Detroit Electric - Background On Electric Vehicles

DETROIT ELECTRIC BACKGROUND ON ELECTRIC VEHICLES Q: Why would I want to drive a Pure Electric Vehicle? A: Two simple reasons: freedom from dependence on oil and no by products that contributes to harming the environment. The batteries in Detroit Electric’s car can be recharged simply by plugging in at your home, office or even the parking lot you visit. While charge times are relatively short, new technologies such as fast-charging stations are coming on line as electric vehicles move into the mainstream, making charging even quicker and more efficient., If those two outcomes are not quite enough to move you into a Detroit Electric vehicle, we can add a few more: · Electric Vehicles have instant torque and will provide a level of fun and responsiveness to driving, all wrapped in a safe and reliable car while seamlessly providing the quality that today’s savvy consumers demand; · Detroit Electric’s vehicles are full-sized. We don’t ask our drivers to compromise on the vehicle size to be eco-friendly. · Affordability and Value. Detroit Electric’s vehicles offer state-of-the-art technology, freeing you from having to pay for fuel at fluctuating price points. Hence, our prices appeal to the broadest audience. Q: Will your vehicles address market demands for efficiency and speed / power? A: Most certainly. Our entire vehicle strategy is to introduce Pure Electric Vehicles that don’t ask customers to compromise on what they have to expect from main stream vehicles – performance, safety, quality, reliability and styling, all combined with interiors that offer all the space and amenities the market demands. For the driver, Detroit Electric’s electric drive offers a highly responsive driving experience with instant torque. Most importantly, our strategy is responsive to global market driving needs. As a mobile society, motorists tend to drive a certain distance daily, on average not more then 64 km (40 miles) a day in North America for example. However, they also want the freedom to drive for longer ranges while avoiding a perceived inconvenience. Detroit Electric’s cars will meet and exceed these needs by offering significant range, 180km (112 miles) in our city-model and 320km (198.83 miles) in our extended-range model, both of which can be conveniently re-charged within a period that meets motorists’ needs. Q: Are Pure Electric Vehicles dependable? A: Pure Electric Vehicles will be the most dependable vehicles made and will have the potential to last longer than present internal combustion vehicles. They also require less scheduled maintenance as there is no engine and complex moving parts therefore less lifelong preventative maintenance. Brake life is also significantly extended since the motor is used to slow the car, recapturing the kinetic energy and using it to recharge the battery. Q: Is “re-charging” an inconvenient chore? A: Not at all. Re-charging has become part of the fabric of our lives from mobile phones to MP3 players to laptops; we are increasingly becoming a society that connects to the Grid. Re-charging literally takes less than a few moments of your time. You will not need to queue up at a petrol station. Your battery can be charged anywhere there is an electric socket. In addition to home charging, we are beginning to see the addition of charging options preparing to launch in cities across the globe. Charging options have the potential to be added to parking meters, parking garages, workplaces in addition to fast charging stations that municipalities are considering adding.

