A Tale of Two EVs

Albert Einstein once said:  “Make everything as simple as possible, but no simpler.”  Pundits always pursue the former, but often fail to uphold the latter.

Such has been the case recently in regards to the prospects for electric vehicles.  Will electric vehicles be commercially successful or won’t they?  As often happens, there is superficial evidence supporting both sides of the argument.

On one hand, you have Tesla Motors (NASDAQ:  TSLA).  Tesla recently announced that it had achieved its first quarterly profit, on the back of better-than-forecasted sales of its new Model S sedan.

On the other hand, you have Fisker Automotive.  At the same time that Tesla was releasing good news, Fisker was making waves with its drastic downsizing, laying off 75% of its workforce.  Fisker’s main model, the Karma, is probably unfortunately named, as the company is certainly beset with misfortune these days.

Fisker’s bad news made more headlines than Tesla’s good news, in part because Fisker has received financial support from the U.S. government, and was thus being lambasted by some as the “next Solyndra”.  (In part, also, because bad news seems to get more attention than good news.)

So, why is Tesla doing fairly well while Fisker is definitely not?  This comparison between the two makes a strong case that Tesla simply has a better all-around product at a more attractive price than Fisker.

Moreover, it is said by many observers that Tesla has pursued a different fundamental approach to business than Fisker.  Fisker started by designing a wholly-new electric vehicle that looks cool — and the Karma is by all accounts beautiful — but only much later turned to considering how to actually manufacture it.  As a result, the costs and complexity of the car ballooned.  It’s a big challenge to source and manage thousands of parts from many vendors.  (It didn’t help Fisker when their main battery supplier, A123 Systems, had performance issues with their products and then went belly-up.)

In contrast, Tesla focused solely on developing an electric vehicle drivetrain, including the battery packs, and then outsourcing design as much as possible to other companies expert in the car business, and then focusing on making the integration/assembly of all the relevant systems as low-cost as possible.  (However, it’s an been documented to be an oversimplification to say, as some have, that Tesla’s initial model, the Roadster, is simply a Lotus Elise with an electric drivetrain.)

Time will tell if Tesla will be a long-term survivor.  No question:  succeeding as a start-up car company is very difficult.  However, Tesla may have turned the corner.

Clearly, though, there’s a long way to go and plenty of opportunities for critics to pile on.  In the wake of some bad press in February, when a New York Times reporter wrote a famously negative review of the Model S, Tesla still must fight the headwinds of skepticism about electric vehicles as a major automotive force.

Fisker’s woes don’t help.  For the too-populous segment of oversimplifiers out there, it’s easy to extrapolate Fisker’s plight to other electric vehicle companies, particularly if they have a reason to want to make the sector look bad.  To illustrate, Sarah Palin piled on by lumping Tesla with Fisker and calling them both as “losers”.

Tesla will do well to distance itself from Fisker as much and as quickly as possible, as they really do have a different tale to tell.

Why is it So Hard to Make Money in New Battery Technology?

Energy storage is still the rage in cleantech.  But after the collapse of A123 and Beacon, and the spectacular failure on the Fisker Karma in its Consumer Reports tests, fire  in Hawaii with Xtreme Power’s lead acid grid storage system and with NGK’s sodium sulphur system, and now battery problems grounding the Boeing Dreamliners, investors in batteries are again divided into the jaded camp, and the koolaid drinker camp.   Not a perjorative, just reality.  New batteries and energy storage is still one of the juiciest promised lands in energy.  And still undeniably hard.  Basically, investors are relearning lessons we learned a decade ago.

Batteries are just hard.  Investing in them is hard.  Commercialization of batteries is hard. So why is it so difficult to make money in new battery technology?

Above and beyond the numbers, there are a number of commonalities related to the commercialization and venture financing life cycle of battery technologies that seem to differ to some degree from other venture investments in IT or even other energy technologies.  Having looked at probably 100+ deals over the years, and on the back of an deep study we did a couple of years ago on benchmarking valuations in energy storage, here’s our take on the why.

Timing – Battery technology commercializations have historically tended to be one of the slower commercialization cycles from lab stage to market.  Startups and investors in batteries have a long history of underestimating both the development cycle, capital required, and the commercialization cycle, as well as underestimating the competitiveness of the market.

