Green Wombat

A blogging Toyota exec has fired back at a Wall Street Journal story that claimed the automaker has delayed by up to two years a plug-in hybrid Prius that uses lithium ion batteries. "To suggest that any timing has been changed for the introduction of a vehicle for which an introduction schedule hasn’t been finalized and published, using battery technology that we’ve previously said isn’t ready for prime-time, is – well, it’s curious and perplexing," wrote Toyota (TM) corporate communications exec Irv Miller on the company’s Open Road blog on Friday. Still, Miller indicated that you won’t see a lithium ion Prius hitting the road anytime soon. "We have consistently affirmed that there are many issues that need to be resolved, beyond the safety and reliability of lithium-ion batteries, before a commercial lithium-ion-equipped hybrid – and what we’re talking about here is the so-called plug-in hybrid, or PHEV – is ready for the market," he wrote. "These issues include battery cost, availability, performance and packaging. All of the car makers face the same problems when it comes to these issues. The answers, unfortunately, are not just around the corner.

Miller contends that "nobody has fully figured out the optimum use of lithium-ion batteries in automobiles" and thus "promises of longer driving ranges on a single charge appear to be several years away." Not exactly. Tesla Motors is preparing to roll out its lithium ion-powered Roadster later this year and has just named a new CEO to ramp up production. But what may have also incited Miller’s ire was the Journal’s suggestion that any delays will open the door for Ford (F), General Motors (GM) and Honda (HMC) to catch up to the industry’s technology leader.

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Tesla Motors co-founder Martin Eberhard has been replaced as CEO of the Silicon Valley electric car company by former Flextronics chief Michael Marks. Tesla marketing executive Darryl Siry told Green Wombat that Marks, a Tesla investor, will serve as interim CEO as part of a planned transition. The news was first reported Saturday night on San Jose Mercury News auto editor Matt Nauman’s blog.  Tesla communications director David Vespremi says Eberhard will become the startup’s president of technology as it prepares to roll out its Roadster super car later this year. "We were looking for someone who could help take the business to the next level, someone who had manufacturing experience," Vespremi told Green Wombat. "Michael Marks definitely has those credentials with Flextronics. This is all part of growing the business and positioning us to be ready for even more success. Which is why Martin is still very much involved. If anything, it allows Martin to do what he does best, be a technology leader."

After stepping down as Flextronics CEO in 2005, Marks joined private equity firm Kohlberg Kravis Roberts. Flextronics is an electronics manufacturing services company that designs, engineers and builds tech products. Siry said Marks will remain with KKR while he serves as interim CEO.

"Martin and the board have been looking for a permanent CEO since early this year and the plan was to have someone in place before we got into production because the amount of manufacturing expertise needed is tremendous," says Siry. "We haven’t found the right one yet, and since we’re about to head into production we decided to name an interim CEO so we could get through this period. Michael Marks has a tremendous amount of manufacturing experience and he knows Tesla."

So far more than 500 people – including California Governor Arnold Schwarzenegger, Google (GOOG) co-founders Sergey Brin and Larry Page, and inventor Dean Kamen – have ponied up nearly $100,000 each for the thrill of going zero-to-60 in four seconds.  The leadership change comes as automakers like General Motors (GM) and Toyota (TM) step up programs to develop plug-in hybrid electric cars. The Roadster takes its first public road trip later this month.

Here’s what Green Wombat wrote about Eberhard in Business 2.0’s 50 Who Matter Now list from the magazine’s June issue:

Eberhard’s high-tech, battery-powered electric car is less about bland eco-consciousness than about sex and speed. The Tesla Roadster does zero-to-60 in a whiplash-inducing four seconds, reaches over 130 mph, and goes more than 200 miles on a single charge.

And oh, yes, it’s also helping to save the earth. No surprise that the likes of Larry Page and Arnold Schwarzenegger have lined up to buy the six-figure supercar. Next up, Eberhard will take aim at the mass market by introducing a four-door sedan, the WhiteStar, that’s slated to debut in 2009 at half the price.

