StockGuru Welcomes ZAP (NYSE arca: ZP)

View the StockGuru Profile:

http://www.stockguru.com/profiles/zp/

WHY DO WE LIKE ZAP?

ZAP (NYSE arca: ZP), Zero Air Pollution®, is a one-stop portal for a diverse lineup of quality, affordable advanced automotive technologies. ZAP has delivered more than 90,000 vehicles to customers in more than 75 different countries. ZAP is dedicated to high technology research and development, and owns many patents and trademarks. ZAP is the only recognized brand name in electric transportation and has been acknowledged as an industry leader by Time Magazine, The Wall Street Journal, Industry Week and Advertising Age Magazine. ZAP has been listed on the cover of Business 2.0 as one of the best business ideas in the world.
Corporate Mission

ZAP’s corporate mission is to be the most complete distribution source of advanced transportation technology and fuel-efficient vehicles that are socially responsible and environmentally more sustainable than existing offerings. ZAP aims to dominate this “niche” and believes that helping their stakeholders act responsibly, both as regards to the environment and the oil crisis, can go hand-in-hand with generating an appropriate return on investment.
Timely Opportunity

Limited focus by existing market players

ZAP feels the OEMs that dominate the US automobile market are not in this niche, nor have their actions demonstrated any real interest to be in the niche, primarily ZAP believes because their business model requires vehicle volumes in excess of 100,000 units.

Rapid growth in consumer demand

ZAP feels there is tremendous growth in their sector due to rising gas prices, growing awareness of our energy dependence, and increasing social consciousness and global warming issues. ZAP simply wants to now aggressively grow its mission to offer consumers and other stakeholders product that better address social responsibility and environmental sustainability than exist today.

Evolving Technology

Technology, and hence opportunities that meet ZAP’s mission, are evolving more rapidly than many expect. ZAP’s strategy is to partner with manufacturers overseas who understand this as well and whose products offer environmental, economic, and technological advantages over the products currently available in the US market. There are numerous manufacturers who would love to tap into the biggest consumer base in the world, but yet do not have the resources to launch a US entry.

Founded in 1994, ZAP has a long history of being a pioneer in electric and alternative fuel powered vehicles. As a magnet for innovation, ZAP believes that the company is well positioned to take advantage of the sea of change expected to occur over the next two-three years.
Business Overview

ZAP has structured it business activities in two parts: automotive portal and consumer products. The automotive portal will focus on building upon its independent distribution network by offering a line of electric and alternative fuel efficient vehicles. Consumer products focus similarly on battery powered vehicles, such as scooters, off-road vehicles and mopeds, as well as innovative battery technologies. In addition to providing important grass-roots awareness of ZAP’s mission, the unit ultimately serves as the catalyst for identifying viable technologies.
Automotive Portal

ZAP’s long term goal is to represent four to five best of class manufacturers, offering a complete line of products that can cater to most everyday use by consumers. If the company can sell 10,000 units of each flag, the company will have succeeded in its mission. If one of these flags becomes the next Honda or Hyundai, this would be a grand slam for the Company.

US OEMs traditionally never think forward, and only respond to changes in the market as they occur. This mentality led to the Japanese penetrating the market in the 70s and 80s, as US OEMs did not anticipate a shift in demand towards smaller and more fuel efficient vehicles during the oil crisis. Most recently, US manufacturers are all racing to produce their own hybrid lines after Toyota’s huge success with their Prius.

Although the US auto market is one of the most regulated market in the world, effectively imposing huge barriers to entry, there are times when these manufacturers are vulnerable to a forward thinking company with new ideas. ZAP thinks that this is one of those times, and stands ready to take advantage of this window of opportunity.

SMART Car

ZAP’s first automotive project was the smart Car. This was an ideal beginning project due to the popularity of the smart Car throughout the world. It led to a tremendous amount of interest from consumers, dealers, and the public in general, allowing the company to set up this portal to filter vehicles through.

The smart Car is manufactured by a division of DaimlerChrysler. The manufacturer didn’t think that a market in the US existed for their micro-car, and never intended to enter the US market on their own. The car as it is produced does not conform to US safety or emission standards.

ZAP began the project by retrofitting the vehicle to meet both the Department of Transportation (”DOT”) and the Environmental Protection Agency’s (”EPA”) rigorous standards. This was the first time in history that an entity in the US has brought a non-conforming car to full compliance.

ZAP went to market shortly after at the 2005 National Auto Dealer Show (”NADA”), and received one-way non-cancelable purchase orders for over 100,000 units within the first 90 days. The Company always knew that a market did in fact exist in the US, but never realized how big the market really was. With a theoretical capacity at fractions of the purchase orders in hand, the Company knew that they would not be able to fulfill all the orders by themselves.

The Company started engaging in discussions with the manufacturer in early 2005 to see if a mutual agreement can be made to work together. Daimler expressed a great amount of interest at first, but kept delaying and dragging the process, until it was very clear that they never intended to work together, but instead trying to find out the secrets of the retrofitting process. Eventually the Company launched a litigation with Daimler and related parties for business interference.

The smart Car was never intended to be a long term project. The Company thought that any amount of success would lead to DaimlerChrysler’s US launch. And although the Company never enjoyed huge sales, the fervor surrounding the car did confirm ZAP’s thesis that there is a sizable demand on the part of US consumers and automotive dealers for smaller, more fuel efficient (or alternatively fuelled) vehicles.

ZAP expects to continue offering limited number of smart cars. However, given the difficulties the company encountered with the manufacturer and continues to face with some of its partners, ZAP is very focused on its goal of offering various types of vehicles.