Special chemistry risk – There is significant risk in launching a technology in newer battery chemistry.  There have been only a limited number of new chemistries succeed, and when they do, as in the case of NiMH and Energy Conversion Devices, they are typically either co-opted by larger competitors obviating a first mover advantage (that advantage is typically much weaker in this field than others) or requiring expensive patent suits.  Also as in the case of NiMH, there is no guarantee the chemistry will have legs (just when it is hitting its stride, NiMH is already becoming eclipsed by Li-On.  This risk has proven to be especially high for new chemistries (like Zn type) that are not as widely researched, as the supply chain development does not keep pace.  In addition, the battery field is highly crowded, and research is old enough that and despite new chemistry in most cases truly defensible patent positions are extremely hard to come by, or provide only discrete advantages (ability to supply a range of quality product cheaply in high volumes (or with value add to the product) seems to be the primary competitive advantage).  Few battery technologies of any chemistry end up their commercialization cycle with anywhere near as sustained an advantage as their inventors expected.

High capital costs – In any case, almost all battery startups will require extremely large amounts of capital (on the order of US$50 to 100 mm+) to achieve commercialization (much higher for real manufacturing scale), and the end product margins tend not to be particularly high.  Even with stage gate, a very large portion of this investment (US$10-50 mm+), is generally required to be spent while the risk of technical and economic failure is still high.  In addition, during the manufacturing scale up phase post R&D, capital investment required per $1 of revenue growth tends to be linear, making these technologies capital intensive to grow.

Degradation of initial technical advantage – In many technology areas one can expect the performance of the final manufactured product to improve over the performance in initial lab results, In part because of the low cost target, high reliability, high volume requirements of this product type however, promising battery technologies, are often forced to make compromises in the scale up, manufacturing, and commercialization stages that mean the performance of actual product might be expected to fall from levels or rates seen in lab scale experiments (though cost may go the other way).    At the same time, battery performance of standard technologies, while mature, is a moving target, and during the time frame for commercialization, will often improve enough to obviate the need for the remaining technical advantages.

Size matters – Most battery products (whether batteries or components like anode or cathode materials or electrolyte), are sold to large customers with very large volume requirements, and highly competitive quality and performance requirements.  As a result, breaking into new markets generally is extremely hard to do in niche markets, and means a battery startup must prove itself and its technology farther and for a longer period of time than other technology areas (see capital costs, timing and down rounds).  Many battery components technology developers as a result will be relegated for early adopters to emerging customers with high risks in their own commercialization path.

Lack of superior economics from licensing – As a result of these size, capital cost, timing, and commercialization risk issues most battery technologies will command much lower and more short-lived economics than anticipated from licensing (or require expensive patent lawsuits to achieve), and will require almost as late a stage of development (ie manufacturing operating at scale with proof of volume customers) and commensurate capital requirements, as taking the product to market directly.

Propensity for down rounds – In addition, battery technology companies tend to have down rounds in much larger numbers in the post A rounds (Series B through D+) than other venture investment areas, as these challenges catch-up to investors and management teams who overestimated the scope of work, capital and timing required in the seed, A and B rounds.  In particular, battery investors have tended to invest in seed, A and B stage battery technologies (pre-scaled up manufacturing process or even lab and prototype scale) with expectations of typical venture style timing and economics.  Quite often instead, it is the B, C, or D investor group that post cram-down rounds achieve the Series A economics (even when the technology IS successful), and the seed, A and B investors suffer losses or subpar IRRs.

Stunning Cleantech 2012

It’s been a busy, ummm interesting year.  We’ve tracked profits to founders and investors of $14 Billion in major global IPOs on US  exchanges and $9 Billion in major global M&A exits from venture backed cleantech companies in the last 7-10 years.  Money is being made.  A lot of money.  But wow, not where you’d imagine it.

