The future is electric and in the coming months, we’ll see the first accessible electric vehicles, both midsized and compact.
Consensus is building in this direction within the automobile industry, both by businesses founded at the beginning of the 20th Century and after World War II and by recent startups that want to revolutionize the sector with more adeptly technological models.
When uncertainty can be positive
For Bill Ford, the situation of change and uncertainty in the industry right now, with General Motors at the verge of bankruptcy and Chrysler trying to avoid extinction with a last minute agreement with Sergio Marchionne’s restructured Fiat, “it’s a great time to be in the auto business“.
Chrysler has had to declare bankruptcy (Chapter 11, that allows for reorganization despite temporary insolvency), and only the success of the Fiat deal, that will allow Chyrsler to use Fiat technology in exchange for commercial advantages, could save it from disappearance.
Chrysler will be in the hands of a consortium made up of the Auto Workers Union (55%), Fiat (up to 35%), the U.S. Government (8%) and the government of Canada (2%). The Italian firm, that can provide technology to develop compact and efficient cars in the short-term, will direct management the company.
It will be interesting to see how the automobile industry’s popular executive, Sergio Marchionne, handles a company that popularized the all terrain vehicle (Jeep) and minivans (Chrysler Voyager).
For Ford, even though the U.S. auto industry is severely debilitated given the years of bad management and the recent drastic drop in sales, new technologies have renovated the interest of buyers for cars made in the biggest economy in the world, often dismissed when compared with European and Japanese models.
The descendant of Henry Ford, responsible for the decision to renovate factories in Rouge River (Michigan) following the Cradle to Cradle (C2C) principles conceived of by William McDonough (who argues that homes that should act like trees and factories should act like forests), believes that the environmentally responsible decisions taken by the firm have improved savings and motivated workers.
The message of the executives of this traditional industry, who have been unaffected by structural changes practically since they were formed by entrepreneurs like Henry Ford, ancestor of Bill Ford and creator of the assembly line: the moment is delicate and we have to make more efficient cars that don’t depend on petroleum.
In Europe, Japan and the rest of the world, the economic crisis has dramatically reduced auto sales and, even though the situation of the big firms isn’t as delicate as that of the U.S. automakers, they are also experiencing a moment of uncertainty.
Startups: the advantage of starting from 0
If the traditional giants, like the Big Three, as well as the main Japanese and European firms, recognize that the future of the car is electric, a new generation of firms don’t need to realize this costly transition from the internal combustion engine dependent on fossil fuels to vehicles driven by electric batteries.
Simply, these new startups begin from zero with electric technology. This is the case of California’s Tesla, that focused its first efforts toward developing an elite sportscar, the Tesla Roadster, and has recently presented an upper-middle range sedan with an industrial design and advantages that should worry- and motivate- the traditional firms.
Ideally, the Tesla Model S should motivate firms like General Motors so that its Chevrolet Volt would take precedence in future planning and would not only exist as a sustainable example for shareholders and mass media.
It’s important to remember that California hadn’t had any relationship with the auto industry until entrepreneurs like Sergey Brin and Larry Page, of Google, decided to invest in cars that don’t depend on gasoline, upon witnessing the inaction of the traditional firms.
Until now, one of the main criticisms of electric cars was their price and elite status as compared with the main commercial alternatives. This past November, when Obama’s electoral victory confirmed that the North American auto industry would receive 25 billion dollars in government aid, New York Times journalist Randall Stross was especially critical of the Tesla and the intention of the firm to opt for aid, like the rest of the automakers.
Stross titled his critique: Should taxpayers back a high-end electric carmaker? The journalist explained then that Tesla, directed by the young entrepreneur Elon Musk, opted for a low-interest loan of 400 million dollars, which the government later granted.
“The program is intended to encourage automakers to improve fuel efficiency, but should it be used for a purpose like this, as the 2008 Bailout of Very, Very High-Net-Worth Individuals Who Invested in Tesla Motors Act?” Stross was referring to the venture capitalists who had bet on the firm, among them the founders of Google.
