October 17, 2016 DMC

October 2016 Low Volume Update

Low Volume Regulations Overdue For

As summer finally draws to a close (here in Texas, at least), we continue to make good progress in most areas of the planned 2017 Low Volume DeLorean production. We have extended our planned start of production due to regulatory delays (explained below), but all in all are pleased with where we are based on our current planned production timeline.

Chassis development is slightly behind schedule due to supplier bottlenecks, but prototype builds of the chassis are expected by early November. These chassis will be suitable for existing DeLorean cars as well as our planned low-volume production. This is an excellent example of how this low-volume production will be improving parts availability for the owners of existing DeLorean cars.

In September, representatives of DMC met with one of our potential powertrain suppliers and a separate technology partner in the United Kingdom for Engine Control Unit (ECU) development. We are carefully evaluating our options here but are also awaiting further regulatory guidance from the Environmental Protection Agency (EPA), the results of which may affect our engine supplier decision.

Also in September, representatives of DMC met with a potential supplier for interior components. This is still in the exploratory stage, but we expect more progress throughout the final quarter of this year. This Tier 1 automotive supplier has significant low-volume experience, particularly in regards to Federal Motor Vehicle Safety Standards (FMVSS) in regards to interior safety/flammability.

As mentioned before, while the legislation that allows for low-volume vehicle manufacturing was signed into law in December of 2015, the actual rulemaking process for the implementation of the law is in the hands of the Environmental Protection Agency (EPA), National Highway Traffic Safety Administration (NHTSA) and the California Air Resources Board (CARB).

The latest update from the EPA indicates they may issue a “guidance document” that will spell out how low-volume manufacturers (like DMC) can register with the EPA and comply with the laws regarding installation of certified engine packages.

CARB officials are working with several companies seeking an “Executive Order” – commonly known as an “EO” – for engine packages that are suitable for the low-volume manufacturer’s use. This, along with some other action still being defined, is necessary in order to take advantage of the federal law.

NHTSA staff are considering how best to implement the new legislation, and currently have no timetable for issuing regulations or guidance documents. The Specialty Equipment Market Association (SEMA) has been working closely with the low-volume law sponsors, Representative Gene Green (D-TX) and Representative Markwayne Mullin (R-OK), in urging NHTSA to consider issuing a “guidance document” allowing sales to begin in 2017 even if regulations were still being drafted.

Accordingly, on October 12, 2016 we submitted a “Request for Interpretation” letter to the Chief Counsel of the National Highway Traffic Safety Administration that would deem DeLorean Motor Company eligible to sell vehicles while NHTSA drafts regulations. We’ll report more on this as it develops.

In light of everything discussed in this update, we are still a few months away from setting a price for the car as we finalize the bill of materials and standard/optional feature list. However, the overwhelming interest and feedback from people interested in the DeLorean production can’t be dismissed.

Beginning today we are accepting applications from those with interest in being placed on a reservation list to purchase one of the low-volume DeLorean cars. Because the standard and optional feature list is still being finalized, these are non-binding expressions of interest only. Our planned production is approximately one car per month for the first 12 months of production, ramping up to one car per week by the end of the second year of production.

Respondents will be given first notification and priority before the ordering process is opened to the general public.