5 Stunners:

  • Recurrent Energy, bought by Sharp Solar for $305 mm, now on the block by Sharp Solar for $321 mm.  Can we say, what we have here gentlemen, is a failure to integrate?  This was one of the best exits in the sector.
  • Solyndra Sues Chinese solar companies for anti-trust, blaming in part their subsidized loans????????  Did the lawyers miss the whole Solyndra DOE Loan Guarantee part?  It kind of made the papers.
  • A123, announced bought / bailed out by Chinese manufacturer a month ago, now going chapter bankruptcy and debtor in possession from virtually the only US lithium ion battery competitor Johnson Controls?
  • MiaSole, one of the original thin film companies, 9 figure valuation and a $55 mm raise not too long ago (measure in months), cumulative c $400 million in the deal, sold for $30 mm to Chinese Hanergy just a few months later.  (Not that this wasn’t called over and over again by industry analysts.)
  • Solar City files for IPO, finally!


My call for the 5 highest risk mega stunners yet to come:

  • Better Place – Ummmmmmmmmm.  Sorry it makes me cringe to even discuss.  Just think through a breakeven analysis on this one.
  • Solar City – a terrifically neat company, and one that has never had a challenge driving revenues, margin, on the other hand . . .
  • BrightSource – see our earlier blog
  • Kior – again, see our prior comments.  Refining is hard.
  •  Tesla – Currently carrying the day in cleantech exit returns, I’m just really really really struggling to see the combination or sales growth, ontime deliveries, and margins here needed to justify valuation.

I’m not denigrating the investors or teams who made these bets.  Our thesis has been in cleantech, the business is there, but risk is getting mispriced on a grand scale, and the ante up to play the game is huge.


IPOs and Bankruptcies and Cleantech “Hot or Not”

Last night while watching Office reruns, I realized I’d been remiss, and a lot’s had been happening in the public equities end of the cleantech sector.  Not to mention yesterday’s billion dollar BK broiler announcement by the one-time Next Greatest Thing, Solyndra.

So, with my usual aplomb, I thought I’d simply peanut gallery what’s “Hot or Not” in cleantech.


Bled Out on the Operating Table

Solyndra – BK (and not the burger kind). Well, we wrote about it a lot, and nobody believes us.  But bad product is bad product, and high cost is high cost, regardless of how much money you throw at it.  So who’s going to calculate the impact on the DOE loan guarantee program’s projected loan losses? Not.

Evergreen Solar (NASDAQ:ESLR)  – :(  And it was such cool technology, too.  I’m very sorry to see this one go.  At one point some years back it was the savior deal of the sector.  But we are in a race to cost down or die. Not.


Filed, Not Yet Hell for Leather

Enphase – I’m very very interested in seeing these guys make it.   Lots of growth.  Very thin margins so far.  Product costs looks miserably high.  Need to cost down like a banshee running from the Bill Murray.  But you’ve got to love the category killer potential and how fast they’ve executed.  First microinverter guy to manufacturing maturity eats the others like oatmeal (sloppy but eaten nonetheless). Hot.

Silver Spring – Hmmmmmmmmh.  Home run potential, but what’s the term?  Very high beta?  These contracts are massive, far strung, very very tight margin.  They’ve shown they can get the growth.  But with long lead time sticky contracts, it’s about managing costs during slippage and change-orders well, and it’s a very competitive business.  One blown contract gives back all the profits on the last 8.  But, give kudos for getting this far and making it to be a real player.  Now we’ll see if you can execute. Hot.

Luca Technologies – Hello?  Are you serious?  I read this S-1 cover to cover.  I had my technologist read it and go find their patents.  We love this area.  The concept of microbes for in situ is old as can be, but very very interesting..  The challenge is always cost and performance (not really a new nutrient mix?).  How do you get the bugs, nutrients, whatever you’re doing, down the hole and into the formation far enough and cheap and effectively enough to make a difference.  But in the entire S-1 and website, there is not a single technology description, fact, proof point or ANYTHING that suggests they’ve actually cracked the real nut.  The few numbers they do mention are not even to the ho-hum level.  Did a real investment banker really sign up to this?  Who wrote this?  Their PR guy with a liberal arts studies degree?  Really?  This smacks of a “trust us I’m Jesus and daddy needs an exit” deal.  In reality, probably interesting, but still very very very very very very very early science project.   Not.


We have a whole collection of biofuels stocks to discuss now.

Solazyme (NASDAQ:SZYM) – half of its 52 week, less than a buck over its low. Not.