Aid to lost causes vs subsidies for vibrant ideas
But in his article Stross avoided a large part of the details with which Tesla argued its candidacy for federal aid.
The firm headquartered in San Carlos, California, specified that the aid from the low-interest loans wouldn’t go toward it’s 109,000 dollar super sportscar the Tesla Roadster, but toward the development of the mid-range sedan the Tesla Model S, whose spectacular prototype has now been presented and tested by bloggers and other Silicon Valley personalities, as well as on the David Letterman show.
Lithium-ion batteries, capable of a range of up to 300 miles (482 km) on one charge, which guarantees its use for everyday activity and not just in urban environments, but for medium distance trips.
A rapid charge mode with a duration of 45 minutes (QuickCharge) to avoid a wait during extensive use of the vehicle.
Acceleration from 0 to 100 in less than 5.6 seconds and with benefits comparable to BMW’s 5 Series.
Seats up to 7 passengers.
Double the efficiency of hybrids like the Prius.
Elon Musk, Tesla’s CEO, assured in April of 2009 that the government loan was 99% confirmed and deserved by the firm, which wasn’t in a situation of technical bankruptcy due to poor management, as was the case with GM and Chrysler, the latter officially in Chapter 11.
What does it cost to innovate? Not as much as to maintain primitive inertias
Likewise, points out Slashdot, Tesla has developed two cars from nothing using experimental technologies from research and development, one of which is now on the market, in less than 2 years and for a total of 200 million dollars.
This frugality and capacity to maneuver to obtain results quickly contrasts with the one billion dollars that General Motors used to develop the electric EV 1. A car that was recalled by the firm shortly after after its launch under suspect circumstances, as explained in the documentary Who killed the electric car?
The controversy raised by Randall Stross in his article criticizing the Tesla loan was revived when Elon Musk declared recently that the New York Times writer is “a huge douchebag… and an idiot” (see video).
Musk has arguments to refute the information from the New York newspaper. As he explained in an interview with Sarah Lacy of Yahoo! Finance:
- “What is he doing picking on an electric car company? Why would he pick on the little guy who is trying to do good when you’ve got egregious waste of money in the tens of billions occurring in Detroit?”
- The 400 million loan is not related to the rescue plan- the TARP bailout fund– of 700 billion dollars to banks, but with aid to help motivate clean technology and to decrease U.S. dependence on foreign oil.
- “All existing investors in Tesla- me or common stock holders, the employees- will only get paid back if we repay that entire loan to the government.”
- Tesla is applying for 1.5% of the 25 billion dollars destined for automakers.
The democratization of the electric car
With countries like Germany, France and Italy offering aid for the purchase of more efficient vehicles in an effort to avoid the closing of factories, it seems less likely that the large European automakers will bet as decisively as Tesla on the development of electric models.
For Elon Musk, “just as no credible scientist questions whether the world is getting warmer, no credible automotive engineer questions whether electric vehicles (EVs) are more energy efficient than internal combustion engine vehicles or hybrids. The automotive industry, which for years experimented with hydrogen fuel cells, biofuels and other alternatives, has reached a clear consensus: the future is electric“.
As CEO, Musk wants to demonstrate his consistency and believes that the future is electric, like many experts in the sector and investors as powerful as the Chinese government and some of its businesses, the technology gurus of Silicon Valley, the aging industry in Detroit, several Japanese and European firms, the governments of Britain, Spain, Portugal, Israel and South Africa, among others.
Germany, the main European producer of automobiles and with a legendary prestige in the industry, is falling behind in the development of the electric car, a risk for the future of German leadership, argues Thomas Hillenbrand in Der Spiegel.
Since Toyota initiated the commercialization of its Prius hybrid a decade ago- while now preparing for the worldwide launch of the new model, that will include powerful competition like the Honda Insight or the Chevrolet Volt– the race to market more efficient vehicles has extended from the most compact models to the rest of the ranges, including the mid-sized sedan, off-road vehicles and sportscars.
The need for a universal plug
Democratizing electric vehicles (from automobiles to the more recent push for electric motorcycles) won’t be easy. There are several challenges that the industry must overcome, according to the experts:
- The production of batteries with an improved lifecycle, more range and reasonable weight continue to be expensive and are centered right now on lithium-ion.
