28 May, 1998
To: Olof Sundin, Victor Munoz at EVsNW
From: Bill Warf
Gentlemen,
I am finally studying my notes from complying the City-el back in late 92 and early 93. In retrospect, and based on what I know now, I think you might be better off in the long run to consider being the manufacturer, and buying parts from Switzerland. I will explain my thinking below. By mail I am attaching a copy of the compliance summary document we made for the City-el. The document summarizes the requirements and shows how the City-el complied.
I believe there are at least four considerations which suggest you might consider being the manufacturer yourself. These are cost of insurance, cost of licenses, risk, and parts supply. Back in 1992 I thought I wanted CityCom to be the manufacturer, since they were bigger and apparently more stable than my fledgling company, and I didn't want the risk of badging the vehicles. Now I think
I was just as exposed, since all in the distribution chain are jointly and severally liable for claims, and in reality the best risk minimization strategy with a low volume vehicle is choosing and training customers well.
With regard to liability insurance, enlisting Twike as the manufacturer under US laws increases their costs significantly. Insurance for the US market is expensive for European companies. In effect, you double the liability insurance cost burden by buying it yourselves, and having Twike buy some also.
Additionally, it is not much help to have an undercapitalized European Company involved in any potential liability action, and your defense cost exposure is probably double with two companies (you and Twike) involved. This is a risk decision, and you might consult a qualified Attorney.
Manufacturer's or dealer's license requirements vary state by state, but one advantage of obtaining the manufacturer's license is the ability to badge the vehicles as compliant yourselves. It seems the cost is not that much in the grand scheme of things, even though it is a bit of a hassle. In California technically you need a manufacturer's license and a dealers license. The
Dealer's license covers the retail sales consumer protection stuff, and the manufacturer's license covers manufacturing. The rules are set up assuming that one company doesn't do both. Scott Cronk's company, Electric Motor Bike
(EMB) obtained a manufacturer's license, as stated to me that it wasn't too hard.
In small quantities, compliant lamps and other parts (brake hoses) may be less expensive sourced in the US and added by you. We had to change these parts on the City-els here, because CityCom couldn't get them in time.

All of the following references to the compliance requirements were based on my own study of the CFR as of 11/7/92. It would of course be prudent to obtain a copy of the current version of a quick review of DOT requirements contained in
49 CFR 500-599 from the Federal Government Printing Office, costs about $30 for paper bound.
I left the following in the language I submitted to CityCom. I think you can fairly safely substitute EV's NW or Twike for CityCom in the following description of the process.
Path Number 1...Certification by the Manufacturer.
In my opinion, this is the least expensive and most direct route to achieve DOT compliance.
STEP 1
EVsNW is required to designate an Agent in accordance with
49 CFR 551, upon whom service of all process, notices, orders, decisions and requirements may be made for EVsNW. This requirement is mandatory, before offering vehicles for importation to the United States . The agent designation must be in legal form, must be accepted by the agent, and must be filed with the
DOT. While the Manufacturer may designate another agent, the agent may not assign his duties as agent. This means the agent will remain the point of communication with the US government, until and unless another agent is appointed by EVsNW. (see photocopy in compliance summary book)
STEP 2
EVsNW must provide manufacturers data to DOT, in accordance with 49 CFR
566. This is a relatively easy step in which EVsNW identifies who they are and what they make to the US DOT. (see photocopy in compliance summary book)
STEP 3
EVsNW, through it's US Agent or directly, must apply to the Society of
Automotive Engineers (SAE) for a unique prefix to be included in VIN numbers, in accordance with 49 CFR 565.5. I contacted SAE on behalf of City Com on
1/11/93. (412-776-4841) I asked about the process of obtaining a manufacturers
Vehicle Identification Number (VIN) identifier according to 565... For a Danish manufacturer, I was told I needed a WMI Code, and given an address in
Denmark to contact. CityCom did this and got the necessary code. I was also given the name of Penelope Johnson, a consultant in Virginia, 703-759-6595.
Eventually we got the identifier... which is explained in the April 14, 1993 information submittal to NHTSA. (See photocopy in compliance summary book.)
STEP 4
EVsNW, must submit it's unique, SAE approved VIN identifier, and an explanation of the VIN numbers to be applied to vehicles to the National Highway

and Traffic Safety Administration (NHTSA) office of DOT, in accordance with 49
CFR 565. The explanation must be submitted at least 60 days before applying
US VIN numbers to the vehicles. VIN numbers must satisfy all requirements of
49 CFR 565. (See photocopy in compliance summary book.)
STEP 5
A Compliance Strategy must be developed for the City-el. This document would list how the City-el complies with all Federal Motor Vehicle Safety and theft protection standards...FMVSS. These are contained in 49 CFR 571.
STEP 6
Submit the compliance strategy to NHTSA for review. This is not a mandatory step, and we never did it. Supposedly, NHTSA could ask you how the vehicle is compliant. They can also buy one, and check it. This is very unlikely unless you sell more than 5000-10,000 per year.
STEP 7
Order compliant name plates for VIN and compliance certification marking according to 49 CFR 565 & 567. The manufacturer certifies that the vehicle complies with all applicable standards effective on the date of manufacture, by application of the 49 CFR 567 plate. These plates are mandatory for importation of a vehicle under the HS-7 declaration box 2.
STEP 8
Include in Owners manuals the statements required by 49 CFR 575.101, and 49
CFR 575.6
STEP 9
Build and ship and sell compliant vehicles. Maintain a record system which shows VIN numbers and tire information (49 CFR 574). This information must identify the first purchaser for each vehicle.
Path 2... Importer Certified Vehicles
I don't like this path because it adds a minimum of 30 days from the time City-el's reach a US port to the time DOT will allow the vehicles to be sold. It therefore increases the costs, and slows cash flow. This path is used for "gray market" cars, and may be appropriate for a few special vehicles. The importer has to post a bond for 150% of the value of the vehicle, until it is complied.
STEP 1
Importer develops a petition to Import a non-compliant vehicle, according to 49
CFR 593. This petition requests importation eligibility be allowed, for the

importer to modify as required, and to then certify the vehicles. It would likely require the same effort as Path 1 Step 5. The PETITION would have to appear in the federal register for a period of time, estimated as 60 days.
STEP 2
Importer obtains a Letter of Insurance, and applies for "Registered Importer
Status" according to 49 CFR 592.
STEP 3
After above steps are completed, the importer must modify each imported vehicle as required to comply with the FMVSS, and must then must certify compliance in writing to the DOT. According to my understanding DOT requires a 30 day wait for each vehicle after certification is submitted, and before sale or other shipment of the vehicle, so DOT may inspect the vehicle for compliance.
Path 2 is more completely delineated on the attached schedule. The vehicles end up meeting the same substantial requirements as described in Path 1. I expect Path 2 would take longer, and cost significantly ($400?) more per vehicle.
I hope the above information will help with your Twike project. As I mentioned, I will put a copy of the compliance book in the mail to you. If I can help please call me or e-mail me. I'm sorry I'm so slow in doing this little bit of work for you.
Regards,
Bill Warf