Kior (NASDAQ:KIOR) – Somebody correct me, but did the filings really indicate Khosla put money IN to this IPO?  And it got off at low end of the range even after that? From one of their filings: “In conjunction with the Issuer’s IPO, an entity affiliated with the Reporting Persons purchased 1,250,000 shares of Class A common stock, resulting in an increase in beneficial ownership by the Reporting Persons by that amount. The
purchase was made at the initial public offering price of $15.00 per share, for an aggregate purchase price of $18,750,000. The source of funds used to purchase the shares of Class A common stock was Khosla’s personal assets.” At least it’s money where it’s mouth is.  Not.

Amyris (NASDAQ:AMRS) – 58% of its 52 week high, 20% over it’s low. Not.

Gevo (NASDAQ:GEVO) – 40% of its 52 week high, c. 20% off it’s low. Not.

Codexis (NASDAQ:CDXS) – 55% of its 52 week high, c. 20% off it’s lows. Not.

I’d comment on the fundamentals of each one, but I don’t want you to think I’m depressed.  Oh, by the way.  Did I ever tell you the story about the cleantech sector’s magically changing cellulosic biofuels business plans to “cellulosic bio-anything-but-fuels” plans as people finally woke up and realized how tough using lousy feedstocks and high cost processes in a commodities market actually is.  Of course, careful you don’t change from targeting fuels to making feedstock for dirt cheap who would want to be in that business commodity chemicals or specialty chemicals with a global aggregate gross margin market less than your cash on balance sheet.

And a Few Tidbits

Advanced Energy (NASDAQ: AEIS) – I still really like this company.  Somebody’s going to own inverters.  And the numbers look very interesting.  Very. Need to dig deeper. Hot.

American Superconductor (NASDAQ:AMSC) – Ummm.  Do you believe their wind business ever recovers?  One customer.  Buying a competitor with one customer.  Both in China.  Customer doesn’t like single supplier risk where the supplier makes high margins?  What did you think was going to happen?  Ugly ugly story.  Very real possibility that they trade on a log curve to straight zero.  Some chance of sunshine, but I’d cancel the picnic. Not.

A123 (NASDAQ:AONE) – I really really really want this to work.  But what’s the path to profits?  Not feeling it. Not.

Tesla (NASDAQ:TSLA) –  “Don’t worry, the NEXT car will fix my company’s fundamental problems” – quote attributed to the Tesla CEO who replaces the next Tesla CEO. Not.

Active Power (NASDAQ: ACPW) – Hey, did anyone notice these guys are growing revenues AND margins?  A long haul, but keep it up!  Need careful consideration before I’d jump into flywheels, but someone deserves a ton of credit as coach of the year.  Hot.

Satcon (NASDAQ:SATC) – Hammered, but still a market leader.  Got to think about this one – it’s historically traded for more than it’s fundamentals justified, but with PV Powered and Xantrex snapped up, hard to imagine they stay independent for long. Hot.

SunPower (NASDAQ:SPWR)  – Wow.  Total. No guts no glory.  Highest cost producer, shall we call it the “performance queen”.  I do like this bet by Total, but it takes guts.  But when a market leader’s stock’s been hammered that far down somebody’s got to move and Total did . . .  Whether an individual investor can play is another story. Hot.

Ascent Solar (NASDAQ:ASTI) – Holy star solar batman!  These guys can sell ice to eskimos are have always been great R&D guys.  Still maybe the highest cost CIGS process known to astronauts.  I like these guys, but I’m not sure more cash fixes anything. Not.

Solon – What does “New US operational strategy” mean?  It means solar is a game of scale and execution.  Not.


Young Cleantech IPOs = Venture Paradise Found?

It struck me the other day that I may have been looking at the recent spate of cleantech IPOs backwards.  Perhaps instead of lamenting the dearth of profitable healthy companies going public on major exchanges  in our sector, what we should be considering is whether early and still risky IPOs mean cleantech venture capitalists are finally finding a capital path and exit model that works, akin to the IT and biotech venture models that delivered such terrific returns up until the internet crash.  And the question then is, can these IPOs continue, and perform and validate the broad strategy that our tech venture capital sector has been following in cleantech?

Our American institutional venture capital sector largely missed the cleantech AIM boom in Europe.  Missed the Carbon trading boom in Europe and Asia.  Missed the Chinese solar manufacturing boom.  And missed the corn ethanol boom in the US, the wind project developer boom in the US and Europe, and the sugar cane ethanol boom in Brazil.  Oh, and missed the shale gas boom in the US.  Each of which were tens to hundred billion + dollar booms. All the money in those sectors was made largely by investors and players outside the traditional venture arena – though some exceptions in each prove the rule.

