Iacocca Gets New Wheels

By FRANK GIBNEY JR.

Lee Iacocca, father of the Mustang and the minivan, the impresario who engineered one of the most audacious corporate comebacks in capitalist history, left Detroit with a historic legacy. But no sooner had the Chrysler chairman stepped down in 1992 than the wheels began to fall off. His third marriage disintegrated. His 1995 partnering with Las Vegas financier Kirk Kerkorian in an abortive bid to take over Chrysler ended in a fiasco of lawsuits, not to mention accusations of treachery and avarice by his former colleagues.

The John Wayne of the automobile business was down and out in, of all places, Beverly Hills--a carman in Tinseltown, hounded by lawyers and, perhaps worse, enjoined from talking publicly about his problems with either Chrysler or his ex-wife. "You never want to retire, move to a foreign country [California] and get divorced at the same time," advises Iacocca now. "That'll kill you."

Iacocca is alive and well at 73, which is to say he's talking big again, this time about the kind of vehicle only a fully California-ized entrepreneur would attempt: an electric bicycle. "I spent all my life putting minivans and Jeeps in American garages," he says. "I think I have one vision left in me before I die, and it's electric." Fine, but a bicycle in the land of muscle cars? Definitely. Iacocca's EV Global Motors (as in, Electric Vehicle) plans to start distributing the Taiwan-produced E-Bike in February. His sales target for this year is an astonishing 1,000 bikes a week, a goal skeptics say is far too ambitious. "Can Iacocca go from zero to 50,000 in sales in one year?" asks Ed Benjamin, a bike-industry analyst. "Most Americans haven't got a clue what an electric bike is."

Keep in mind that, outlandish as it sounds, this scheme comes from a man who made his career betting against the short-term odds. No one is longing for environmentally correct transportation. But there has never been as much global political pressure to produce nonpolluting vehicles. In Asia and Europe, where noisy, gas-powered scooters are fast being outlawed, electric bicycle markets are exploding. Analysts like retired GM engineer Frank Jamerson expect even the minuscule U.S. market, led by enviroconscious California, to double this year, as it did in 1998, to a total of 30,000 bikes sold. "How deep is the market?" asks Iacocca rhetorically. "Why does a girl need a 4WD sport-utility vehicle in Beverly Hills? The electric bike is a life-style thing--and we'll get a lot of interest out there if we play this right."

Since leaving Detroit, Iacocca has fooled with an eclectic array of proposals, even serving a brief stint as chairman of Koo Koo Roo Chicken, the health-conscious fast-food chain. He turned down an early invitation to team up with inventor Malcolm Bricklin's electric-bike company. Yet Iacocca has been intrigued by electric propulsion since his early days at Ford, 50 years ago. "Thomas Edison promised Henry Ford he would be able to throw away the internal-combustion engine," he says. "It's 100 years later, and we're just now seeing some progress."

So Iacocca launched EV Global in late 1996. Now EVG has 10 employees, support from Taiwan's Giant bicycle (which produces the E-Bike) and backing from private Swiss and Italian financiers ("Europe is our next stop," he says). Iacocca has also invested in Energy Conversion Devices, an innovative Detroit batterymaker run by former General Motors chairman Robert Stempel, and in Unique Mobility Inc., which designs some of the world's most advanced electric motors. "We're assembling all the people who want to be part of the electric-vehicle revolution," says Iacocca. "This is how you get it started."

The E-Bike has neither Mustang pizazz nor minivan practicality, but it sure will turn heads at the mall. Designed by an assemblage of talent, including Harald Belker, who gave Hollywood the Batmobile, the two-wheeler is a mountain bike with an ignition on the handlebars. Just turn the key, and it will carry you about 20 miles between charges (at any 110-volt outlet)--unless, that is, you're not too lazy to pedal, in which case it'll take you as far as you want to go. The sticker price: $995.

But who wants it? Iacocca is counting on niche markets around the U.S. Retirement communities are an obvious target (he has spent some time playing golf at them lately). Small-town police departments in California already use electric bicycles, mostly made by ZAP Power Systems, a U.S. market leader. Later this year EVG plans to introduce a folding electric bike, which Iacocca figures is just the accessory for the life-style-conscious drivers of minivans and SUVs. "It's like the Trojan Horse," says the prince of promotion. "If I can get enough bikes into garages, then eventually kids are going to pressure the old man to make an electric vehicle the family's third car."

Which, of course, is the point. This is not just about electric bicycles. EVG already has a prototype electric scooter (Iacocca has a relationship with renowned scootermaker Piaggio) and long-range plans to produce small electric delivery vans.

Still, Iacocca's new venture faces a long, steep climb to success. The E-Bike is already nine months late to market (at an entrepreneurial burn rate of $150,000 a month) because of the technical difficulties in producing a finely tuned hybrid to Iacocca's exacting specifications. Instead of selling through bike dealers, EVG will peddle the E-Bike through auto dealers, where advertising budgets are gargantuan and Iacocca's credit impeccable.

Next week Iacocca will put his mouth where his money is, when he unveils the E-Bike at the National Auto Dealers Association convention in San Francisco. Whether EVG is another Mustang or another Edsel, friends say the effort has rejuvenated a man who told FORTUNE magazine he had "flunked retirement." Says Irene DiVito, a co-founder and vice president of EVG: "He's got his game back." And this is a man who only plays to win.