Arcimoto raised $19 million to build “fun utility vehicles”—now what? – Ars Technica

EUGENE, Ore.—It’s 2pm on a Saturday afternoon, and Eugene, Oregon is about to witness the (re)launch of its most serious entry in the electric mobility industry to date. Outside of Arcimoto’s new factory, located in the sliver of industrial space between the railroad tracks and the increasingly-hip Whiteaker neighborhood, parked cars are starting to line up. Heavily represented are Eugene’s automotive stalwarts: Volkswagen diesel wagons, Toyota hybrids, Subaru Outbacks, and a smattering of newer electric cars and quirky vehicles like the Isuzu Vehicross.

The crowd assembled to witness the delivery of Arcimoto’s first “Signature” line of three-wheeled “Fun Utility Vehicles” is as classically Eugene as the vehicles they drove here. Aging hippies brush shoulders with middle-aged public radio-supporters, and there’s also a mix of more mainstream families and a few younger alternative types—including one performatively circling the parking lot on a OneWheel. Any hope of assessing the prospects of Arcimoto’s quirky three-wheeled electric runabout based on the crowd in attendance faded as I realized that this same group could just as easily be on hand to check out the opening of a new microbrewery or outdoor wear store.

This left me back at the problem I was presented with when I accepted an Ars assignment to cover my hometown’s “automaker”—how do you judge a three-wheeled electric vehicle that straddles the recreational and practical markets, and is built by a company that has gone through seven previous iterations over its decade-long history? This problem is only amplified by the fact that even the version of the FUV I was recently given access to represents an early “Signature” build. Significant design iterations remain ahead. And even if there were a solid point of reference in the market for the Arcimoto FUV today, it would still be a moving target.

For all its apparent uniqueness, Arcimoto’s concept isn’t a fundamentally blue-sky idea. Three-wheeled motorcycles posing as car replacements have been around for decades, and these vehicles have been edged toward the mainstream by companies like Elio Motors. Eugene in particular has been ahead of the quirky three-wheeler adoption curve for years, embracing both imports like the Zap Xebra and home-grown entrants like the NEVco Gizmo. Each has appeared on local roads since the turn of the millennium. So today, the burning question facing Arcimoto is unique. Can this vehicle transcend its local niche in a famously progressive college/hippie town (where three-wheelers have been featured in Eugene Celebration parades for nearly two decades now) and actually sell to a broader market?

The pressure is certainly on Arcimoto. Last year, the company raised nearly $20 million in an initial public offering, about double what it had initially sought. In going through that process, the company became only the second pure electric automaker to list on the NASDAQ after Tesla. With this surprisingly successful capital raise, Arcimoto will now attempt to make the leap from a struggling, little-known local startup in debt to the City of Eugene’s Business Development Fund to a nationally-known player in what has been called the “Cambrian Explosion” of new mobility options. Can a Fun Utility Vehicle lead to a functional business model?

Mo’ money, mo’ problems

Though Arcimoto has existed for more than a decade (founded back in 2007), it’s clear from the moment I arrived at its new factory on the day before its Signature vehicle launch that its capital raise has been pivotal to becoming a serious business. Within the last year, the company has leased its new manufacturing facility, grown to more than 60 employees, and brought in the production equipment that is beginning to fill its clean, bright workspace. Desks line one wall of the plant so engineers and marketers can work cheek-to-jowl, while heavy manufacturing equipment like laser cutters, tube benders, and CNC machines lines the far wall. In between, a makeshift (and for now, highly labor-intensive) assembly line hosts a row of the firm’s “Signature” three-wheelers.

From the moment you arrive at the plant, it immediately feels like a brand-new startup rather than a decade-old firm. The space is spotless, the equipment is all brand new, the workforce is mostly young and evidently passionate, there’s a mix of computer people and car guys, and a frantic bustle fills the air. But there’s also an unmistakable hint of chaos in the mix: equipment isn’t operational. One production machine was dropped during installation (though luckily I’m told it was covered by insurance). And in the immediate, there isn’t a vehicle ready for me drive when I arrive at the pre-arranged time. Nobody seems quite sure how to handle the sudden (but again, planned) arrival of a reporter.

While the electrical team gets an FUV ready for me to drive, I wander the factory with CEO Mark Frohnmayer and Vice President Jesse Fittipaldi as they fill me in on the company’s plans. The IPO has allowed Arcimoto to buy more production equipment than initially planned, they say, resulting in what the duo says will be a more vertically-integrated and flexible production facility. The snowmobile/motorcycle/ATV manufacturer Polaris, which incidentally also makes a (gas-powered) three-wheeled vehicle called the Slingshot, is mentioned as an inspiration for the system that produces the FUV’s steel tube cage and structure.

But any hope of seeing an FUV go through the entire production process dies fast, as Arcimoto’s executives explain how far they still have to go. For now, the Signature vehicles that are being delivered the next day are built largely by hand. And despite their staggering $42,000 pricetag, these are effectively test vehicles. Before Arcimoto can begin cranking out FUVs at the planned starting price of $11,900, it must still build a run of “Beta” vehicles that will be operated by fleet partners later this year. That will provide another level of feedback and prompt another round of design tweaks before the vehicle and manufacturing system are finalized for production.