Q: How much does it cost to charge an Electric Vehicle? A: This will vary depending on the vehicle and electricity rates. On average, it will be between USD2.00 to USD4.00 for Pure Electric Vehicles. Q: How long will it take to charge the car? A: Vehicles fitted with a 25 kWh Battery will take between 6-8 hours, charge using a normal 13 amp 240V household socket. Vehicles fitted with a 40 kWh battery require around 10 hours charging from 0% to an 80% charge. Using a 3 phases charging infrastructure will take 3.5hrs to charge our city range car and our long range cars will take 5 hours to fully charge For rapid charging using the charging time will be less than 15 minutes. But people must remember that on average people only drive 70 Km a day using less than 20% of the capacity of the battery. This will result in a charging time of approximately 2 hours in a normal household. Q: At the end of the day, is the Electric Vehicle just a pipe dream, or will it welcome the dawn of a new era in global transportation? A: The question really is: how ready is society to adopt change? We believe this change has been thrust upon us due to global warming and other environmental issues. Can we afford to continue ignoring the signs that we must arrest the degradation of Planet Earth or do the right thing and adopt for survival? We are providing an alternative to environmental pollution. The public is free to choose, but an option such as the electric vehicle must be available to the mass market for consumers to make this choice. As far as the automotive industry is concerned, Detroit Electric’s vehicles will be the catalyst for change. We want every Electric Vehicle manufacturer to be successful to spur competition and growth in the industry. Detroit Electric is the alarm clock. When we create a competitive landscape for our electric vehicles, others will wake up and follow our lead. DETROIT ELECTRIC’S BUSINESS AND MANUFACTURING MODEL Q: What segments will Detroit Electric enter? A: Our initial vehicles will be in the “C” segment. We will launch with both mid-size sedan and mid size hatchback models. We will be using the platforms for the popular Proton models – the Persona and the Gen 2 – for the initial product launch. We will add additional segments as our product plan progresses. Q: What are the performance specifications of your vehicles? A: We plan to introduce two variants of the Electric Vehicle. We will allow consumers to select the range of the vehicles per charge they prefer, which we believe best corresponds to the market needs. The city model will cover 180km/111.9miles per charge, while the long range model will cover 320km/198.83miles per charge. The vehicles will be able to travel from 0 to 100km/62.1miles in less than 8 seconds, and offer a superior driving experience, thanks to our state-of-the-art electric flux motor which can deliver 75kw of continuous power and with a peak power of 150kw. This is equivalent to 200 brake horse power (bhp). Maximum Torque is 350 to 380 Newton metres (Nm). Top speed is limited to 180km/111.9miles per hour for both variants although they can go faster. Q: Where can I get a Detroit Electric Pure Electric Vehicle? A: Currently, we are concentrating our efforts on production planning and homologation for the US and European markets. Our first dealers will be announced later in 2009. We will roll out some 40,000 vehicles in our first year beginning in the EU and UK and that will be closely followed by our entry into the North American market. We will move from 40,000 vehicles in our launch year and will increase this to 315,000 vehicles in our fifth year of production.

Q: Will you also sign similar deals with other automobile manufacturers based on this business model? A: Our outsourced manufacturing model calls for us to continue to develop strategic partnerships. So naturally, Detroit Electric is looking toward other segments and other automobile manufacturers to implement our strategy. In doing so, we are able to market vehicles employing our technology within 12 to 18 months of reaching an agreement, instead of the traditional way, which would take as long as 50 months before a new vehicle can be introduced. Q: Are you concerned about entering the market during a global economic downturn? A: Not at all. Detroit Electric is introducing Electric Vehicles that are competitively priced, reliable and meet all existing quality and safety requirements. Our vehicles will also outperform internal combustion engine (ICE) vehicles, but without the carbon emissions. This affords consumers many advantages and a clear choice, allowing us to break into the market. Furthermore, our products will cut across all demographics. Some 12 million vehicles were sold in the US alone in 2008. Of this, 3 million vehicles were sold in the popular C-segment (midsized sedan) which is what we are going to produce. We plan to retail our vehicles in the US, EU and Asia within the first 12 months of production and estimate sales of 40, 000 vehicles in the first year. Q: What are the key barriers that previously hampered mass production of Electric Vehicles? A: A combination of problems had contributed to these barriers. Automobile makers, for instance, have invested billions in manufacturing plants and developing engine technology. They are also tied up to excessive labor, health and pension schemes apart from outdated dealer networks which cost them hundreds of millions of dollars annually. So the socio-economic implications of any divestment by these traditional automobile makers would be massive. Add to this, the “brand legacy” in engine technology that some automobile makers have built their reputations on. Imagine what will happen to them if they lose their advantage in having such a legacy of technological advancement in their engines? What will their brands be worth? Q: What factors compelled Detroit Electric to build its business on Electric Vehicles? As our name indicates, we have a legacy in Electric Vehicles and believe they are the future of the industry, not only in terms of vehicles but also in manufacturing. Today, the Electric Vehicle is a revolution led by consumers and dedicated engineers who understand its potential. Technology, cost structure, inexorably rising world oil prices, global warming, and environmental pollution have made it both timely and practical to develop and mass produce Electric Vehicles. The world market is ready for Detroit Electric in terms of social awareness, and best of all, the EVs we are producing are not limited to speed and range restrictions which force consumers to compromise their quality of life as it relates to their transportation needs.. Instead they are true performance vehicles. We believe Electric Vehicles are the future and are willing to work with other original equipment manufacturers (OEMs) to further develop this technology. Q: What is your competitive landscape? A: The vehicles we will produce are not for a niche market. They are for the “manin-the-street”. Hence, initially, we will be compared to internal combustion vehicles in terms of safety, practicality, and range of

