheel vehicle that made a lot of sense—the Centaur. It was very sexy and attractive. But it didn’t take advantage of their self-balancing technology as much as they would have liked, so they didn’t continue with it. But that was the one I liked. The P.U.M.A. announcement does not mean that much from a consumer perspective.

X: You talked about finalizing the design for the Rally Fighter, and you talked about the micro-factories. What other company milestones should we be on the lookout for this year?

The Boston BulletJR: Those are the two big things. Another thing you see very soon is the ability for a customer to come to our site and place an order for the Rally Fighter. You will see an announcement about the micro-factory, and you will see the Rally Fighter finished and announced. We will do that in November at the Specialty Equipment Market Association show in Las Vegas. Then we will go down to Baja and try it in the desert.

X: Speaking of the desert…that reminds me about feedback I heard from a few readers of my December article, who were puzzled why your company chose an off-road desert racing car as its first vehicle, given that you also talk a lot about your green aspirations, and making cars lighter and more fuel-efficient.

JR: We try to keep our eye on the bigger prize, which is that we need to provide options to the automotive market that will change the face of car and light truck consumption. If you are a large company you have the clout in the market to change customer behavior, but we can’t. We have to work with existing customer behaviors to become successful. When people criticize us about “Why would you start here, it’s not really green,” I say, well, you try starting your own company and seeing whether your green car would be bought by customers, or whether it’s better to launch first into the enthusiast market. We are working within consumers’ existing preferences, and trying to make a lighter-weight, cleaner platform at the same time. That will help us get the company launched.

X: So do you think the design for Local Motor’s second production vehicle will be something that’s more obviously green?

JR: I do. We’d like very much for the Boston Bullet or something like that to be the next model. We’d like to bring the price point down a little bit, and make it more of a city vehicle. But I appreciate the concern you’re raising. We are all trying to figure out better ways of doing things. It’s very difficult to start a car company. That isn’t to excuse anyone from anything, but you need to take all the factors into consideration. I, more than anyone, would love to see an electric vehicle launched that would make sense as a commuter car—and I think we will be one of the first companies that can actually bring it out. But I think there are still very real technological obstacles. The battery technology, for example, is not there. If you use the best lithium-ion chemistry out there, there is no way right now to get a battery that will last for 80 miles for under $20,000, and when you stack a whole car on top of that, you are looking at a minimum of $50,000. But we have got to be ready in two years to make that car. And I think that everybody can wait for two years.

Wade Roush is the producer and host of the podcast Soonish and a contributing editor at Xconomy. Follow @soonishpodcast

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