Tuesday, October 7, 2008

The Race for The Electric Car

As I was relaxing at home after a busy weekend (my wife, who is 9 months pregnant, had a false alarm Saturday afternoon) I channel surfed my TV until I found an interesting program: "60 Minutes" (CBS 7pm). The lineup for this week's stories: "A Look At Wall Street's Shadow Market" (Trying to explain Wall Street's financial crisis), "Elite Officer Recalls Bin Laden Hunt" (an ex-Delta Force tells the story of how close the US was to killing Mr. Terror himself) AND "THE RACE FOR THE ELECTRIC CAR" (don't watch the segment now, read first, then watch. I provide a link at the bottom of this entry. Thanks!).


I can imagine the editorial meeting for this week's "60 Minutes". "We can't have a full hour of such depressing news!"; "Let's find something people can look forward to" ; "here it is! let's talk about the electric car!". So, in spite of the falling economy and the disaster of the war on terror, The Electric Car takes the stage!


Two things came to mind watching this story:


1- How is the new economic reality going to impact Greentech economics?


On one side, I suppose, the general belief is that Greentech will suffer as the rest of the economy will. Although this may be true, I also believe investments are going to look for new markets and they are going to find that Greentech has gained attractiveness if compared to Real Estate, to Wall Street and to many other current-day options. Therefore, I would not call this downturn "a blessing in disguise" for Greentech, but I would call it a "potential opportunity"


2- Silicon valley vs Detroit. GM's Volt and the Electric Car Business Model


In the "60 minutes" segment the main story is about Tesla Motors. The narrator talks about this company from Silicon Valley that is challenging old-school car manufacturers like Detroit's GM. The story begins with Elon Musk the CEO of Tesla who is a co-founder of PayPal, the reporter asks bluntly who will pay a fortune for these cars ($110,000), Elon response: "It's a deal!". The story then turns to Tesla finally yielding to Detroit. The company that started by challenging Detroit is now massively hiring traditional motor-heads.


[Tesla Roadster]



Something that really caught my eye was the part where they interviewed GM's Vice Chairman of Global Product Development Bob Lutz. My impression of Mr. Lutz was of the Plant Manager recently promoted, with his hands still dirty from the grease and his attitude of constantly dealing with Union workers. Nothing wrong with this, except, if you want to have a radical new product and break away from old vices, then Mr. Lutz may be a liability. He goes as far as to say that global warming is a "Pile of Horse Sh--". His product reflects his personality. The Volt is a car that has been promoted as an electric car for over two years now, and it is supposed to come out to market in 2010. It has a 25 mile range with pure electric charge and a small Engine to charge the battery for longer trips. The design of the Volt is nothing that will turn heads (at least not in my opinion). Just as a comparison point take the much less promoted Mitsubishi i MiEV this car is expected to arrive to market at the end of 2009 and has 100 miles of travel with electric power (four times that of the Volt!). Not to mention that the i MiEV is expected to cost around $28k whereas the Volt had a price of $30 and it was recently announced that it will be more like $35k. If you ask me, GM is no competitor in this race.


[GM's Volt]


Chevrolet GM Volt electric car


[Mitsubishi i MiEV]


image


At the end of the day, the conclusion that I draw from this segment, is that the next breakthrough vehicle will have to come from a traditional car maker using technologies from smaller specialized hi-tech companies. The large car maker has the muscle to assemble and market the vehicle, there are too many barriers to entry to be competitive in that arena. But, they will have to buy or pay royalties to smaller (more agile) companies that will bring the innovation. Mitsubishi partnered with GS Yuasa for their batteries (a young Japanese company established in 2004). The other conclusion (and this one I feel much more confident in) is that the Japanese are better suited for these innovations than Detroit. I am yet unsure about what the Europeans are doing to stay on top of this race (I think they are waiting to see where the market leads, except that they may be running the risk of being too late into the race). Below you may now watch the "60 Minutes" segment. For now I say "SHALOM"


Watch now "60 Minutes"... THE RACE FOR THE ELECTRIC CAR

2 comments:

Anonymous said...

I see that ignorance is no barrier to your clueless opinions. Let me know where those terrorists are who are winning the war against Western Civilization.
The Mitsubishi iMiev will not retail for $28K - the price will actually be $40,000, about $3K more more than the practical Volt, which, I might add, can easily do everything the iMiev can in terms of avoiding gas and emissions. And you DON'T need to buy, maintain, garage and insure a second car, which the Mitsubishi requires. Mitsubishi can't build a plug-in hybrid - that is beyond the capability of Mistsubishi - you know, one of those "superior" Japanese automakers. Ha, ha,ha,ha. The iMiev battery pack alone will cost $20,000 and last around 5 years, making it three times more expensive than the 10 year plus, $15,000 Volt battery. So much for your insight into EVs. What a brainless boob.

Sami Shiro said...

Bike:
You don't need to insult me in order to start an exchange of ideas. I have opened this "forum" partly to educate myself and if you have more knowledge or information than I then I appreciate your willingness to share it.
Now, regarding the war; you may view the war in Iraq and Afghanistan, as well as the conflict with Iran and the issues facing Pakistan as isolated incidents. You may also view the conflict in Darfur and Kosovo as isolated. Even the “smaller” clashes between Muslims and non-Muslims in Indonesia, Algeria, Sudan, Azerbaijan, Chechnya, Dagestan, Turkmenistan, Tajikistan, Uzbekistan, Lebanon and Kenya, and even the riots in France, as isolated incidents. But, that Mr. Bike would be ignoring just too many facts.
Regarding the price for the Mitsubishi I MiEV and its comparison to GM’s Volt my source is September 27 2008 Newsweek’s article “Leading the Green Charge” - http://www.newsweek.com/id/161052 . WHAT IS YOUR SOURCE?

Best regards,

Sami Shiro