travel on a single charge. In the long term, other features and benefits will come into play, such as vehicle design. We do not consider hybrid vehicles (series or parallel) as competitors, because they run on electricity for a limited range only before switching to internal combustion. In short, they too pollute the environment, hence the argument that there is little difference between hybrid vehicles and full-time internal combustion vehicles. Q: Who is your target audience? A: Our target audience is those who purchase practical, affordable and reliable vehicles costing $USD23, 000 to $USD33,000. This target price allows Detroit Electric’s vehicles to fit the pockets of a very wide audience – from professionals and executives, to mothers (soccer moms), those just entering the work force, students and small business owners. Q: Which are the key markets for your vehicles? A: US and Europe for a twofold reason – consumers and governments. From a consumer perspective, surveys in these markets indicate consumers are ready to embrace Electric Vehicles, while from a governmental perspective; these countries either provide incentives for owning alternative fuel vehicles or have strict legislation that encourages their use. In Denmark for instance, there is a 150% pollution tax, and in Holland the pollution tax is 40%. In the US, Federal and State incentives are provided, such as the USD7, 000 tax rebates from the Federal Government for those owning environmentally-friendly vehicles. Asia, with a strong focus on China, is also important to our efforts as we look at growing demand and the need to reduce emissions. Q: What is your capital investment in the project? A: One of our corporate goals is to be good stewards of funds at every level. Compared to others trying to enter the market, we have spent a very conservative USD20 million for research and development, apart from contributions for the development of the technology. Within the next 2 years, we expect the project to represent an investment sum of USD100 million with additional funds designated to support R&D as well as technology development. Q: This figure is small compared to the vast sums that traditional auto makers spend on developing an internal combustion engine. Why is that so? A: First and foremost, Detroit Electric’s business model is different from the traditional industry models. We concentrate our funding on research and development of the motor, vehicle design, marketing and distribution, while utilising original equipment manufacturer’s (OEM) proven vehicle platforms. We also outsource production of the vehicle itself, an approach which allows us to avoid the capital intensive areas that have traditionally plagued new entrants to the automotive industry. Q: Do you plan to set up your own manufacturing plant for Pure Electric Vehicles in the long term? A: Yes we do, but this is a long term plan and not something we foresee doing in the immediate future. Q: What is your global sales volumes and distribution plan? A: Conservatively speaking, we have targeted to sell 40,000 vehicles in the first year of production, increased to 210,000 in the third year of production with three models and 315,000 vehicles in our fifth year with five models.

As for our distribution plan, we are currently developing a network of distributors in key markets in Europe and North America. Our business model also calls for us to redefine some conventional distribution channels and develop new programs that support the levels of customer service we wish to achieve. Q: How are you planning your global distribution network? A: We have innovated on the traditional distribution networks for our business model. We are not constrained in terms of dealerships or distribution. In Asia for instance, we are in discussions with a major original equipment manufacturer (OEM), however, we cannot say more on these discussions at the moment. More importantly, unlike some other automotive manufacturers, we will listen to our core partners – our distributors and customers. We will engage them in a relationship based on an open and active dialogue, keeping in line with our corporate culture. Q: Do you already have an order book? If so, how many vehicles do you plan to roll out? A: Currently, we do not have an order book as our plan is to soft launch our vehicle in the last quarter of 2009. For now, we are concentrating our efforts on production planning and homologation for the US and European markets. Our order books will be filled beginning in June 2009, when we launch our vehicles in Europe. We will roll out 40,000 vehicles in 2 models in the first year and increase this to 315,000 vehicles on or before our fifth year of production. Q: Proton is a new brand in the global automotive landscape. It has only a 20-year history and that too not a very successful one in a global sense. So why did Detroit Electric pick Proton as your partner rather than a global player with a ready distribution network? A: If you were to do an in-depth study of Proton, it would demonstrate that the company is progressive, maintains very high production standards, and manufactures high quality vehicles. Proton is Malaysia’s largest investor in R&D and product development, having spent USD1.2 billion on R&D between 1993 and 2003. The Proton Persona, which is one of the models we will be utilizing, was named Malaysia’s Best Model of the Year in the 2008 Frost & Sullivan ASEAN Automotive Awards. Detroit Electric chose Proton due to these factors, their state-of-the-art and readily expandable manufacturing facility where 60% of its production line is automated, its production costs efficiency and experienced stable workforce. Unlike a majority of established automotive manufacturers, their investment in Internal Combustion Technology will neither be a deterrent to Detroit Electric nor compromise their existing investments. Q: What exactly is your deal with Proton? A: To put it in simply, Proton will be our manufacturer, we will adapt Proton’s vehicle platforms and interiors, but will redesign many distinctive exterior elements, such as lighting and in addition to installing our patented electric drive system and its supporting accessories, allowing the “new” vehicle to be fully tested and homologated for the different markets based on those country’s specifications and regulations. Q: How will you grow demand for your vehicles? A: There is a strong and growing demand for Electric Vehicles. Even with that, we believe that an educational process, together with a traditional sales process, will be one of the key factors for achieving

