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This Week’s Top 10: Tesla and BMW may focus more on collaboration than competition, Honda funding hydrogen stations in California

by Jon LeSage, editor and publisher, Green Auto Market

Here’s my take on the 10 most significant and interesting occurrences during the past week…….

Combining “lightweighting” and advanced batteries could bring Tesla Motors and BMW beyond competition for dominance in the sporty luxury electric car space. Tesla CEO Elon Musk told German weekly Der Spiegel that Tesla and BMW have been in meetings on forming a potential alliance in batteries and light-weight carbon fiber components being used in the BMW i3 and i8. Musk finds the carbon fiber made by BMW and its joint venture with materials supplier SGL “interesting” and “relatively cost efficient.” Musk said the talks are exploring whether collaboration might work for battery technology or charging stations. BMW and Tesla had met in June to discuss creating charging stations applicable to different types of electric vehicles. This alliance could expand Tesla’s recent history of working with major OEMs such as Toyota and Daimler. Toyota is moving away from building its RAV4 EV that uses Tesla’s electric drivetrain, but still wants to work with Tesla; the same is true for Daimler, which recently sold its remaining 4% stake in Tesla but wants to continue to collaborate with electric carmaker.
Honda will loan $13.8 million to FirstElement Fuel to build 12 more hydrogen fueling stations in California. The hydrogen station supplier received a similar loan of $7.3 million from Toyota earlier this year as part of funding for the first 19 FirstElment stations in California. California wants to have 100 hydrogen stations assembled by 2020. The California Energy Commission granted FirstElement almost $27 million earlier this year; it’s part of a pledge of almost $200 million to bring the 100 fueling stations to the state. Hydrogen stations are expected to expand to other states, including Toyota collaborating on a hydrogen network in the Northeast. Volkswagen, which showed two hydrogen-powered vehicles at the LA Auto Show, is prepared to bring its fuel cell vehicles from Germany to the US market.
Keith Leech, Fleet Manager at the City of Sacramento and head of Sacramento Clean Cities, has won the 2014 Fleet Excellence (FLEXY) in Public Fleet Sustainability award. “We are the first government fleet in the country that is actually fueling with renewable natural gas (RNG) naturally produced locally from organic food waste using anaerobic digesters that the city did not build. We’re excited to be out in the forefront and support a local start-up company [CleanWorld – a Sacramento Clean Cities partner],”Leech said. Read more about it in NAFA Fleet Management Association’s FLEETSolutions.
Clean Cities is rolling out a new program to coordinate bulk alternative fuel and advanced vehicle technology orders. Its new Funding Opportunity Announcement (FOA) is called Alternative Fuel and Advanced Vehicle Procurement Aggregating Initiatives. “By developing a process for companies and organizations to consolidate their orders, it could help vehicle manufacturers achieve better economies of scale and lower prices per unit,” Clean Cities says.
The Sierra Club is joining Ford Motor Co. and SunPower’s Drive Green for Life program to help more Americans move toward emissions-free driving. Ford customers who own electric vehicles such as the Focus Electric, C-Max Energy and Fusion Energy plug-in hybrids, will get a $750 rebate on a SunPower residential solar system. Two other models are eligible for the program, the C-Max Hybrid and Fusion Hybrid. The Sierra Club will be receiving a $500 donation for each rooftop solar system through the program.
Energy Vision named four winners to its 2014 Leadership Awards in the renewable energy field. Among the winners were Richard DiGia of Aria Energy and Harrison Clay, President, Clean Energy Renewables, whose joint project works with the Seneca Meadows Landfill in Seneca Falls; its first New York State operation converting landfill biogas into vehicle fuel, to ship its renewable natural gas to California, where Clean Energy Renewables distributes it to vehicle fleets.
The Coda Sedan now has a second life as the Mullen 700e, an unchanged version of the electric car. The Mullen 700e debuted at the LA Auto Show last week. One big difference is that the 31-kilowatt-hour battery pack is now supposed to deliver the car 185 miles on a charge compared to the previous 125 mile range on the Coda Sedan. The car comes from a post-bankruptcy firm named Coda Cars, whose chief executive Rick Curtis now serves as president of Mullen Consolidated, the corporation that’s overseeing the revival of this electric sedan.
The US Department of Defense and the US Air Force are bringing 42 plug-in electric vehicles to the Los Angeles Air Force Base. The non-tactical vehicle fleet gained a $3 million investment from California Energy Commission and comes from an alliance between federal, state, and private energy organizations, Air Force officials said. The fleet is made up of plug-in sedans, vans, and trucks. It’s also serving as a demonstration model for emerging vehicle-to-grid (V2G) technology. The vehicles can direct power to and from the electrical grid when they’re not being driven. The technology is capable of providing more than 700 kilowatts of power to the grid, which could power more than 140 homes in the US.
About 280 employers in the US now have workplace electric vehicle charging stations, a number that’s nearly doubled in the past two years. Workplace charging is turning into an effective tactic to attract and retain talented employees while supporting reductions in greenhouse gas emissions and advanced vehicle technologies. Several of these employers are participating in the US Dept. of Energy’s EV Everywhere Workplace Charging Challenge. Starting with 13 founding partners in January 2013, its grown to 150 partners who are providing access to charging stations for more than 600,000 employees at more than 300 worksites around the country.
Lux Research presented a cost-of-ownership model comparing gasoline and diesel internal combustion engine vehicles to battery electric vehicles (EVs), plug-in hybrid electric vehicles, hybrids, and hydrogen fuel cell vehicles. EVs lead the way due to the relatively low cost of electricity, and it was followed by various types of hybrids, and plug-in hybrids. Rating measures included fuel cost alone, fuel cost plus operation, and purchase or lease for total ownership cost.