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photos: green wombat
PG&E has put California’s first hybrid diesel-electric service truck on the streets as part of pilot program to cut greenhouse gas emissions and pollutants while reducing fuel bills. The nationwide effort involves 14 utilities – from PG&E (PCG) and Southern California Edison (EIX) on the West Coast to American Electric Power (AEP) in the heartland to Duke Energy (DUK) and FPL (FPL) on the East Coast. Hydro Quebec also is participating in the truck trial. This morning a 16-ton "bucket truck" silently rolled up to a plaza in front of PG&E’s San Francisco headquarters. The International truck can run up to 35 miles an hour on its electric drive train made by Eaton, according to Efrain Ornelas, PG&E senior program manager for clean air transportation. Batteries also power the bucket that lifts workers up to power lines. In a conventional bucket truck that equipment is powered by the vehicle’s diesel engine, which is left idling and spewing carbon while the repair work is being performed. "Normally when one of these trucks is working in a neighborhood it’s so loud you can’t hear yourself talk," said Ornelas as the bucket quietly lifted a technician into the air.

According to PG&E, the hybrid bucket truck will slash fuel consumption up to 60 percent, saving up to $5,500 a year in diesel costs. The year-long trial will help the truck’s manufacturer tweak the vehicle’s final design. Ornelas said the electric lift can operate for about two hours on battery power, which should let PG&E customers get some sleep when trucks are dispatched in the dead of night to fix downed power lines. Meanwhile, as Green Wombat wrote earlier, New Jersey utility Public Service Electric and Gas (PEG) plans to replace a quarter of its 5,000-vehicle fleet with diesel-electric hybrids and biodiesel-powered trucks.

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photo: CalCars

Thanks to Felix Kramer of the California Cars Initiative for tipping off Green Wombat to an enlightening exchange between a Toyota executive and a U.S. energy commissioner on the automaker’s blog. The topic: plugging a plug-in hybrid electric (PHEV) version of the Prius into the power grid to supply electricity when demand peaks. Toyota (TM) corporate communications exec Irv Miller wrote a post on July 26 about the company’s move to supply plug-in versions of the Prius to the University of California, Berkeley, and UC Irvine for testing. In response, Jon Wellinghoff, a commissioner at the Federal Energy Regulatory Commission, posted a query on Toyota’s Open Road blog about the car’s vehicle-to-grid capability, or V2G in green car geek talk, which would allow owners to be compensated for generating electricity. "Is Toyota planning on incorporating this ‘cashback’ hybrid technology into the cars they produce for testing?" asked Wellinghoff. "Studies have demonstrated that PHEV with vehicle-to-grid capability can realize annual payments from electric grid operators of between $1,000 to $3,000. These cashback payments could completely offset the high cost of this technology. What is Toyota doing in this regard?"

In a lengthy reply posted less than a day later – warp speed for a multinational corporation dealing with a hot-button topic – Miller said Toyota’s priority is to produce production-ready PHEVs rather than build mini power plants. "Our expertise is in building motor vehicles. It’s not in power generation," wrote Miller. "That’s something that we would prefer to leave to those best equipped to do it." Nevertheless, he went on to discuss the challenges of V2G. Among them:

• Battery performance.
• Coordinating thousands of PHEVs to supply power to the grid.
• Building and financing the V2G infrastructure.
• Consumer’s willingness to accept lower fuel efficiency by giving up battery power to the grid.

(One hurdle not mentioned but something that Tesla Motors CEO Martin Eberhard has raised with Green Wombat is the impact of V2G on PHEV or electric car battery life.)

"The automobile business is changing and will, we feel sure, require strategies, partnerships and alliances we might not even have thought of yet. We don’t even know, for sure, if PHEVs will come to market in the way in which we think they will," concluded Miller. "So while the potential for V2G is another intriguing aspect of hybrid technology, we must not become sidetracked so that we lose sight of the immediate goal. That goal is to produce an affordable, reliable PHEV that can be sold in large quantities, that can be serviced at any dealership, and that will meet the needs of the American motorist."