Instead the American venture capital and tech sector eschewed what proved to be a huge number of highly profitable investment areas in cleantech as “not venturable bets”, and has poured c. $15 -$20 billion + into thin film /advanced solar, cellulosic biofuels, solar finance, smart grid, automotive/energy storage technology.  One cynical argument is that in a hubristic attempt to avoid the “low tech”, policy driven and capital intensive sectors in cleantech, our venture sector overreached into technology risk, and then once they found the policy risk and capital intensity waiting for them on the other side busily moving the bar, they started clamoring for M&A, IPOs, and government funding and policies to bail them out. In any case, the cleantech deals are hurting for a lot more cash and likely need early IPOs to make the sector viable long term, but the first generation of cleantech VCs have learned lots of lessons.

BUT, are we now on the cusp of a model capable of anchoring returns for these last few years of the 2nd and 3rd waves of cleantech venture capital investment anyway –  a model perhaps described as 1) raise larger funds, 2) take more concentration early in technology risk curves, 3) stack on capital fast 4) take heavy leverage with government dollars, 5) IPO early leaving money on the table in terms of tech boom style multiples, but leaving a lot of technology and scale up risk for the public markets.  Time will tell.

Critical to this model would be 1) the aftermarket performance of the the first wave of these IPOs, and 2) willingness of policy makers to continue to fund.  So a quick look at the Big 4 of US venture backed cleantech IPOs to date hopefully tells us something.  Excluding for this analysis earlier US cleantech powerhouse deals SunPower and First Solar, which came up a different financing paths and well before the policy and FIT booms that drove most of the first generation of solar profits.

A123 – Went IPO on the back of having neat batteries for EVs.  Still losing money.

Amyris –  Not sure what it went IPO on.  Still losing money.

Codexis – Went IPO on the back of a strong R&D partnership and contract with Shell.  Still losing money.

Tesla – Went IPO without the product it needs to breakeven built on the back of DOE money and car sex appeal. Still losing money.






Aftermarket performance, key to the actual returns of the LPs who usually aren’t out at the IPO and even more critical to willingness of the public markets to underwrite more deals, hasn’t been awful.  Three of the four doubled from the IPO price before peaking and giving back one to three quarters of value from their peak.  Two of them are still above listing, mean 90 day post IPO performance is a positive 27%, only one struggled to see a strong pop, and the mean performance to date since IPO price is+9%.

Of course, the largest, most mature, and earliest bellwhether, A123, has been on a long slow slide.  Meaning overall dollar weighted average performance would be a -6%.  And 90 day performance is only 3% with performance to date a -8% if calculated on the 1st day close not the IPO price, meaning it may be more underwriters managing issuance price than true aftermarket performance.  If benchmarked against the S&P 500, foreign cleantech IPOs and other non cleantech US IPOs it might not look so good.  But time will tell.

Will these first Big 4 hold out for solid returns, or slide like A123?  What portion of their businesses will get built and eventually become profitable?  Will they be able to raise more capital?  Will the next crop of rumored and planned cleantech venture backed IPO candidates from BrightSource to KiOR to Silver Spring to Opower to Bloom Energy make it through?  How much cash will they need before they do/what kinds of aggregate cash on cash returns multiples will we see, and will they too hold up when the public markets are asked to support billions of capital into dozens of these deals needed to anchor the cleantech venture sector?

More Greenbacks for Greentech

By John Addison – original post at Clean Fleet Report

Investments Grow for Electric Cars, Energy Storage, Smart Grid

More venture capital will be invested in innovative greentech firms and more IPOs will happen in 2010 predict some of the world’s smartest venture capitalists and investment bankers at the Venture Summit Silicon Valley. In most circles, greentech is called cleantech, but with the 2009 IPO of A123 leading to a billion dollar valuation, venture capitalists are seeing green.

Cleantech encompasses the growing array of technology, services, and corporations that provide for a future with lower greenhouse gas emissions: energy efficiency, renewable energy, electric cars, smart grids, pure water, and even next generation building materials.