Four reasons I was wrong about California and electric vehicles

Not long ago, I wrote about a sticking point I’ve had for a long time – it’s not all about California electric vehicle sales for bringing zero emission vehicles to US roads. Well, I may have been wrong about some of it……. California does lead the way in collaborative projects between government, industry, and non-profits organizations. Here are a few clear examples………….

The governor’s Office of Business and Economic Development (GO-Biz) and the Japanese government organization New Energy and Industrial Technology Development Organization (NEDO) agreed last week to conduct a feasibility study for an electric vehicle (EV) demonstration project to develop new fast charging EV stations in California. During the roughly half-year feasibility study, NEDO in coordination with GO-Biz will develop a detailed plan for the possible demonstration project. It comes from a memorandum signed by the two governments in September on climate change, renewable energy, vehicles, and other issues.
The County of Los Angeles has deployed 82 EVlink charging stations at 34 locations, including hospitals, sheriff stations, and the LA Civic Center. Users will get free charging up to four hours during the first year of the pilot program. Schneider Electric makes the EVlink stations and it makes a lot of sense to work with that county. “LA County is leading the way in providing their communities with EV charging solutions,” said Mike Calise, Senior Director of Electric Vehicle Solutions, for Schneider Electric. “We hope other counties will take this lead and pursue similar projects, since the sum of multiple county involvements will create a tipping point for the state.”
Major utility NRG’s eVgo company has installed what it says is the largest corporate deployment of EV charging stations in Southern California – 60 Level 2 workplace charging stations at Sony Pictures Entertainment’s historic facility in Culver City. Sony began offering incentives to employees in 2008 to buy EVs, and so far 300 employees have done so. The Ready for Electric Vehicle (REV) program provides Sony and other workplaces with turnkey EV charging solutions, providing charger maintenance and driver support.
An impressive meeting took place Thursday at the South Coast Air Quality Management District office in Diamond Bar. Officials from eight states say their country is on track to have 3.3 million zero-emission vehicles on the road by 2025 – with about 1.5 million of them in California. Beyond a vivid display of a wide range of Evs in its parking lot, officials from members of the multi-state EV task force praised California and talked about what’s been accomplished in their states. A commissioner with the Massachusetts Department of Environmental Protection said that Evs are playing a vital role in his state’s goal of dropping green house gas emissions to 25 percent below 1990 levels by 2020.