- Electric batteries require a minimum period of recharging, between 3 and 8 hours to achieve more than 80% recharge in batteries designed to achieve a range equal to or superior to 60 miles. Firms like Tesla have focused their research on reducing the charging time and improving range. The batteries included with the Tesla Model S can be sufficiently recharged to be used in an urban environment for an entire day in just 45 minutes (this is with the aforementioned QuickCharge system).
- There is no global infrastructure that makes it easy to recharge an electric vehicle while traveling, a limitation that the Israeli-American entrepreneur Shai Agassi is trying to solve with his Project Better Place, an electric charging network with global ambitions. The governments of Spain, Portugal and the UK, among others, have initiated pilot projects to install charging stations for electric cars in various urban centers (in the US, Silicon Valley, Portland and Hawaii will all be testing the concept).
The most critical limitation preventing the electric car from mass commercialization is the total nonexistence of charging standards.
It’s as if combustion engine cars, whether gasoline, diesel oil or biodiesel, used totally different methods to fill up their tanks, which would prevent the existence of compatible gas stations worldwide, or even the use of a car in any location.
Given this inconsistency, it’s evident the importance of a recent agreement, according to which in the next couple of months a standard type of connection will be developed for charging electric vehicles. The recharging system SAE J1772, an EV plug based on an initial design by the supplier Yazaki, will be supported by Volkswagen, BMW, Tiat, Chrysler, Ford, Toyota, Honda, Nissan, Mitsubishi and Tesla. General Motors has also confirmed that the Chevrolet Volt will include the charger.
The electrical plug has been developed to take particular care with the transmission of electricity to avoid unnecessary use, as well as with the safety of those who use the device, two of the main demands of the firms that support its use. A system of universal recharge would facilitate, as well, the development of private initiatives related to the technical support or charging of electric cars, believe the manufacturers.
The EV plug SAE J1772, with three points of load, will allow any vehicle that incorporates it to be charged using currents of 110 and 220 volts, as well as 400 volts, which would reduce the recharge time from the hours necessary with a conventional electrical socket to just minutes, according to a spokesman from the German electric company RWE confirmed in April of 2009, during the announcement of the agreement between the firms supporting the new standard.
Several of the main European electric companies are supporting the project: Eon, Vattenfall, EDF, Npower, Enel and Endesa.
Despite the commercialization worldwide of several models of electric car, the nonexistence of a charging network limits the rapid introduction of the electric car, argues the New York Times.
Nevertheless, the autonomy of several models- the high-performance sportscar Tesla Roadster can cover 250 miles without recharging- guarantees relatively comfortable daily use, if the user has conventional current.
In places like the United States, where single family homes are in most common among large parts of the population, recharging an electric car can be as easy as cutting the lawn. American users of electric cars, including those of the EV1 that GM commercialized in the 90s, never have mentioned difficulties with charging as a limitation of their vehicles.
The electric car prepares for a serious roll out
European manufacturers don’t seem too preoccupied in adopting the electric car in the short-term. In April of 2009, taking advantage of the acceptance of the new universal plug, the main European manufacturers established 2020 as the goal for adopting this new generation of vehicles.
It’s interesting that the European manufacturers always keep a distance “of security” from disruptive technologies that could change the face of the industry and liberate the automobile from fossil fuels. It has happened with hydrogen since the 80s.
Here is a short list of the most promising electric models on the market or soon to be released:
- Aixam Mega City.
- G-Wiz L-Ion.
- Mitsubishi i-MiEV.
- TH!NK City.
- Tesla Roadster.
- Mini E.
- Smart Ed.
- Chevrolet Volt.
- Optimal Energy Joule electric car.
- Detroit electric.
- Tesla Model S.
This time, it will be more difficult to stop the evolution of the automobile since the most successful hybrid models to the plug-in hybrids, electrics with a small gas motor for startup and emergency situations (Chevrolet Volt) and, finally, strictly electric models like the Tesla Model S.