Continued investment is needed to bring us the next generation of batteries, solid state lighting, smart grid components, electric cars, lighter and stronger materials, and solar power so efficient that it makes no sense to build another coal power plant. Greentech is now 25 percent of venture capital investment reported Eric Wesoff, Senior Analyst, Greentech Media. Greentech has become the third major area of investing for the venture capital community that has focused on information technology and life sciences.

2010 IPO and M&A Growth

Forty IPOs of venture-backed firms were predicted for 2010, up from less than ten in 2009. More importantly, 600 venture-backed firms are likely to be purchased in 2010 through mergers and acquisitions (M&A) by large companies eager to expand their total offerings. The AlwaysOn Venture Summit included top private equity executives from Google, Qualcomm, Motorola, and dozens of companies with a history of acquisition. Hallways and lunch tables overflowed with investors, entrepreneurs, and corporate giants pitching, listening, and networking.

The severity of the recent recession has left brilliant ideas unfunded, lithium battery plants delayed, and gigawatts of renewable energy plants without project financing. Innovators at early stages depend of private equity. Venture capitalist raise billions in funds from large university endowments and pension plans who in turn suffered lost billions in the stock market and real estate downturn. Successful 2010 IPOs plus M&A will generate cash for VCs and bring new endowment and pension funds.

Lithium battery maker A123 Systems (AONE) is a poster-child of cleantech IPO success. This year it raised $391 million with an IPO priced higher than expected. A123 has never made money, only had $68 million of revenue last year, and will have less than $90 million revenue this year. Its stock still trades above the offering price with over a billion in market capitalization, even though Chrysler cancelled electric vehicle plans that include A123 batteries. Investors continue to be optimistic about A123 in markets like power tools, grid storage, and automotive.

A123 CFO Mike Rubin explained that the IPO provided important credibility with the battery maker’s major customers. It also gives A123 a strong balance sheet and the ability to fund more R&D and weather difficulties.

Yes, government funding and loans are also critical to American leadership in cleantech. Headquartered in Massachusetts and founded in 2001, A123 was funded initially with a $100,000 grant from the U.S. Department of Energy.

In 2010, it may be IPO offerings like Tesla or Silver Springs Networks that get cleantech investors excited. Stay tuned.

John Addison publishes the Clean Fleet Report and speaks at conferences. He is the author of the new book – Save Gas, Save the Planet – now selling at Amazon and other booksellers.

Ford Electric Car for 2011

By John Addison (originally published in Clean Fleet Report 10/26/09).

My test drive of the new Ford electric car for 2011 demonstrated that Ford (NYSE:F) is building an electric car that millions will want. The Ford Focus EV prototype provided a quiet and smooth drive for a prototype. One Ford engineer indicated that he was going beyond a 60-mile daily range in Michigan without nearing battery depletion.

The Focus EV looks and drives like the popular gasoline powered Ford Focus four-door sedan. It comfortably seated four adults, but good luck if you want three people in the back – it will help if the one in the middle is a child. This BEV will appeal to mainstream drivers that want a sedan that looks and drives like a regular car. Instead of ever visiting a gas station, they will charge in their home garage and/or at work.

This prototype was a converted Focus. It did not include the SmartGauge™ with EcoGuide display available in Ford Fusion and Mercury Milan Hybrids, nor did it include a navigation system with smart charge display user interface expected in the 2011 BEV. The final version is expected to have friendly yet sophisticated display options and some of Ford’s newly introduced telematics.

It drives with quicker acceleration than its gasoline cousin. The prototype, like the final version, had a Magna (MGA) electric drive system. Unlike the final version of the Focus EV, the prototype had a Magna Steyr battery pack taking part of the trunk space. One Ford rep believed that the battery cells were EnerDel (HEV) lithium titanate. Ford will make its own packs for the 2011 commercial version and would not state who will make the cells. Volvo is part of Ford Motor Company. The concept Volvo C30 Battery Electric Vehicle will use EnerDel batteries. Volvo will use A123 (AONE) cells in heavy vehicles integrating a Magna Steyr battery system. Ford has expressed a past preference for the cells to be made in the United States, which would include a number of candidates such as EnerDel and A123.

