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My electric summer, when Washington helped resurrect the EV

If this summer was the coming out party for the electric car, Washington was the host. They would seem unlikely bedfellows, but after visits with a couple of the hottest EV makers in the country, I’m convinced that electric vehicle companies have learned how to play politics.

A month after Tesla announced that they’d turned profitable for the first time in their short history, I arrived at their flagship showroom in Menlo Park, California late for a press conference. As I entered the lavish showroom (just minutes from Stanford University and Palo Alto), the automaker’s communications director Rachel Konrad was explaining to reporters how they happened to land such a prime location on the city’s auto row.

“You might have noticed if you came in this way [she points North down El Camino Real], there are four dealerships there that are all empty, totally gone. There’s a huge problem in the industry with overcapacity right now. I mean, GM alone has to close somewhere between 1200 and 2000 dealerships this year. It’s a large issue that affects not only Detroit and the upper Midwest, but places like Menlo Park even with the closure of dealerships. Right now we’re the only game in town that’s growing.”

She neglected to point out that Tesla was now worth more than GM, but she did explain that the company wasn’t just growing in the Bay Area- their headquarters is in nearby San Carlos and they’re opening a power train facility in Palo Alto-, but they’ve opened showrooms in Los Angeles, New York, Seattle, London and Munich, plus a gallery in Boulder, Colorado.

From the Bush administration to EV superstar

They’ve got an impressive product- this week Roadster owners broke the electric distance record by driving 313 miles on a single charge- but the company hasn’t been valued at anywhere from $500 million (given Daimler’s investment of $50 million for a 10% stake) to one billion dollars on just the power of product alone, they run a well-connected enterprise.

The Tesla machine includes a man who knows Washington. Before meeting the automaker’s VP of business development Diarmuid O’Connell this September I wasn’t aware they’d hired such a Beltway insider. Konrad clued me in with her introduction on the floor of the Menlo Park maintenance bay. “Among other reasons why he’s famous is because he was behind Tesla’s Department of Energy half a billion dollar low interest loan.”

She was referring to the 465 million dollars the federal government had guaranteed the company back in June, so of course the first thing I mentioned once I’d wired O’Donnell for his interview was his role in securing that funding. “I spent two years working- a huge opportunity- I worked for Secretary Powell in the State Department,” he explained, “but I’m not a professional in the government and it was a sort of brief period of time. But for all of that I was the one who had been to Washington most recently.”

An administration that fought the electric car

I was surprised to hear of his political bent and that he’d worked in the Bush administration, especially since it was that same group who’d been accused of sabotaging the electric car by those behind the film Who Killed The Electric Car. “The Bush administration’s antagonism to the electric vehicle is perhaps unsurprising”, explains the film’s website, “given its links to the oil and automotive industries”.

For O’Connell, it was actually his time with the Bush administration- where he served supporting military operations in Iraq and Afghanistan- that grew his respect for the electric car. “I developed a very poignant realization,” explained O’Connell to Vanity Fair in 2007, “that … energy security is all about oil, and if it’s all about oil, you better be doing something about transportation.”

O’Connell may have downplayed his Washington professionalism to me, but in an interview with the San Jose Mercury News in 2007, he explained how his insider status was helping the fledgling company. “The fact I can have these conversations with, as they call them in Washington, with principals, with senators or senior policy-makers in the White House and DOE, these are things not usual for your average start-up,” he said.

The Mercury News explained that he “shies from the word lobbying”, but Vanity Fair used the term to describe O’Connell’s sales pitch to secure a job with the automaker, explaining that he told former CEO Martin Eberhard about “how he could use his government experience to help Tesla lobby for state and federal subsidies and tax breaks”.

His experience has paid off well. That government loan has ensured that the company can move forward- during a time of tight credit markets- with plans to build their electric sedan the Model S (expected to hit the market in 2011 for about $50,000).

Governmental favoritism of gas companies is “obnoxious”

During my second visit with an EV manufacturer this summer, that dirty word “lobbying” raised its head again. This time, instead of attending a press conference run by a communications director in the heart of Silicon Valley, I had dragged a CEO/inventor into work on a Sunday in the laid-back town of Scotts Valley (Santa Cruz county), California.

