Stories of Technology, Innovation, & Entrepreneurship in the Southeast

The latest issue of Automotive News has a postmortem on the demise of Local Motors. If you are a subscriber or have other mysterious ways to read subscriber only items, you can find the article here. If not, here’s our summary as a subscriber.

• When public transit companies took at hit on ridership and the number of active routes during the early stages of the COVID-19 pandemic, orders for the iconic Olli were shelved. Then, when demand returned, Local Motors was plagued by the chip shortage that is broadly impacting the mobility sector.
• Olli was never totally autonomous, meaning there was always an operator of the vehicle which added to its cost structure.
• Add to those factors what Automotive News described as the company’s “perpetual fundraising cycle.” The well-respected newspaper covering the automotive sector said that existing investors and prospective new ones balked when the company sought further funding in recent weeks.
• Finally, the newspaper article described a convoluted federal regulatory process that added cost and complexity for Local Motors. That challenge was described similarly in another online report by the Times News Express. Basically, Local Motors produced Ollis at its West Knoxville facility and shipped them to Detroit where they were transported across the Ambassador Bridge into Canada. Then, the company filed paperwork to import those same vehicles back into the U.S. without any changes made to them while in Canada. “Local Motors delivered Ollis for 18 months via that logistical process,” Automotive News quoted an otherwise unidentified  executive as saying. The process added about $15,000 cost to each shuttle sold in addition to the retail cost of $275,000 to $325,000. “It wasn’t a decisive blow, but the regulatory burden didn’t help with penny-pinching public transit customers, and it exacerbated delays,” the Automotive News article explained.

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