During my recent tour of a Johnson-Controls (JCI) Saft (SGPEF) joint venture design and manufacturing plant, I was shown a lithium-ion 13 kWh battery with cylindrical cells for the 2012 Ford PHEV. Johnson-Controls gave no indication that it was in the running for the 2011 Ford Focus EV.

No pricing has been announced for the Ford Focus EV. If it comes in at under $40,000 with a $7,500 tax credit, I would be interested in buying one. However, if Nissan or BYD beats Ford to the U.S. BEV market with better delivery and better price or lease rates, then they are likely to get my business over Ford.

In its drive for market share, volume, and improved profit margins, 2012 will be a big year for Ford when the company will have a common C-segment platform for a number of vehicles including the Focus, Focus C-Max, and Escape. As future gasoline price volatility causes shifts in consumer demand, Ford can quickly change its mix of what is manufactured on a common platform. For example if gasoline prices jump, Ford could increase production of vehicles with fuel efficient eco-boost and make less with conventional. Ford could also quickly increase production of electric cars.

The Focus EV will be made in America – Warren, Michigan. Ford is investing $550 million to transform its Michigan Assembly Plant into a lean, green and flexible manufacturing complex that will build Ford’s next-generation Focus global small car along with a new battery-electric version of the Focus for the North American market.

Clean Fleet Report predicts that in 2012, Ford will offer a new global Focus available with several drive systems: conventional engine, 2 liter eco-boost, electric vehicle, both hybrid and plug-in hybrid. By 2012, Ford may be using lithium-ion even for its hybrids. The vehicle will have better range because it will be lighter as Ford executes a strategy of removing 250 to 750 pounds per vehicle. Ford will be well on the way to a 35 percent fuel economy improvement over its 2005 fleet.

The new 2.0-liter, 4-cylinder EcoBoost engine will go on sale in the 2010 calendar year.
It is the first EcoBoost engine to include Twin-Independent Variable Cam Timing
(Ti-VCT) and will deliver a 10 to 20 percent fuel economy improvement versus larger-displacement V-6 engines. By 2012, the company plans to produce 750,000 EcoBoost units annually in the U.S. and 1.3 million globally. By 2013, Ford will offer EcoBoost engines in 90 percent of its product lineup. 2010 Focus Homepage

I get questions (or rather lectures that start with a questions), “Why would someone pay more for an electric vehicle, when you can’t even cost justify a hybrid?” First, some people make money with hybrids over comparable non-hybrids. When I bought my 2002 Prius for $20,000, I paid about $4,000 more than for a non-hybrid with similar features. Over seven years, the car saved my wife and me over $5,000 in gasoline, and then I sold it about $4,000 more than a similar non-hybrid.

While I was test driving the Focus EV in San Francisco, I saw many taxis that were Ford Escape Hybrids, Toyota Priuses, Toyota Camry Hybrids, and even a Ford Fusion Hybrid Taxi. These taxis put on 90,000 miles per year. Hybrids make the owners money by saving a fortune in fuel. New York has over 2,000 Ford hybrids in its taxi fleet.

The fact is that hybrids make money for some owners and not for others. It depends on how the cars are used and how often. In the past 12 months of severe economic downturn, Ford has increased its hybrid sales 73 percent.

Early adopters will not shell out $40,000 for an EV to save money over a sedan for less than half that cost. For mass market success, auto makers and battery makers must drive cost down the learning curve over a few years. Competition is growing for battery electric, hybrid, and plug-in hybrid car leadership. By 2020, these vehicles could represent up to 25 percent of Ford’s production – that’s 2 million cars annually with electric drive systems and advanced battery packs.

<!– By John Addison, Oct 26th, 2009. Learn about the future of cars and transportation in John’s new book – Save Gas, Save the Planet.–> By John Addison. John Addison publishes the Clean Fleet Report and speaks at conferences. He is the author of the new book – Save Gas, Save the Planet – now selling at Amazon and other booksellers. (disclosure: author owns stock in Ener1, parent company of EnerDel)

Chrysler to Make Plug-in SUV, Minivan and New EVs

By John Addison (9/24/08). Chrysler builds on the success of its 38,000 GEM EVs that are currently on the road in the U.S. with new battery-electric vehicle and plug-in hybrid announcements. Any time I visit university towns, corporate and government fleets, I see these GEM electric vehicles being used for practical transportation and hauling. Often, they are powered by solar roofs and carports.

