Lord Borwick: In the green driving seat

The Business Interview: Modec, the maker of all-electric vans, may not yet be turning a profit but it has its sights set on a global market, says its founder

In the tradition of Jonathan Swift, Jamie Borwick has a "modest proposal" of his own – this one with the humbler goal of propelling electric vehicles from their eco-friendly niche into the automotive mainstream. The first step is to put exhaust pipes at the front, he says, so drivers can see the mess they are making. If that doesn't work, the pipes should be fed inside the cab. "My automotive industry friends go green when I suggest it," he laughs. "Instead, we cover the pipe in chrome, make it look beefy, and stick it out the back so it poisons the fellow behind."

Lord Borwick – the fifth Baron Hawkshead and scion of the early-20th-century baking powder magnate – is not entirely disinterested when it comes to electric vehicles. He is the founder of Modec, which makes short-range, all-electric delivery vans, and he has big plans. "Modec: we're going to clean up," was the mission statement he concocted at the outset, while lying in the bath considering his new venture.

"London's atmosphere is filthy and appalling," the former deputy chairman of the British Lung Foundation says. "Do I want to clean up the air in London? Absolutely. Do I want to make money? Absolutely."

Lord Borwick is a stalwart of the British car industry. But his first job was as a bricklayer for the family business, the engineering group Sir Robert McAlpine – "him", he says, jerking a thumb at a large painting of his grandfather on the wall. He joined the car industry when he married, poached by his new father-in-law for the London taxi maker, Manganese Bronze. Within five years, he was the chief executive.

Modec was born from Manganese Bronze's search for a "McGuffin", Lord Borwick says. "Hitchcock had the concept of a McGuffin: that on which a plot turns," he explains. "Making taxis wheelchair-accessible was a McGuffin for Manganese Bronze for 15 years and it was a cracking good one." Low emission vehicles seemed a suitable successor.

Despite bucket loads of Lord Borwick's considerable energy, electric vehicles could not be made to work as taxis. But while battery power may not be sufficient for a black cab with an average daily range of 250 miles, it is more than enough for the city delivery vans needed by supermarkets, postal services and local councils. So, following a failed management buyout attempt in 2002, Lord Borwick left Manganese Bronze, taking "Jamie's Project" with him.

Modec was formed in 2004 and has made steady progress since, helped by deals to supply Tesco, Fedex and UPS, and booming business in subsidy-rich France. The company now employs 85 people and sales are rising respectably: more than doubling to 200 vehicles last year, and expected to double again in 2010.

But it can be tricky to wean fleet managers away from traditional trucks. "If you've spent your life maintaining engines, you can feel slightly lost without one," the peer acknowledges. And although last year's turnover came in at about £8.5m, the company is not expected to turn a profit before 2011.

"I had expected to be profitable by now," he says somewhat ruefully. "But there is a tendency for people to say 'wonderful, we'll have three', whereas I want them to say 'wonderful, we'll have 3,000'."

Getting the business off the ground may be taking longer than expected, but the prize is also potentially more glittering. "When I started I wanted a company like Manganese Bronze – producing 2,000 vehicles each year for the UK market," Lord Borwick says. "But what I've actually done is create a worldwide business that will produce far more than that."

The first step was last year's joint venture, with the US truck giant Navistar, to supply Modec vans into the vast North American market – a deal which came with a $39m (£25m) grant from President Barack Obama, who has visited the group's factory in Wakarusa, Indiana. "With Navistar, we have the guy with the biggest share of the biggest market as our partner," Lord Borwick says. "This is a mouse and an elephant."

Modec is also at a key point in its development on this side of the Atlantic. The majority of its vans are already being exported to Europe, which is changing both the nature of the business, and its prospects. Estimates of the potential size of the market are hard to pin down, because all the statistics focus on vehicle weight rather than distance travelled. But it could be huge – up to 25,000 vehicles a year within 10 years, of which Modec thinks it could account for 5,000. But at this stage it is all guesswork. "To call it an expectation is too much," Lord Borwick says. "These are wild speculations really because it's an entirely new market and nobody knows."

In the short term, the main focus is finance. "I need to raise money to capitalise the business better," Lord Borwick says. Alongside the joint venture, Navistar also bought a 25 per cent stake in Modec itself. But that is just the beginning. "With Navistar we are endorsed by one of biggest players in the automotive business, so now is the time to bring in other shareholders," he says. "The implications are huge: I thought I would keep the company private and have it for myself for the long term, but it has turned out to be much, much bigger than that and we will probably have to list it in the future."

Meanwhile, given that the idea of frontal exhaust pipes is unlikely to gain much traction, the most helpful thing the Government can do to help electric vehicles of all types is to back off. The subsidies that do exist are of little help, and the latest plan to offer up to £5,000 for low-carbon vehicles from 2011 just delays short-term sales. Better to cut business taxes and look at practical ways to encourage people to buy, says Lord Borwick. "It is lovely that the Government's heart is in the right place but subsidies will never get it right – so it shouldn't try," he explains.

Best of all would be to copy the Californian model, where hybrid Prius drivers were allowed to use the state's multiple-passenger lanes, pushing up Prius sale prices by $3,000 almost overnight. "That is a subsidy, but it doesn't cost anything," Lord Borwick says. "So we could ensure the triumph of electric vehicles in Britain very simply, just by letting them use bus lanes."

Now that is a modest proposal.

Lord Borwick: Driving force

2004-present Chairman of Modec

2002 Left London taxi-maker Manganese Bronze (MB) following a failed management buyout

1987-2002 Chief executive and then chairman of Manganese Bronze

1981 Joined Manganese Bronze

1972 Joined Sir Robert McAlpine as a bricklayer

Personal life Lord Borwick is married, has three children and drives a London taxi