For CalCars’s Kramer, whose organization promotes plug-in hybrids, Toyota’s willingness to even publicly discuss vehicle-to-grid was more important than Miller’s laundry list of obstacles to V2G. "The company’s reservations are less significant than the fact that it is paying very serious attention to the subject," Kramer told Green Wombat in an email. If you live in the San Francisco Bay Area you might spot the PHEV enthusiast tooling around in his converted 100-miles-to-the-gallon plug-in Prius, as Green Wombat did just the other weekend out at Point Reyes National Seashore.

Green Wombat is also fascinated by how a high-level U.S. government energy official and a corporate executive are having a direct, and apparently minimally mediated, open discussion via blog on a matter of public policy. Toyota’s willingness to talk no doubt owes in part to the pressure exerted by groups like CalCars and the interest of utilities like PG&E (PCG) and Southern California Edison (EIX) in V2G. Google (GOOG) also has focused attention on the issue by installing a vehicle-to-grid charging stations at its corporate headquarters in Mountain View. Now the question is, will Honda (HMC), General Motors (GM) and Ford (F) join the discussion?

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photos: green wombat
While reporting a feature story on Norwegian electric car company Think that appears in the August issue of Business 2.0 ("Have You Driven a Fjord Lately?"), Green Wombat had the chance to sit down with Ion Yadigaroglu, co-founder and partner at Palo Alto’s Capricorn Investment Group. Capricorn, the investment vehicle of former eBay president Jeff Skoll, has invested in both Think and Tesla Motors, the Silicon Valley electric car company making the Roadster super car. "This is the first time in a very long time that there are two car companies – two real car companies – that are being launched," says Yadigaroglu.  He believes there’s an opening for electric car startups to grab market share while Detroit and Tokyo dither. "The reason there might be a window is because, clearly, the incumbent car companies didn’t take this electric car phenomenon seriously," says Yadigaroglu. "They have, as always happens, big incentives to drag their feet and maintain the status quo." 

Automotive history, of course, is littered with the rusting name plates of failed startups, from Tucker to DeLorean. But thanks to the economics of electric car production, companies like Think and Tesla are able to make cars for $100 million versus the $1 billion automakers will spend on just retooling an existing model. "Fundamentally, by going all-electric there is a radical design change involved," Yadigaroglu says. "The complexity goes down. Half the complexity of a regular car is in its drive train, its engine and transmission and all that. You have such savings by going all-electric in terms of what engineering is needed." Tesla and Think will use Tesla’s lithium-ion battery packs, piggybacking on the billions spent to create such batteries for laptops and cell phones. Think is also benefiting from the $150 million that former owner Ford (F) pumped into the company to develop a highway-ready electric car that met European and U.S. safety standards. And both companies are pursuing a classic Silicon Valley strategy: attract high-profile early adopters with disruptive technology and then popularize it for the mass market.

Think and Tesla will roll out their cars this year from from opposite ends of the market – Think with a two-seater urban runabout called the City and Tesla with its two-seater $100,000 Roadster. The challenge will be ramping up to get costs down so both companies can expand production to more mainstream passenger vehicles. "The real game here is how are we positioned in 2009," says Yadigaroglu. "There will be two electric car companies in the world that will have significant numbers on the road with the knowledge and assets in order to be competitive with Toyota. Car company incumbents are maybe slow but they’re not stupid. I guarantee you in two years there will be interesting vehicles coming out of even the U.S. automobile industry."

Whether an electrified Toyota (TM) or General Motors (GM) will attempt to crush or co-exist with the upstarts in the great unknown. To help drive down the cost of electric cars and boast Think and Tesla, Capricorn plans to start a battery leasing company. Think, for instance, will sell the City but lease the battery, which accounts for half the cost of the car. When you buy an electric car you’re essentially paying upfront the fuel costs for the life of the vehicle. (It would be like buying a $20,000 Honda and then having to pay a $20,000 surcharge for the gasoline the car will consume over the next decade.) Capricorn’s lease might be sold as a "mobility" fee that could include insurance and other services. Utilities like San Francisco-based PG&E (PCG) are interested in buying thousands of used electric car batteries to store renewable energy and ease demand on the power grid. "

