Electric Vehicles

ZAP is a leading distributor of fuel efficient alternative energy vehicles in the United States, and has already established more than 20 licensed automotive dealers. We intend to grow our distribution base significantly over the next several years. ZAP launched the XEBRA in 2006. Our flagship comes in a four-passenger sedan version and a two-passenger utility pickup version. According to the Electric Auto Association, there are over 56,000 EVs on the road today. It is estimated that almost all EVs sold to date are LSVs.

The Company believes the EV market niche will continue to grow rapidly, especially with the introduction of affordable vehicles such as the XEBRA that will retail for less than $10,000 and deliver features, such as speeds in excess of 40 mph, not currently available among existing EVs. ZAP’s Chinese manufacturing partner currently has the manufacturing capacity to produce approximately 1,000 vehicles per month and is working with ZAP to obtain the required federal and state regulatory approvals in the United States.

In 2008 ZAP intends to launch an advanced alternative energy vehicle called the OBVIO!. These cars will be designed to run on ethanol, gasoline, or any combination of the two energy sources and will come in two models, an economy 828 model and a high performance 012 model. OBVIO! anticipates deliveries to ZAP to begin in 2008. According to an article published by the Washington Post, there are approximately five million flex-fuel vehicles currently on the road in the U.S., with sales expected to increase substantially over the next few years.

In May 2007, ZAP completed a feasibility study with Lotus Engineering to develop a new generation of commercially viable electric vehicles. One of these vehicles is an electric Cross-Over SUV called ZAP-X that ZAP and Lotus Engineering introduced in February 2007. In June 2007, ZAP announced a second high performance electric vehicle which is expected to be more affordable and available sooner than the ZAP-X but uses similar technology.