The new GEM Peapod will be available for purchase in 2009, with more models to come. Eco-friendliness gets a fresh face with the GEM Peapod. The GEM Peapod brings beautiful aerodynamic style to a gas-free, emission-free vehicle. This light electric vehicle has a maximum speed of 25 miles per hour and a range of 30 miles before requiring at least 6 hours for an adequate recharge of its lead-acid batteries. Peapod Specs

Three freeway-speed vehicle electric vehicle announcements were also made this September 24 by Chrysler’s ENVI – Dodge EV, Jeep EV and Chrysler EV. The development of Chrysler’s Electric Vehicles and Range-extended Electric Vehicles is led by ENVI – representing the first four letters of “environmental” – the Company’s in-house organization that was formed to focus on electric-drive production vehicles and related advanced technologies. Discussions are taking place with several lithium battery suppliers including A123.

The Jeep EV is a plug-in hybrid Jeep Wrangler SUV with an estimated 40 mile range in electric mode, before a small gasoline engine is engaged. The vehicle may give record fuel efficiency for customers that want SUVs, from families hauling kids and trailers to fleets. The Jeep EV will compete with the plug-in hybrid offering from Saturn VEU.

The Jeep EV uses an electric motor, an advanced lithium-ion battery system, and a small gasoline engine with an integrated electric generator to produce additional energy to power the electric-drive system when needed. The 200 kW (268 horsepower) electric motor generates 400 N•m (295 lb.-ft.) of torque. With approximately eight gallons of gasoline, the Jeep EV has a range of 400 miles, including 40 miles of zero fuel-consumption, zero-emissions, all-electric operation.

Minivan drivers have been longing for better mileage as the shuttle vans full of people and stuff. The new Chrysler Town and Country will use the same plug-in hybrid drive system as the Jeep EV.

Chrysler’s announcement should increase pressure on Toyota to announce a hybrid mini-van and for Honda to announce a more fuel efficient van using diesel.

For sports car enthusiasts, Tesla has new competition in the form of the Dodge EV, a hot two-seater with a body designed by Lotus. This battery-electric will have a range of 150 to 200 miles between charges – more miles, when driven with a feather touch; much less, with a lead-foot.

The electric-drive system consists of three primary components: a 200 kW (268 horsepower) electric motor, an advanced lithium-ion battery and an integrated power controller. The 200 kW electric-drive motor generates 650 N•m (480 lb.-ft.) of torque. The instant high torque of the electric-drive motor delivers outstanding performance, accelerating the Dodge EV to 60 mph in less than five seconds. The Dodge EV has a top speed of more than 120 mph.

Chrysler plans to have 100 of the new ENVI vehicles in fleets in 2009 and to start taking production consumer orders in 2010.

Three weeks ago, I had the chance to talk with Chrysler President Jim Press, an executive who is famous for staying in close touch with customer and dealer interests and issues. He knows how to make hybrid vehicles a success. He was President and COO of Toyota USA when Toyota made the Prius a best seller and when Toyota grew to global market leadership. After 37 years at Toyota, Mr. Press could have coasted into retirement. Instead he joined Chrysler as President and Vice Chairman, where he will be integral to building a new company.

In his travels, he notes a strong interest in EVs among younger people – he refers to this market segment as Millennials. Should Chrysler win with the new generation, they could be customers for decades. Look for Chrysler to extend the development of advanced, production-intent electric vehicles, and that it will apply electric-drive technology to its front-wheel-drive, rear-wheel-drive and body-on-frame four-wheel-drive platforms in the next several years.

Jim Press, when talking recently with the Western Automotive Journalist, stated, “We need a new business model based on one word – Reality.” The new management team inherited a 4 million car per year overhead with sales falling to one million per year in the new era of high gasoline prices. Mr. Press is cutting unprofitable sales such as rental car fleets. He is focusing on a future of vehicles that give customers a visceral emotional connection with their car, while using electric drive systems to address fuel economy and environmental concerns.

Jim Press continues to move aggressively. After talking into the evening with California journalists, he took off for a red-eye flight back to Detroit. He wants to see Chrysler moving at the speed of their new vehicles.

John Addison publishes the Clean Fleet Report