ZAP in settlement talks with federal regulators over electric vehicle recalls

  • 7/9/2010: C6:
    8/11/2009:B4: Brad Wallis works on the electric battery system of a Zap utility vehicle in the company's Santa Rosa factory Monday.
    PC: Brad Wallis works on the electric battery system of a ZAP vehicle in the company's Santa Rosa factory Monday, August 10. ZAP has secured financing to grow its business.

Santa Rosa electric vehicle distributor Zap Jonway is in settlement talks with the federal government, which sued the company this spring after it failed to buy back hundreds of three-wheeled vehicles that regulators say are unsafe to drive.

The lawsuit, filed by the National Highway Traffic Safety Administration, seeks $17.4 million from ZAP, plus an additional $6,000 to $7,000 a day for each car it did not recall after regulators ordered the company to take action on Nov. 26, 2012.

The NHTSA took unprecedented action last November in ordering Zap to purchase and take off the road more than 600 of its 2008 Xebra three-wheeled vehicles. The order followed more than three years of regulatory efforts to get the company to voluntarily notify owners of the safety problems and to enact a solution for the vehicles' braking systems.

"Indeed, this was the first time the NHTSA exercised its statutory authority to compel a manufacturer to comply with its remedy and notification obligations under the Safety Act," according to the lawsuit. "Yet, to date, ZAP still has not complied with that order. Noncompliant vehicles remain on the road today, posing an unreasonable risk of accidents."

The Safety Act refers to the national motor vehicle safety law enacted in 1966.

The NHTSA filed its lawsuit on May 6 in U.S. District Court in Washington. In a joint filing on May 29, the government and the company said they have been discussing a settlement "and have made significant progress." The two sides are slated to provide a status report on the talks by July 15.

ZAP controller Michael Ringstad said Friday the company won't discuss the matter until the legal dispute is resolved.

"We expect that to happen in the next couple weeks," he said.

The Chinese-made Xebra, considered a motorcycle by federal standards, failed brake tests in late 2008.

The November 2012 order requires Zap Jonway to pay Xebra owners $3,100 for each vehicle, an amount the agency said was based on current market value. The Xebras are to be permanently disabled or destroyed.

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