XEBRA

ZAP’s traditional business was in battery-driven technologies. The newly launched Xebra reflects that tradition as well as its pioneering efforts. The Xebra is the only production electric vehicle (”EV”) in the US that can go over 25 miles per hour (40 mph) or have a range of over 25 miles per charge (40 mile range). Xebra is also one of the first vehicles manufactured in China which meet all US FMVSS requirements.

Most existing EVs are open with little to no functionalities of a traditional car. The Xebra has most functionalities of conventional gasoline vehicles. For charging, any 110V outlet works, whether at home, at work or while running errands.

Passenger sedan and pickup versions are available. The sedan can seat up to four people. The truck can seat two people, and has a flatbed on the back that can also act as a dump truck. The flatbed can hold over 350 kilos (800 pounds). The trucks will appeal to industrial and municipal applications, some of which are mandated to buy the cleanest vehicle available.

Both the sedan and pick-up will sell for less than $10,000 MSRP.

There are currently about [20,000] EVs sold every year in the US, all of which are known as NEVs (neighborhood EVs) with a top speed of 25 mph. While ZAP believes that its product will expand the market size tremendously, capturing even just 25% of the existing market would allow ZAP to grow its revenue many times in the next year.

In short, ZAP is aiming to offer a 100% electric vehicle at an extremely affordable price. ZAP wants to build awareness of electric vehicles by making the entry as easy (read: less expensive) as possible.

OBVIO !

To be manufactured in Brazil, the OBVIO! will be a new micro car, emphasizing styling, power, safety and have the ability to be powered by ethanol, gasoline or any combination thereof (”flex fuel”).

Brazil is the pioneer for ethanol production and usage. It produces over five times the ethanol produced by the US. Today all cars sold in Brazil are required to be flex-fuel. OBVIO will utilize this technology, allowing its vehicles to run on any blend of pure ethanol and/or gasoline.

The two OBVIO models: the economy version, 828 and the sports version, 012, are designed by Anisio Campos, a living legend in the Brazilian racing circuit, and successful designer of other micro-car designs. He is the impetus behind the life-style design reflected in the OBVIO. Both models will have butterfly windows, seat three, provide up to 250 horsepower, and be equipped with its own wireless IMobile carputer.

Obvio recently retained an investment bank for its next round of financing and is close to retaining a leading engineering services group to ensure smooth and timely FMVSS certification and production introduction. First deliveries are slated for 2008.

Additional Flags

The Company is in regular discussions with existing and new automotive manufacturers. The ideal would be to assist a partner in developing a 100%, highway drivable, four-wheeled EV. Until ZAP helps such a partner get to the US market, the Company will continue to broaden its offering by introducing unique vehicles which meet its mission and provides consumers with exciting options to what exists today.
Consumer Products

The primary product line of ZAP until recently, the consumer division has sold close to 100,000 vehicles since ZAP’s inception. However, given the tremendous focus by the Company on the Smart project , ZAP neglected its traditional business over the past few years. As a result the Company found itself dealing with numerous quality and customer service issues as well as plummeting sales.

At the beginning of 2006, the Company placed a renewed focus on the business. The number of suppliers was slashed and the emphasis was placed on upgrading existing models with new technologies and higher quality. Staff has been brought in to accommodate the potential. Although the consumer business is expected to play a smaller role in terms of revenue over the coming years, if developed properly, the unit can:

* provide stable cash flows
* facilitate access to technologies
* continue to expand ZAP’s brand recognition

Furthermore, while being a smaller revenue contributor, the goal is to bring back the business to ZAP’s historic levels of selling an average of 10,000 units per year. At $350-$500 average unit prices, the business represents a good complement to the automotive portal.

The current product offerings include:

* the three-wheeled scooters (ZAPPY 3, ZAPPY Pro and ZAPPY EZ)
* off-road vehicles (electric motorcyle and mini-ATV)
* marine products (Seascooter)
* portable energy products (universal chargers and iPOD chargers)

Given the success of the new model introductions of the last Quarter, further product introductions are being slated and include:

* electric moped (Fall of 2006)
* mid-sized ATV (Fall of 2006)
* heavy duty ATV (Winter of 2006)
* upgraded electric motors for bicycles (Winter 2006)
* laptop and upgraded portable energy products (Fall 2006)

ZAP believes its consumer products are exciting and unique:

* the ZAPPY 3 line competes with the Segway, but at about 10% the cost ($5,000 versus $500)
* the off-road vehicles are popular with a wide range of end customers from Park rangers, security personnel and off-road enthusiasts. They are silent and zero emissions.
* the recently launched portable energy line of products are perfect for any user of electronics concerned with the battery life of their devices. ZAP’s product are small and efficient ways to extend use time for cell phones, MP3 players, iPODs and laptops.

View the StockGuru Profile:

http://www.stockguru.com/profiles/zp/

We Invite you to Visit the All New StockGuru Blog!

Here you will find updates on all our covered companies, including Profiled Companies and StockGuru Picks.

Click HERE to visit the Blog, or go to:

http://stockguru.com/blog/

StockGuru.com is owned and operated by Pentony Enterprises LLC, 9555 Lebanon Road, Suite 103, Frisco, Texas 75035. Telephone: (214) 453-4268. Web: StockGuru.com. Email: Publisher@stockguru.com. Disclosure: Pentony Enterprises LLC was compensated $25,000 for profile coverage. Pentony Enterprises LLC is not a registered investment advisers or broker/dealers. Pentony Enterprises LLC makes no recommendation that the purchase of securities of companies profiled in this web site is suitable or advisable for any person or that an investment such securities will be profitable.