Already some of the necessary design changes are coming into focus, showing how early in the development process Arcimoto is for an 11 year-old company. When I notice that none of the vehicles I can see around the plant have the fully-enclosed doors shown as an option in the company’s literature, I am told that the organic curves of the FUV’s frame make manufacturing and fitting full doors more difficult than originally imagined. A minor tweak to the frame, which the company says will hardly be noticeable to the naked eye, will provide dimensions and angles more suited to the optional doors. It’s a seemingly minor challenge for a company that is in the midst of the countless tasks of taking a startup from zero to one. But given Arcimoto has eight design revisions already under its belt and millions of dollars of equipment eventually arriving at this plant, that revelation strikes a discordant note.

Putting the “Fun” in FUV

Though much work lies ahead for the company, Arcimoto has hardly wasted its youth. Nine years ago, its vehicle (then called the Pulse) used lead-acid batteries, weighed more than a ton, had a top speed of just 55 MPH, and was built with parts from a “recycled” Toyota Yaris. Today, Arcimoto’s FUV uses lithium-ion batteries housed in a structural member, weighs just 1,300 lbs (with plans to reduce that to 1,100 by the start of series production), uses bespoke fiberglass body panels (which will be plastic for series production), and can hit 80 MPH. Clearly the company has not been sitting still.

Out of the eight prior revisions of its three-wheeled concept, Frohnmayer says the biggest one involved moving away from a car-like steering wheel toward a more motorcycle-like control scheme. Whereas the Pulse was trying to be a true economy car replacement, the FUV has embraced its unconventional positioning and in the process and made significant strides in the process. By removing the Pulse’s steering wheel and column, Arcimoto’s designers have given the FUV a more upright seating position and cut hundreds of pounds of weight from the design.

But has the motorcycle-style control scheme also made the experience harder for typical consumers to adopt? Once the electrical team signed off on my test vehicle, I was ready to find out. A bright blue Signature series FUV is soon handed over to me, and at the suggestion of my marketing department guide I take it to an empty lot behind the factory and get acquainted with the controls and handling.

Having already spent time in both EVs and motorcycles, I found the FUV’s controls easy enough to pick up. A motorcycle-style rotating throttle on the right handlebar provides both smooth traction at low speeds and grin-inducing shove when called upon. An automatic transmission takes away the hardest part of motorcycle riding and offers a reverse gear to boot. Only the brakes present a learning curve: the FUV sports regenerative brakes operated by a bike-style lever on the right handlebar, and those are accompanied by a traditional brake pedal by the driver’s right foot. Using the regen to slow and the traditional break to fully stop requires some conscious thought at first, and that might take less-experienced drivers some time to learn. But during my testing, it soon enough becomes second nature.

Having spent almost no time driving three-wheeled vehicles, it took a few minutes of low-speed maneuvering to get comfortable with the handling. At any kind of speed on the open road, the FUV becomes as intuitive to steer as a motorcycle, but at parking lot speeds it’s just not as nimble as you might expect from an urban runabout. Its parallel seating gives it a surprisingly long wheelbase (77.5 inches), and because its two front wheels deliver power as well as steer, the resulting turning circle feels oddly large (its 27 foot target is comparable to some “real cars” on the market). The FUV doesn’t threaten to tip over the way you might expect a taller three-wheeler to, but trying to make tight turns at higher speeds highlights the intrinsic downside of this three-wheel, front-drive design.

Leaving the parking lot and heading out onto the road, however, the FUV starts to make a lot more sense. The smooth electric shove induces a giggle as it effortlessly takes you up to surface street speeds, but unlike the often-disembodied power of electric car drivetrains you get a motorcycle-like sense sensory involvement with the drivetrain. This sense of engagement extends beyond the vehicle, whose open doors and tall windshield connect you to the space you are driving through while still protecting you from the ever-present Willamette Valley drizzle. Thanks to a double seatbelt design borrowed from BMW’s innovative C1 enclosed scooter, the cabin’s breezy ambience never feels like it’s about to let you fall out onto the road.

By the end of my short ride through Eugene’s leafy neighborhoods, the FUV feels perfectly intuitive. The once-challenging controls melt away, and I am thoroughly enjoying the unique experience of zipping away from stop signs and conversing with the passenger behind me while the wind whips through my hair. As we return to the factory, there’s no doubt in my mind that Arcimoto has nailed the “fun” part of its “Fun Utility Vehicle.” But what about the utility?

Built for a future it could never have imagined

On Saturday, after Arcimoto’s first-ever public shareholder meeting and the delivery ceremony for the first “Signature” FUVs, the company’s employees, customers, and supporters gathered in the parking lot behind the factory to celebrate. As attendees munched on the offerings from local food carts and chuckled at a jokey “Initial Corn Offering” (a free popcorn machine, which according to the presenting executive offered “more value than most ICOs”), I found two of Arcimoto’s “Signature” customers and asked them what had drawn them to these undeniably quirky machines.