While I would still love to see other states embrace EVs, California is leading the way. That’s also true for natural gas vehicles, hybrids, and hydrogen fuel cell vehicles (which fall under the zero-emission vehicle category). I think there are three other reasons why California is leading the pack: plentiful funding programs through California Energy Commision and other state sources; university think tanks such as the UC Davis Plug-in Hybrid & Electric Vehicle Research Center with its excellent study on dealerships and EVs; and California Air Resources Board is up there with the US Environmental Protection Agency for certification standards governing OEMs in alternative fuel vehicles including natural gas and propane autogas.

Murky definitions of electric vehicles and hybrids make purchases more challenging

If you’re reading media coverage and market reports on electric vehicle (EV) and hybrid sales trends, it’s easy to get confused over what’s being described. One might think it would mean plug-in electric vehicles and hybrid electric vehicles – with plug-ins including battery electric (Nissan Leaf, Tesla Model S) and plug-in hybrid (Chevrolet Volt, Ford C-Max Energi); and hybrids representing models such as the Toyota Prius (not including the Prius Plug-in Hybrid) and Ford Fusion Hybrid. However, lately there have been reports and media coverage that make the categories more confusing; and make the prospect of marketing, selling, and purchasing these vehicle technologies even more murky and challenging.

For many consumers and fleets, buying either of these technologies is a new and confusing experience. The price differential compared to high fuel economy gasoline engine cars is one factor; and the need for charging stations and the amount of time needed for full charging are other questions that come up all the time. Why invest in a new technology when you can get cost-competitive traditional engines with higher mileage?

A new study by the University of Michigan’s Transportation Research Institute, “What Do Current Owners of Hybrids and Non-Hybrids Think about Hybrids,” speaks to that challenge. The survey received responses from 1,002 hybrid owners and 1,038 owners of non-hybrid cars. It focused primarily on their experience with current hybrids and plans for future vehicle purchases. About 80% of current hybrid owners will buy a hybrid with about one third of them intending to buy a plug-in hybrid. For those who won’t be buying another hybrid as their next vehicle, about one sixth of them will be buying an electric vehicle. This study defines and segments hybrids and electric vehicles differently than other sources have been in recent years. Most of the time, plug-in hybrids are listed as “electric vehicles” or “plug-in electric vehicles” in data reports, while Transportation Research Institute places it in the “hybrid” category. (To receive a copy of the University of Michigan report, email Michael Sivak at sivak@umich.edu.)

Early September saw a wave of media coverage on analysts stating that EV and hybrid sales were fizzling. Edmunds.com saw a stalled August market for battery-powered cars – including hybrids, plug-in hybrids, and battery electric vehicles. A drop in hybrid sales offset gains made in the plug-in hybrid and battery electric market. Hybrid sales were down 9.1% since August 2013, but plug-ins were up 9.5% since a year ago. The Edmunds study said that the drop in hybrid sales offset sales gains in plug-in hybrids and battery electric vehicles with hybrids selling a higher volume than that achieved by plug-in hybrids and battery electric vehicles. The study refers to all of them as “electrified vehicles.”