Yadigaroglu met Think CEO Jan-Olaf Willums last year when he invited Willums, an expert in corporate sustainability, to a meeting at Capricorn. As the two were driving back to San Francisco – in a Prius – Willums mentioned he and his investment group had just bought Think. "He’s a very interesting person and delightful to be with and very generous," says Yadigaroglu. "They’re not in it just for the money. They really aren’t. One thing that always keeps me optimistic about the world is that sometimes when you try not too hard to make every last dollar of profit is when you actually create companies, organizations or ideas that are truly worth an outstanding amount of real value."

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Green Wombat’s feature story on Norwegian electric car company Think appears in the August issue of Business 2.0 and is available online. A startup acquired by Ford (F) in 1999 and now owned by a group of Norwegian entrepreneurs backed by Silicon Valley and European investors, Think is revving up the production line for its zippy two-seater City coupe. (Alas, the convertible City on the Business 2.0 cover is a prototype.) The company, which has attracted the attention of everyone from Google (GOOG) and Tesla Motors to inventor Dean Kamen and PG&E (PCG), will begin selling cars in Europe in 2008 and hopes to bring the Think to selected U.S. markets in 2009.  Like Tesla, Think is attempting to upend a century-old automotive business model as it rolls out the first highway-ready production electric car since General Motors (GM) scrapped the EV1 in 2003. Over the next few days, Green Wombat will feature bonus material that didn’t make it into the Think story.

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Avis is greening its rental fleet, announcing today that it will add 500 Nissan Altima hybrids to the thousand Toyota (TM) Priuses it began offering earlier this summer. The move is probably less a sign of Avis’s (CAR) eco-consciousness than a strategy to spice up a dowdy rental fleet of Detroit cast-offs like the Chevry Impala. For ethanol fans, Avis offers flex-fuel cars. The hybrids are part of Avis’s new "Cool Cars" collection that includes some decidedly brown vehicles like General Motors’s (GM) Hummer and Dodge’s (DCX) Nitro monster SUV. Apparently traditional car rental agencies are feeling some pressure from Web-based competitors Zipcar and Flexcar, which maintain fleets of "cool cars" like the Prius, Honda (HMC) Civic hybrid and Mini Cooper but which, for the most part, eschew carbon-spewing big sedans and SUVs.

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photo: neuroticjose
The first major analysis of the potential impact of plug-in hybrid electric vehicles has found the widespread adoption of such cars and trucks would dramatically reduce greenhouse gas emissions in the United States and improve air quality. By 2050, plug-in hybrids, or PHEVS, could eliminate 450 million metric tons of CO2 annually – the equivalent of taking 82.5 million conventional cars, or a third of the nation’s current fleet – off the road. That would also cut oil consumption by nearly 4 million barrels a day. Assuming PHEVs hit the market by 2010, and depending on sales of the cars, the total reduction in greenhouse gases by 2050 would 3.4 to 10.3 billion metric tons, according to the study conducted by the non-profit Electric Power Research Institute and the Natural Resources Defense Council. The study was based on sophisticated computer modeling of the U.S. power grid and transportation system.

"What we’re talking about today is potentially a very, very large effect," said John Bryson, CEO of utility giant Edison International (EIX), during a press conference in Washington, D.C. this morning. Utilities like Edison, PG&E (PCG) and Austin
Energy have taken the lead in pushing automakers to get in gear on
plug-in hybrids.

Even if plug-in hybrids become the dominant form of transportation they would only spike electricity demand by five to eight percent, researchers said, because most car owners probably will charge their vehicles at night when power plants are idle or under-utilized. The study’s computer models considered various scenarios, from a high CO2-intensive grid to a greener one as well as plug-in hybrids with varying ranges and sales. But even if plug-in hybrids made up only 20 percent of the nation’s vehicle fleet in 2050 and the electric grid remained relatively dirty, greenhouse gas emissions would still decline by some 163 million metric tons annually.