Zero Motorcycles CEO Neal Saiki started his company in his garage so I shouldn’t have been surprised that he started off the interview sounding more like an activist than an executive. “If you look at governmental policy as far as how favorable we are toward gas companies it’s obnoxious actually. Subsidizing pollution cleanups from the gas industry and the pollution they create. We’re paying public tax dollars to subsidize cleanup for that mess when really the gas companies should be taking it out of their profits.”

Saiki has worked for the government, as a project manager with NASA, but that didn’t mute his attack on them. “If you look at it from the whole system- how much government subsidizes the gasoline industry with road infrastructure and gas stations, basing our whole transportation system on that- we could certainly take a little bit of that money and make an electric vehicle transportation solution.”

Saiki’s contribution to the EV transport solution are electric motorcycles with power and performance that have everyone from Jay Leno to Google co-founder Larry Page lining up for a ride (Page has bought three).

Mr Saiki sends someone to Washington

Zero doesn’t have a liquidity problem and so far hasn’t received any government loans so I was surprised when we started talking about stimulus money, Saiki volunteered some new information.

“We were part of the stimulus package as it is right now with the 10% federal rebate. And we actually lobbied in Washington. We were part of a consortium of motorcycle companies and we actually lobbied in Washington to get that through.”

I was surprised enough at his volunteering of the “L word” that it took me a few questions to return to the topic and ask him what it meant to lobby washington. “It was surprisingly affordable actually to hire a lobbyist in Washington and get the ear–“, explained Saiki with his ever-present grin, “I think there are a lot of politicians in Washington who really want this”.

So now if you buy a Zero bike you get 10 percent back on your taxes, obviously good news for those interested in selling bikes that still cost about double their gas counterpart. Saiki would argue, what’s good for electric bikes is also good news for EVs in general and “help Americans adopt electric vehicles quicker.”

If EVs can live up to their promise- to run off renewable energy and use cleaner batteries (Saiki swears there’s a lot we don’t know about battery tech that will be coming out of the Valley soon)- that should be good news for all of us concerned about emissions. But I left the interview feeling, like O’Donnell, reluctant to embrace the L word.

Did our fourth president condone lobbyists?

Back home, I emailed my one lobbyist friend who before moving to Sacramento to lobby for tort reform had worked for the poor, battered women, the DAs office… the good guys. “In my opinion, lobbyists embody the Madisonian ideal of factional democracy”, she responded to my question which was indirectly- I thought- asking if lobbyists could be good.

“Lobbyists are good because they represent interests (factions) before the government. No way can legislators understand all the nuances of issues they have to decide by themselves, or even with able staff. And legislators who are uneducated may make bad decisions. So it makes sense for lobbyists to educate legislators and staff about the issues they know about. And it seems to me very smart for the electric car people to have lobbyists because if they don’t then they will lose out when laws that affect them get written.”

I can see how in an ideal world benevolent lobbyists could help legislators negotiate through too much information, but in the real world, it smells like a system of he with the most money wins. I told her that in a subsequent email.

“Right now its sort of fashionable to dump on lobbyists,” she responded, “but I think they (we) serve a valuable function and help make democracy work. And certainly makers of electric motorcycles are a small faction and they need the help of lobbyists so they don’t get legislatively run over by larger factions… yes, I think the powerful do have more power than the power-less but actually organizing into factions helps counter the power of the wealthy.”

Making this more about our fourth president and his talk of factions- she even pointed me toward Madison’s Federalist Paper no. 10– intellectualized the argument and somehow brought the industry up a notch in respectability, but I wasn’t convinced the system wasn’t somehow easily corruptible.

The electric motorcycle club

Today, reviewing my interview at Zero, I replayed the section where I brought up my doubts with Saiki. “I would imagine the electric vehicle lobbying power is a fraction of gas…,” I asked him just minutes after he had called the government’s favoritism toward the gas industry “obnoxious”.

“Gas is overwhelming and electric vehicles are very small,” he agreed and then continued with that smile, “but if we hadn’t hired a lobbyist and pushed in Washington of course the motorcycle industry would have gotten nothing. So the lesson I learned is that you have to push for representation in Washington if you want it.”

They may be small, but it’s significant that there are now enough electric motorcycle makers to actually form lobbying groups, and their numbers are only growing. Perhaps one day we’ll be calling them “obnoxious”.