Here’s how leading sources of data on EV and hybrid sales are defining the numbers:

Electric Drive Transportation Association (EDTA) defines “electric drive” sales figures as covering light-duty hybrid vehicles and total plug-in vehicles (with plug-ins breaking out into plug-in hybrids and battery electric vehicles). In September, there were 31,285 hybrid vehicles and 9,340 total plug-in vehicles sold that month. Of the total plug-ins, 3,357 were plug-in hybrids and 5,983 were battery EVs.
Plug In America’s Plug-in Vehicle Tracker features battery electric and plug-in hybrid electric vehicles. The difference here is that everything is covered – light duty passenger vehicles, commercial vehicles, buses, motorcycles, and three wheelers. It doesn’t include sales figures, but it does offer pricing and driving range numbers.
HybridCars.com has changed its formatting this year – breaking out battery electric vehicles and plug-in hybrid vehicles into separate charts; they’d previously been featured in one category as plug-in electric vehicles. The HybridCars.com monthly report covers hybrids, plug-in hybrids, compressed natural gas (with only the Honda Civic Natural Gas featured on that chart), and diesel passenger cars (aka clean diesel).
AutoblogGreen considers them to be “green cars” in its monthly reporting, and includes hybrids, plug-in hybrids, battery electric, clean diesel, and a few fuel-efficient technologies like the Buick Regal eAssist and Chevrolet Malibu ECO mild hybrid. The sales figures are broken out by each brand and company. Analysis of sales trends is based on the total green car sales for the month in relation to recent months and year-ago numbers.

When looking at all of these sales figures and category definitions, here are a few things to keep in mind:

Purchase incentives are being offered on battery electric and plug-in hybrid models and don’t exist on hybrids anymore. Center for Renewable Energy’s website provides an example of what’s available on the market these days. This just covers California, but it also features federal incentives and information on carpool lane stickers – other sources that are taken seriously by car shoppers. Incentives used to be offered on hybrids until their sales volume increased and plug-ins entered the market.
It is a very good idea to have industry standards in place, as Society of Automotive Engineers would attest to. Having uniformity in industry terminology becomes important when it comes to government legislation and regulation, corporate policies, research studies, investors, and buyers of the products.
Simplifying the wording is a good idea. Extended range electric vehicle or plug-in hybrid electric vehicle? I prefer plug-in hybrid. Pure electric vehicle or battery electric vehicle? I vote for battery electric vehicle. Hydrogen fuel cell electric vehicle or hydrogen fuel cell vehicle? I would take the word “electric” out of that one. Hybrid electric vehicle or hybrid? Hybrid is a good way to simplify it. And what to do about electric vehicle (EV). It seems to cover both battery electric and plug-in hybrid. Some say it should be plug-in electric vehicle (PEV) at all times; I’m fine with EV since that’s widely used and accepted – and I would rather use it regularly than throwing in “electric car” occasionally.
Automakers are still working out their definitions of “electrified vehicles” and sometimes group hybrids and EVs together. Ford offers hybrid and plug-in hybrid versions of its Ford C-Max and Fusion models – with the plug-in hybrids under the “Energi” label. Toyota is offering the Prius Plug-in Hybrid version of its popular Prius brand. The price is several thousand dollars higher than the traditional hybrid version of the Prius, but there are incentives on the plug-in version.
The experience can be confusing and stress-inducing. Survey researchers at Indiana University released an exhaustive study that found consumers are misinformed about EVs – with 75% incorrectly underestimating the benefits of the vehicles. I got a phone call recently from a friend shopping for a car with his wife. They’re open to owning a hybrid or plug-in, but confusion over the differences between hybrid and EV models doesn’t help; they could easily put off the purchase even longer.
Fleets that have yet to acquire any vehicles outside traditional internal combustion engine models have a similar experience and have definite concerns over their return on investments. Electrified commercial vehicles make their research a bit murky as well, especially with Smith Electric Vehicles and Boulder Electric Vehicles going through financial struggles.
While the total sales volume of EVs and hybrids isn’t growing by leaps and bounds, if you include clean diesel and natural gas as “alternative fuel vehicles” or “green cars,” the sales numbers represent their own segment gaining more credibility. Eventually, those sales figures will likely include hydrogen fuel cell, propane autogas, and biofuels.
Effective educational and question-and-answer materials are very much needed in the marketplace. EDTA and Plug In America are doing a very good job on this front, but stakeholders in clean transportation have a lot of work to do on getting the word out to consumers and fleets who will be making these acquisitions in years to come. Clear labelling of vehicle types would help simplify the process.