Perhaps predictably, both were longtime electric vehicle fans from the Pacific Northwest who saw themselves as evangelists for both Arcimoto and alternative transportation. Their passion was infectious, but unsurprising given that they had volunteered to spend over $40,000 for an early-run vehicle. The duo cheerfully admitted that they were “guinea pigs” in some way. Their experience and enthusiasm reminded me of early Tesla customers, who knew the vehicles were expensive and incomplete but saw the attendant sacrifices of ownership as being their personal contribution to a better, greener world.

Obviously, Arcimoto would be thrilled to capture even a fraction of the demand and loyalty that Tesla commands, but the road to mainstream acceptance is even more challenging for the kind of category-defying vehicle they are making than for Tesla’s altogether more conventional electric muscle cars. A decade ago, I saw very little chance of a path forward for Arcimoto, but like Tesla they are still here. Unlike Tesla, however, which has committed itself to the business of making and selling electric cars that simply replace privately-owned gas cars, Arcimoto has a fresh wind at its back that requires a reappraisal of its chances at success.

The opportunity now facing Arcimoto comes from a mobility technology that is fundamentally more “disruptive” than simply putting electric drivetrains into normal cars: on-demand mobility as a service. Apps ranging from Uber to Car2Go are beginning to open minds about how we get from point A to point B. And rather than owning a single car that can (however inefficiently) handle all your mobility needs, more and more people are finding that making mobility decisions trip by trip can allow them to use the best vehicle for each journey. Whether that’s getting a ride from someone already on the road, picking up a car that you might otherwise never consider buying (like Car2Go’s Smarts), making a quick trip on an e-scooter, or renting a truck from Zipcar or a sportscar for Turo, the “Cambrian Explosion” of new mobility options is beginning to open spaces for quirky players like Arcimoto’s FUV.

Convincing committed car owners to buy what is technically a three-wheeled motorcycle will not be easy, even at the FUV’s modest $11.900 starting price. Not because it’s a bad vehicle per se, but because even a used car at the same price is going to do things that the FUV can’t: easily taking long road trips, passing crash test standards, and keeping you dry in a deluge or warm in winter. Arcimoto executives argue that the FUV is optimized for the things that a lot of cars are mostly used for, specifically urban and suburban commuting and errands, and they are absolutely right. But in the private mobility market, where significant investments in a vehicle come with the expectation of a wide range of capabilities rather than optimization for just one, that’s still a tough sale.

The opportunity then, seems to be in putting FUVs onto a menu of mobility options, allowing users to access them for trips that might not require a car but require more than just an e-scooter or moped. You may never have heard of Arcimoto or seen an FUV before, but if you see an electric two-seater option on your usual mobility app that can handle a quick freeway jaunt, you might choose to rent one and be pleasantly surprised at its versatility and sheer fun. Whether you go on to buy one or simply rent one more often, Arcimoto could build both the market- and mind-share needed to ensure a sustainable future for its business.

To be clear, Arcimoto has no plans at this time for partnerships with existing mobility as a service platforms. But executives say the company is pursuing several fleet models. The execs say they are in talks with a Portland condo developer to provide every condo owner with an FUV, and they are developing rental shop franchises for cities with a bustling tourism business. Each of these approaches make sense: the FUV’s long-but-narrow shape means you could fit more into a given parking space, making them an interesting option for a “car-free” condo (or a dedicated delivery vehicle). The FUV looks and feels like it was made for scooting around a sunny tourist destination.

But I can’t help but wonder if these approaches will ultimately expose enough people to this unexpected and unusual vehicle to really build a solid base of demand. After all, you would still need to know about Arcimoto in order to seek out one of their rental franchises in the first place. How many condos are really going to be built that tie the owner down to a single, unconventional vehicle? These deployments are a start, but like the vehicle itself it seems like Arcimoto still has some work to do before it can fully catch the new winds of mobility diversity.

Breaking into this market has never been easy; there always have been and always will be challenges. What’s fascinating about Arcimoto is the fact that such a small company making such a quirky vehicle in such a manufacturing backwater even has a chance of success at all. The company’s dedication to its original vision and willing flexibility to steadily evolve and improve its product have not only resulted in a surprisingly satisfying machine, they’ve led to a point where Arcimoto may be able to find market niches that didn’t even exist when they first started down this path.

Arcimoto has a lot of work ahead of them. But this electric three-wheeler company from Eugene, Oregon seems to have a shot at a genuine business. If that’s not a sign of the exciting automotive times we live in, I’m not sure what is.

Edward Niedermeyer has covered the car industry for over a decade, starting as a freelance blogger. His work has been featured in the New York Times, Wall Street Journal, Bloomberg View, the Daily Beast, and elsewhere. He lives in Portland, OR and is currently working on a book about Tesla Motors. He co-hosts The Autonocast, and you can find him on Twitter @Tweetermeyer.