The impact of plug-in hybrids on global warming will depend on the electric system, noted NRDC scientist Dan Lashof. "The key to utilizing plug-in hybrids is a cleaner power grid," he said. The greener the grid, the greater the greenhouse gas reductions as coal-fired power plants are displaced by renewable energy or begin to deploy technology to capture their CO2 emissions.

General Motors (GM) executive Tony Posawatz brought a plug-in Chevrolet Volt concept car to the press conference. The automaker is designing the Volt to run primarily on battery power and use other alternative fuels to extend its range. "We at General Motors are certainly very interested in this study," said Posawatz. "The potential for plug-ins, I think everyone recognizes, is tremendous."

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photo: green wombat
Think the electric car is dead? Think again. Norwegian electric car company Think has raised $60 million in its latest round from U.S. and European investors, including Silicon Valley’s DFJ Element and Capricorn Investment Group. Other U.S. investors include RockPort Capital Partners and Wintergreen Advisers. Think now has $85 million in the bank to begin production later this year of the City, a two-seater urban runabout that can go about 112 miles (180 kilometers) on a single charge with a top speed of 62 mph (100 kph) with its current battery. The zippy little EV should get even zippier: Think has cut a $43 million deal with Tesla Motors to buy a version of its lithium-ion battery packs that power the Silicon Valley electric car company’s forthcoming Roadster super car. Think will initially sell the City in Norway before expanding to other European markets in 2008. The company hopes to bring the car to the U.S. sometime in 2009.

The latest funding round marks the rapid resurrection of a company left for dead little more than a year ago. It began life as a startup before being acquired by Ford (F) in 1999 when automakers faced a California mandate to produce a zero-emission vehicles. After investing $150 million in Think, Ford sold the company to a Swiss electronics outfit in 2003 when it looked like Detroit would be able to gut the California regulation. (For its part, General Motors (GM) subsequently scrapped its EV1 electric car.) With Think in bankruptcy by 2006, the three founders of $8 billion Norwegian solar energy company REC bought Think last March, acquiring an electric car factory and Ford’s designs for a next-generation car. Stay tuned to Green Wombat and Business 2.0 for more on Think in the coming weeks.

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The announcement Monday from Ford and Southern California Edison that they will collaborate on commercializing plug-in hybrid cars represents a tentative step toward a replacing the petrol pump with the power outlet. At first glance, the agreement looks rather modest: Ford (F) will provide SoCal Edison (EIX) with a fleet of hybrid Ford Escape SUVs that will be converted to plug-in hybrid vehicles, or PHEVs, by developing a larger battery with a yet-unnamed partner. Ford and the utility will assess the the performance of PHEV Escapes and the potential for charging them with renewable energy like solar or wind. That means the utilility then could potentially tap the cars’ batteries to provide electricity to the grid during peak demand rather than rely so much on greenhouse-gas emitting power plants. Plug-in hybrids sport larger rechargeable batteries that allow the cars
to travel longer distances on electricity and thus use their gasoline engines less,
reducing CO2 emissions while significantly improving fuel efficiency.

But the real potential of the collaboration involves Ford and Southern California Edison’s interest in developing new markets for plug-in car batteries, which could reduce the cost of electric cars while providing new ways to store and use renewable energy. As Green Wombat earlier wrote, utility PG&E (PCG) is also exploring the potential to buy thousands of such batteries once they’ve outlived their usefulness for transportation but still retain capacity that could be used to store electricity produced by solar arrays and wind farms. As these programs progress, we could start to see the century-old axis between the auto and oil industries be supplemented by a new alliance between car makers and utilities.

"The utility industry and the auto industry have to really sit down and understand both sides of the technology equation," Ed Kjaer, an EV veteran who runs Southern California Edison’s electric transportation program, recently told Green Wombat. "The auto planners of the future need to understand the grid of the future. The designers of the grid of the future need to understand what is the technology capability of these cars connecting to the grid." Still, he cautions, there is much work to be done. One big issue: the impact on battery life if electric cars are used as mobile generators to provide electricity to the grid.

A note to readers: Green Wombat is on holiday in Australia so posting may be a bit sporadic over the next week or so.

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