Disruptive technology: What will we be doing to make a living in 25 years?

As covered last week, AltCar Expo keynote speaker Tony Seba made some outrageous statements about the future of transportation technology and economics. The Silicon Valley entrepreneur and Stanford University lecturer inspired humorous comments from panel speakers, and interesting conversations for attendees who had just heard him speak – inspiring for those supporting electrified transportation and solar power and ominous for those making their living in automotive, transportation, and other industries. A question that stuck in my mind: What will Ford Motor Co., Hertz, Mack Trucks, Manheim, and mega-dealers be selling 25 years from now?

The statistics and market analysis presented by Seba were fascinating. They came from his recently published book, Clean Disruption of Energy and Transportation: How Silicon Valley Will Make Oil, Nuclear, Natural Gas, Coal, Electric Utilities and Conventional Cars Obsolete by 2030. Here are a few points he made……

The auto industry played an integral role in the development of “disruptive technology.” One interesting point was seeing photos of a street in New York City in 1900 and then in 1913 – with one car featured in 1900 and the street filled with them 13 years later. Seba thinks we’re full bore into another disruption cycle that will radically alter the products and services offered in automotive and transportation.
Lithium batteries are going down 14% in cost per year, and that’s expected to continue for the foreseeable future. Tesla Motor’s “gigafactory,” once it’s up and running, will be able to double the word’s supply of these batteries and will bring their prices down even further.
By 2018, automakers will be offering $40,000 battery electric vehicles (EVs) that can get 200 miles per charge. Disruption will continue – by 2020, that price will drop to $31,000 and its range will be comparable to, or better than, internal combustion engine (ICE) powered cars. By 2023, average EV prices will go down to $21,000. He says that by 2030, all mainstream cars will be electric and ICEs will be obsolete.
As for autonomous cars, disruptive technology will see a big price drop and become economically viable for the future of transportation. In 2012, a LIDAR (light radar) system cost $70,000 for a test self-driving car. That now costs $10,000 per driverless car. As for what consumers think about it, a recent Cisco Systems survey found that 95% of Brazilians are willing right now to use a self-driving car, and 60% of Americans are willing to do the same.
Autonomous vehicles, along with carsharing services like Zipcar and ridesharing services like Uber, will be game changers. Annual sales of new vehicles will shrink, highways will open up, and many of the parking spaces we have in our cities will go away. Highway capacity can be increased four times when autonomous vehicles show up on our roads; there will be no need for 80% of our parking spaces as autonomous vehicles show up exactly when and where they’re needed by the owner. The insurance industry will also take a big hit as the need for car insurance will diminish.
As for solar power, installation of solar panels has been increasing 43% per year worldwide since 2000. If this continues, all of the world’s energy will be solar by 2030, he says.
When the question of hydrogen fuel cell vehicles came up, Seba made comments that obviously didn’t go over too well with hydrogen advocates. Hydrogen is not a disruptive technology and works much the same way as gasoline in production and pipeline/trucking distribution. EVs are three-to-four times more energy efficient than hydrogen.

Seba may be way too off the mark on several of his conclusions, but he’s right about one thing: technology and economics are going through a historic shift right now. The role of automakers and transportation companies is changing – which is why we’re seeing automakers startup car sharing services and test out self-driving cars. It’s also a driving force behind nearly every automaker rolling out an EV and other alternative fuel vehicles.

Clean transportation has a very important role to play. It’s providing a channel for advanced vehicle technologies, reducing emissions and fuel consumption, and supporting economic advancement and job creation in a fast-changing world. Maybe you’ll get laid off by an automaker and go to work for a specialty EV maker, or lithium battery maker, or alternative fuel infrastructure supplier, or an advanced engineering and design firm. That sounds much better than taking drive-through orders at McDonalds. As my grandfather used to say, “Always be looking for another job.”

