Alexander Bruce considered the Groudle electric railway merely a field test for a more ambitious undertaking; he wanted to reach Laxey. In March 1893, he was already seeking approval from Tynwald, the Manx Government, for the extension. Saunderson had already planned the railway and road as far as Baldromma Beg (Halfway House) where it met the main Douglas to Laxey road. The land was now owned by the ‘Douglas Bay Estate and Groudle Glen Company’, a new operations committee, ‘The Douglas and Laxey Coast Electric Tramway Company’ was formed at the same time, with a view to operating between Douglas and Laxey. They would take over the land as far as Baldromma Beg upon the tramway’s completion, leaving the Douglas Bay State Company to develop Howstrake Park (later the Howstrake Holiday Camp).
Tynwald’s approval was gained in November 1893, but with certain conditions. The maximum gradient would be no more than 1 in 20, maximum speed 8mph during rail/road running, and 6mph at crossing points. Goods, freight and mail were also asked to be carried at a fixed rate, and finally, it gave the company compulsory purchase powers for land along the approved route.
Construction recommenced in February 1894 with the second line to Groudle finished by May, a 3 span viaduct constructed to take river and road over the Groudle river. The line was also constructed as far as Laxey, with a terminus being built parallel to today’s Laxey Car Shed at Rencell Road. A further shed was constructed at Derby Castle for eight Cars or Trailers. To take the extra traction current required, a third boiler, engine and feeder line were also installed. Six more Cars arrived, Numbered 4 to 9. These were nicknamed ‘Tunnel Cars’, all fitted with the Hopkinson improved Bow Collectors. In addition, six more Trailers also arrived from G.F Milnes, numbered from 17 to 22 (todays 34-39 class, of which only 36 and 37 survive.)
Inspections took place on the 27th of July 1894, and formal opening took place the next afternoon, all of Laxey turning out for the ceremony. The new extension was definitely to put Laxey on the map, with the Glen Gardens developed as a major attraction, and the magnificent ‘Lady Isabella’ wheel still turning and visited by thousands daily during the Summer.
Although the new Motors and Trailers bore the D&LCET name, the company had changed its name to the Isle of Man Tramways and Electric Power Company Ltd, after purchase of the Horse Trams along Douglas Promenade. It was the objective of Mr Bruce to replace the Horses with Electric Cars, making the Victoria Pier an ideal terminus. The Douglas Town Commissioners, who had first refusal on the horse trams, only agreed to the change with the proviso that the IOMT&EPCo would construct a tramway for the residents of Upper Douglas, the Upper Douglas Cable Tramway opening as a result in 1896.