growth. When customers test drive our vehicles, they will realize that we are offering them a product that performs well beyond expectations. These customers will then become our evangelists and share their driving experience with others. Over time, this process will help redefine consumers’ pre-conceived notions that Electric Vehicles are slow, have limited a range between charges or are limited or suffer from a narrow focus of design. Also, it is important for customers to drive, feel and live with our products to truly experience them. We are going to produce vehicles without compromise but at the right price points. We have no doubt consumers will quickly realize and respond to the benefits of driving safe, high quality, reliable and affordable Electric Vehicles. Apart from these, we will pioneer charging stations for Electric Vehicles like those currently being developed in Holland. We will also focus on battery technology in terms of charging methods, alternative energy or different types of battery technology so generation of electricity is improved, environmentally friendly and progressively more efficient. Q: What is your business strategy and expansion plans over the next three years? A: We will focus on what we are good at – further developing our technology – while continuing to outsource the manufacturing of our vehicles. In the next 10 years, we plan to develop at least 4 vehicle platforms – full size, compact, sub-compact and a small vehicle to progressively increase our range of models. Q: Do you plan to design and manufacture your own vehicles as an original equipment manufacturer (OEM)? If so when? A: Yes. We intend to design our own vehicles in the second quarter of 2010. Q: What intellectual property rights does Detroit Electric own? A: We invented and patented the Magnetic Flux Motor Technology for the motor drive train. We also own the intellectual property for the motor controller software and the battery management systems apart from licensing the manufacturing rights for the LiPo (lithium polimer) battery technology. Q: What would it cost to run a Detroit Electric vehicle? A: It varies from utility to utility but, in the US, for example, industry sources project that it will cost the consumer the equivalent of 3 cents per mpg. Q: How many years will it take before you see a return on your investment? A: Our unique business model, where we are really a technology, marketing and distribution company allows us to achieve a very low break even point right from the beginning. That being the case, we expect a return on investment within a very short span of between 12 to 18 months. Q: How will Detroit Electric’s progression into an OEM affect the Proton deal and others like it? A: The deals we sign with Proton and others will continue. However, there is a need to manufacture a dedicated Electric Vehicle from the ground up. In using other manufacturers’ internal combustion vehicle platforms for our Electric Vehicles, some parts become irrelevant. Furthermore, in the future Electric Vehicles should be purpose built, as various design issues will crop up, such as the optimum location for the battery, controller and motor. Q: What is your homologation plan? A: Detroit Electric will have a dedicated internal team as well as an external team to manage our US and EU compliance programs. We intend that all of our vehicles will meet or exceed the current safety and certification regulations required for their sale. Our vehicles will be compliant with all US and EU requirements.

As Detroit Electric’s vehicles and other high volume electric car manufacturers will be breaking new ground, we will work closely with organizations in all of our target markets. For example, in the US we will work with organizations including the Environmental Protection Agency, the California Air Resources Board (CARB) and National Highway Transportation and Safety Administration (NHSTA) among others, to provide safe vehicles for motorists. Q: What is Proton's current capacity? A: Currently Proton’s Tanjung Malim facility can produce up to 250,000 vehicles annually. However, by expanding its plant, it has the capability to produce up to one million units. Detroit Electric’s partnership with Proton will enable us to leverage on this state-of-the-art manufacturing and assembly facility, which opened in 2004. This facility is the epitome of integration, with a workforce of 2,000 people combined with 180 precision robots, making it the most advanced and exemplary manufacturing and assembly facility in Malaysia and one of the most modern in Asia. Proton Tanjung Malim operates with a 60% automation level, reducing operational costs by about 20% and man hours per unit by 30%. This makes it an extremely efficient facility. Q: In which countries does Proton distribute their products? A: Since their initial vehicle, Proton has produced 3 million vehicles thus far. Proton currently exports its vehicles to the United Kingdom, South Africa, Australia, Singapore, Brunei, Indonesia, Sri Lanka, Pakistan, Bangladesh, Taiwan, Cyprus, Mauritius, and more recently, China, Egypt and Syria.

