ZAP (motor Company) - Controversy

Controversy

ZAP has had a history of production delays. An article from Forbes magazine in June 2007 criticizes the company for over-issuing stock and failing to produce results or show significant profits.

A feature article in the April 2008 issue of Wired alleged that "ZAP has taken millions from investors and dealers eager to see the company's line of green cars hit the road. But that line has never materialized." The article alleges that board members issued themselves large amounts of company stock and warrants and made misleading claims about the company's prospects, allowing them to enrich themselves at the expense of dealers who bought franchises and did not receive the cars that they were expecting to sell. While the company sold the low-end Xebra for a number of years, more expensive, higher-performance models have been repeatedly announced but not produced.

ZAP sold a lot of shares based on its intention to sell Smart cars, but that deal fell through, leading Daimler-Chrysler, the Smart car's manufacturer, to say that ZAP's behavior revealed "both the sham nature of its purported business and a lack of trustworthiness that is nothing short of stunning." Although ZAP did sell 300 Smart cars that it bought from third parties, it sued Daimler-Chrysler in California after failing to reach an agreement to buy the Smart cars directly. ZAP lost the initial lawsuit and also a subsequent appeal.