The Future of Electric Vehicles – Where is it going?

By Richard Marks

Today’s populations are moving to the cities and urban areas surrounding these cities. In the US, 75% of the population lives in an urban metropolitan area. Europe and Asia are slightly lower.

So what are the choices to interested private buyers? That depends where you live, what you do, where you work, how much you earn and your household needs.

The average price paid for a new car today (March 2014) in US is $32,086. Median income for US is $53,043 (half above – half below; by Sentier Research). Who can afford a new car? Really only the wealthy buy new cars (15.6 M new cars/trucks sold 2013) and 40+M used cars. The “average” person buys a used car.

Experian Automotive reported recently that roughly 21 percent of electric car buyers earned an average household income of at least $175,000 last year, not your typical car buyer. However, with all the low dollar monthly lease deals on EV’s going on, the industry probably has dropped that. The other issue is that the $7,500 tax credit on a purchase, only works if you purchase, not lease; and you need a tax liability greater than $7,500 after all of your other deductions. So what kind of income do you need? The $100,000+ is not a bad place to start. So EV’s are for the richer and more educated buyers plus our Government gives them a special tax break? Sound fair?

Let’s go back to the 40M used cars/trucks sold each year. National Automotive Dealers Assoc. reported the average used car price was $15,042 in March 2014. that’s better, but you are buying an out of warranty vehicle up to 8 years old that has a lot of up and coming repair work and maintenance on the horizon plus $4/gal gas.

There is a solution to many on the horizon. How many cars do you have in your household? 2010 Census data says that 21.5M households have 3 or more cars, 45.4M have 2 cars, 39.7M have 1 car and 10.7M have no cars. If you are part of the 2 cars or 3 or more, than EcoVElectric is an affordable alternative. EcoV is designed to meet the needs of people and fleet operators in city areas. At $11,999 it is also affordable by all and it offers a 70% lower cost to operate than a new or used car. EcoV costs less as a new vehicle than an average used car today. Never have to buy gas; just plug into a wall socket and for 50¢ you are charged and ready to go 25 – 40 miles. Zero emissions and almost zero cost to operate. EcoV is safe and crash tested. EcoV is fully enclosed and very much a car. What’s your purpose? EcoV is available in passenger, pick-up and delivery vehicle models that are all multi-functional.

How much range do you need in a vehicle for city and urban area trips? Average daily trip distance for urban based cars in USA, was 36.5 miles/day. The average single trip distance was 5.95 miles. The average commute distance was 13.6 miles. In fact, we do not realize how little we really drive. For most people a city based EV is a great solution to save money, particularly when a high speed vehicle is available for those important but less frequent trips.

Now how about government and commercial fleets in cities and urban areas? Since many of these fleets don’t need to go fast and their missions are shorter in distance, EcoV can save them greatly in operating costs. Take a city parking enforcement vehicle. EcoV can save $43,500 over a 10 year period, payback in 9 months based on 25-35 miles per day. 100,000 EcoV’s in service over 10 years, saves you the taxpayer $4.5B. Take an EcoV city mail delivery vehicle with a 22 year life cycle – saves Post Office $145,000 per EcoV with payback in 7 months based on 5-10 miles per day and with 40,000 in service that saves you, the tax payer, $6B. There are lots of applications: parks & recreation, city services, security patrols, university public safety and campus service & pool vehicles, vacation resort rentals, airports, homeland security at airport, harbor and border crossings.

The future is clearly going towards smaller, smarter city based transportation solutions like EcoV. The next question is how does an early stage company find partners, both financial and business? Can the current trend away from investing in EV companies be reversed? Can we create a race towards an affordable EV solution for everyone? Can we attract investors with the strength, skill and vision to be part of the future profits EV sales will generate? We think so.