ELECTRIC VEHICLES AND BATTERIES Q: Who will supply the battery for Detroit Electric Vehicles? A: We are currently testing several batteries for compatibility with our Magnetic flux motor technology, and will shortly name our first generation supplier. Having said that, we recognize the need to constantly review new technologies to improve battery density and vehicle range. We shall enter into a preferred supplier relationship with a leading battery manufacturer whose technology is proven and has the ability to meet our capacity needs. Q: Are batteries for Pure Electric Vehicles ready? A: Yes. Detroit Electric designed the battery management systems apart from licensing the manufacturing rights for the currently available LiPo (lithium polymer) battery technology (we are now seeking a licensing agreement with a battery manufacturer). Q: What happens when the batteries run out of power? A: You recharge them. As Pure Electric Vehicles become an increasing part of the automotive landscape, charging stations will also become a familiar fixture in society. Places of work, restaurants, grocery stores, and other retail establishments will offer low cost charging as enticements to get customers. Parking meters will also be transitioned to offer charging stations that allow motorists to swipe your debit or credit cards or through Smart Grid applications your home account will be debited with the energy used and the time at the meter. Q: Aren't batteries full of toxic chemicals and precious metals that will just end up in a landfill? A: Not at all. Every car in the world has a lead-acid battery, which is the most toxic metal used for batteries. Electric Vehicles will use newer chemistries such as NiMH and LiIon. Both of these metals are inherently more valuable than lead, and since the batteries are quite large, the value of the spent battery

packs will be such that the recycling rate will approach 100%. Nickel, while mildly toxic, will be reclaimed during the recycling process, lithium is even less toxic and more valuable than nickel.

ENVIRONMENTAL CONCERNS AND ELECTRIC VEHICLES Q: Isn't an Electric Vehicle simply trading a tailpipe for a smokestack? What about pollution from the power plants? A: Electric Vehicles eliminate emissions. But even today, with 50% of US power coming from coal plants, because so much of harmful emissions come out of tailpipes, Pure Electric Vehicles will eliminate emissions of greenhouse gases and most other pollutants compared with either conventional internal combustion engine vehicles or conventional hybrids. Unlike internal combustion vehicles that only get dirtier with age, Pure Electric Vehicles will get cleaner as the electrical grid gets cleaner. Recharging by tapping on renewable electricity such as solar, wind, tidal or others, allows motorists to drive without contributing to the pollution that sickens hundreds of thousands each year. It provides virtually pollution-free driving. Besides, electricity is more economical than petrol/gas. Q: Will rechargeable cars lead to building more coal and nuclear power plants? A: No, reports from energy analysts and world renowned scientists all indicate that the infrastructure is there to fully support Electric Vehicles even with the projected increase in market shares electric cars will enjoy. They will not increase the need for additional generating capacity for decades to come, and during that intervening time we can shift to cleaner, renewable power options that will result in less environmental harm than currently used fossil fuels. In the US alone, the existing grid's off-peak capacity for electricity generation is sufficient to power 84% of commutes to and from work by cars, light trucks and SUVs, without building a single new power plant if people drive plug-in hybrids, according to the US Department of Energy. Q: Can I charge a Pure Electric Vehicle with solar or wind power? A: Yes. Using solar power or wind power at your home or business is the perfect complement to an electric car which has truly zero-emission. Electric Vehicles typically can travel 4-5 miles/6.7-8km (or more) per kWh. If you drive 12,000 miles/ 19,312km per year, you will need 3,000-4,000 kWh. Depending on where you live, you will need a 1.5kW-3kW plug-in system to generate that much power using about 150-300 sq. ft/ 13.94-27.9 sq. m. of space on your roof. In fact, many EV drivers recharge their cars from rooftop solar panels today at companies like Google and in cities like Pasadena, generating virtually no pollution for their local driving.