What do you do when a major publication publishes an expose on the firm you’d crowned winners of a competition you’d been running, asking if the winner was even eligible to take part? 

That’s the problem facing the team behind the Progressive Automotive X-Prize after an article in The New York Times made serious allegations that Li-Ion Motors, the winners of the side-by-side category of the $10 million competition, had a less-than rosy past. 

The New York Times reports that just as representatives from Li-Ion Motors were receiving a comically over-sized cheque for the $2.5 million share of the X-Prize fund, attorneys representing the company were trying to persuade a former customer to accept an out-of-court settlement for $75,000.

Chrysler PT Cruiser converted to electric car by EV Innovations, photo from buyer Barrett Lyon

Chrysler PT Cruiser converted to electric car by EV Innovations, photo from buyer Barrett Lyon

Claimant Barrett Lyon, CEO and founder of several tech companies including BitGravity and 3Crowd, brought the case against Li-Ion Motors to court after his PT-Cruiser, converted by the company and returned to him, fails to correctly work.

Li-Ion Motors, or EV Innovations, Inc. as it has previously been known has been trading for around ten years, but has not always been an electric-vehicle firm. 

As U.S. Securities and Exchange Commission documents illustrate, the company now known as Li-Ion Motors has sold shares in gold-mining, sold coffee in China and even ran an Internet phone service before settling on electric vehicles. Its history is littered with vehicles we're doubtful will see the light of day.

It gets worse. In 1998, Arizona lawyer Peter Strojnik attacked the company in a federal lawsuit as having the “modus operandi to manipulate the securities market in order to assure their continued existence”.

As The New York Times reports, the company has been investigated twice by the SEC, owes more than $250,000 in payroll taxes and has even broken stock trading rules in Canada. 

But while its troubled past and litany of legal cases against it may have put many off supporting the company the biggest question revolves around its cash flow. 

ev innovations liv inizio main630

ev innovations liv inizio main630

The company is unable to pay its $75,000 out-of-court settlement with claimant Barrett Lyon at the present time. 

While the company attorney is adamant that it can pay the settlement figure without X-Fund Prize money, Lyon posts on his blog that he was emailed by a lawyer represneting the firm notifying him that Li-Ion Motors is still waiting on the real $2.5 million cheque to clear before it pays its debtors.

But here’s the really interesting thing. The other two teams who won a share of the $10 million prize fund have already received their share of the X-Prize. 

Has the X-Prize delayed the winning funds to a company it has just realised may not even have the production skill or funds to bring its all-electric car to market? 

Perhaps. The Auto X-Prize rules for winning included a requirement that the winner must have a credible plan to manufacture, sell and service 10,000 vehicles by 2014. 

But with so much financial insecurity and severe allegations of misconduct does Li-Ion motors face disqualification post facto? 

And where does that leave fellow competitors, who signed a pact to share the prize-funds between themselves in the event of one of the co-signees winning?

Whatever happens, we’re sad to see a competition which set out to be so noble in cause at its inception become embroiled in what appears to be a glaring mistake in due diligence on its competitors. 

Li-Ion aren’t alone either. Fellow X-Prize finalists Zap were the subject of a lengthy investigation from Wired magazine when it failed to deliver on promises made to its franchised dealers.

For now, one message is clear. The X-Prize sought to inspire and support a new wave of electric vehicles. In time between its inception and its execution, it has gone from a beacon of hope to a stage for the seedy underbelly of electric vehicles to mix with genuine hopefuls while the rest of the world makes electric vehicles far beyond the dreams of any competing. 

 [The New York Times]