Local Motors

What did it do?

Local Motors was a vehicle maker that combined design competitions open to an online community with production in small, distributed microfactories. It developed the open-source Rally Fighter car, the 3D-printed electric Strati and Olli, an autonomous electric shuttle. It also ran co-design projects for companies such as Airbus, GE and IBM.

Why did it shut down?

The reasons for the closure were never shared publicly in detail, but the picture in the sources suggests the company could not scale in its new focus. In February 2017 it laid off staff, shifted its focus to autonomous vehicles and white-label software, and closed its Las Vegas facility. The Olli shuttle remained confined to campuses and pilot projects; a pilot announced in Toronto never started. The company closed on 14 January 2022, just a few months after appointing a new CEO who had announced plans to scale up global production.

The story

In 2014, visitors to the International Manufacturing Technology Show in Chicago watched a car being printed before their eyes. Local Motors' electric Strati came out of a 3D printer in 44 hours. The vehicle consisted of just 50 parts; a conventional car has around 30,000.

Local Motors was founded in 2007 by John B. Rogers Jr. and based in Phoenix. The idea stood on two legs: have an online community do the design through competitions, and build the vehicles in small, distributed microfactories rather than big plants. The Rally Fighter, launched in 2009, was the first co-designed car, with its exterior chosen by community vote. The company soon began running co-design projects for organisations such as Airbus, GE, BMW, IBM, Goodyear, Peterbilt, Shell, the US Army and Domino's; Airbus and GE became significant investors. Microfactories were set up in Phoenix, Knoxville, Las Vegas, Louisville and Washington. Fast Company twice named it one of the world's most innovative companies, and Harvard Business School wrote a case study about it.

In 2016 the company unveiled Olli, an autonomous electric minibus equipped with IBM Watson technology. In February 2017, however, it laid off staff, shifted its focus to autonomous vehicles and white-label software, and closed its Las Vegas facility. In January 2018 a Florida-based company promised Olli customers up to $1 billion in financing and operational support. Olli was used as a shuttle in enclosed settings such as a United Nations campus in Turin, Italy. In December 2021 an Olli being driven in manual mode in Whitby, Canada, hit a tree, seriously injuring the attendant.

Former operations chief Vikrant Aggarwal had taken charge of the company and announced plans to scale up global production. A few months later, on 14 January 2022, Local Motors closed; the news emerged through a post by former sales executive Chris Stoner. The autonomous shuttle pilot announced in Toronto ended without carrying a single passenger.

Local Motors' story shows the gap between an innovative manufacturing model winning awards and partnerships and turning into a sustainable product business.

Lessons for founders

• Prototypes that win awards and media attention are no substitute for repeat orders; identify the first paying customer for every new product from the outset.
• When changing focus, make the transition without cutting off the old business's cash flow; sales cycles in a new market are usually longer than expected.
• For hardware start-ups growing through pilot projects, make the share of pilots that turn into commercial contracts your key metric.

Sources

1. Local Motors (Wikipedia)
2. Local Motors, the startup behind the Olli autonomous shuttle, has shut down (TechCrunch, 2022-01-13)
3. EXCLUSIVE: Local Motors lays off employees, shifts gears to autonomous vehicles and white-label software (Phoenix Business Journal, 2017-02-01)

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