EV Startups Could Find A Helping Hand In AM General

With its two most recent products about to be out of production and its factory sold, AM General is out of the consumer vehicle and contract manufacturing business -- for now, at least.

But Kevin Rahrig, AM General executive vice president for commercial programs, left the door open to returning to contract vehicle production.

AM General, he said Monday at the seminars, could be an excellent partner for startups trying to design, engineer, build, launch and sell electric or specialty vehicles.

A number of startups, such as Lucid Motors, Faraday Future, Local Motors and Bollinger Motors, are trying to follow Tesla's lead and launch brands of electric vehicles. Rahrig said such companies could free up capital and focus on developing products by hiring a company such as AM General to handle manufacturing.
"Based on our experience, they lack expertise and resources," Rahrig said of the startups. "They need to rely on outside resources to fill in the gaps."

AM General's two most recent products are about to be finished. The MV-1 wheelchair van was discontinued because of slow sales. It had a starting price of around $40,000 and featured ramps and a smooth floor designed for wheelchair users.

AM General's other product, the Mercedes-Benz R class, ends production in October. AM General produced it for only its final year for exports to China, Rahrig said.

In response, AM General announced in June the sale of its commercial assembly plant in Mishawaka, Ind., to SF Motors, a Chinese-owned company that plans to build an EV there. AM General retains its plant for military vehicles and is competing to produce the next generation of U.S. Postal Service vehicles, Rahrig said.

SF has promised to preserve the plant's 400 jobs. The South Bend Tribune reported AM General sold the 700,000-square-foot-plant for $110 million and will invest $30 million to adapt it to producing EVs.

"Contract assembly provides automakers with a stop-gap measure," Rahrig said, noting that Mercedes needed to end production of the R class at its Vance, Ala., plant, even though there was high demand for it in China. Mercedes needed a year, he said, to retool Vance for an incoming vehicle. So AM General was hired to take completed R-class bodies and finish the assembly in Indiana.

Rahrig said contract assembly enables automakers to have low-volume variants, vehicles that excite consumers, without "disrupting efficiencies at high-volume plants."