Manufacturing is key to any low volume niche business. Overheads in terms of staff, facilities, tools and equipment are typically large. We are changing the paradigm on low volume niche manufacturing in the transportation business. How we integrate the product, the suppliers, and the processes to be able to build not only a profitable low volume (10,000-30,000 units/yr) but low price product ($11,999 well equipped) has changed all the rules. The manufacturing side is about finding the right partners to assemble the product, which we have been able to do. The other side is using off-the-shelf proven technology rather than designing all new parts ourselves, we leverage other’s efforts including prototyping, testing, tooling, and putting into high volume manufacture to get to low costs. They buy excess manufacturing capacity. We need to be out of the traditional manufacturing box to make an entry level great product work and be a sustainable business.

Here is a short, entertaining video that presents a strong message about investing in electric vehicle start-ups for the future. EcoV is just one but it is for limited number of investors who can see the future.

The owner, Richard Marks, spent 25 years with General Motors, including five on the EV1 electric vehicle. I then worked for Tier 1 suppliers and during the past eleven years has been developing EcoV in a full-time, privately funded effort. Today the company has invested $10M (mostly sweat equity, prototype building & testing and market research) and is looking for $10M in funding to be in production in 9 months. The “secret sauce” is the unique integration of product, suppliers and automotive process. We have taken a bite out of Apple Computer’s manufacturing model playbook.

Written by: Richard W. Marks
President, EnVironmental Transportation Solutions, LLC
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Big Picture: NHTSA drops Tesla battery fire investigation, Honda and UC Davis showing how EV batteries can store solar power

The National Highway Traffic Safety Administration (NHTSA) has ended its four-month investigation into three battery pack fires in the Tesla Model S that occurred last fall. That decision followed Tesla Motors adding a titanium underbody shield to protect the luxury electric car from road debris that can cause battery fires. Tesla CEO Elon Musk announced in an article on Medium.com that all Model S vehicles built after March 6 will have the new shield. Owners of the Model S built before that date can have the titanium shield added by Tesla. NHTSA said that the shield, along with the software upgrade a few months ago that lifted the car’s ride height, have alleviated the agency’s safety concerns with the Model S. Last fall, Tesla’s software upgrade added the ability to raise ground clearance at highway speeds; at that time, Tesla also took steps to prevent overheating of its charging systems, including giving customers upgraded wall adapters and providing charging-software upgrades.

And in other clean transportation news……..

Honda has worked together with University of California, Davis to build the Honda Smart Home in the city of Davis to demonstrate how an electric vehicle’s battery pack can store solar power. The 1,944-square foot home offers the very latest in energy efficient technologies – LED lighting, radiant heating and cooling, a geothermal recovery system, a large solar panel system, and a grey-water filtering and recovery system. The home contains a 10-kilowatt-hour lithium-ion battery pack; it’s a smaller version of the one that powers the electric Honda Fit. As more homes are generating electricity from solar panels, electric vehicle batteries are expected to become storage units when the sun goes down. “It’s a new world in terms of vehicles operating not as isolated artifacts but as being part of a larger energy system, and I think the greatest opportunity for automakers is figuring out how their vehicles become part of that system,” said Daniel Sperling, director of the Institute of Transportation Studies at UC Davis, which provided the building site and the heating and lighting technology for the Honda Smart Home.
New Jersey Assemblyman Tim Eustace has introduced a bill that would permit consumers to buy electric vehicles directly from Tesla Motors. If passed, it would bypass the recent ban by the New Jersey Motor Vehicle Commission (MVC), which is composed of Governor Chris Christie’s cabinet members and appointees, on allowing Tesla cars to be sold outside of a franchised retail dealer network. Next door, in the state of New York, Tesla struck a deal on Friday with Gov. Andrew Cuomo and others that will allow it to keep five existing company-owned stores, as long as it doesn’t open more of them in the state. According to the agreement between Tesla, Cuomo, legislative leaders, and auto dealers, additional Tesla retail locations would need to be established under a “strengthened dealer franchise law.” In return, elected officials agreed to drop language in a bill in the state legislature that would have forced Tesla to close its existing direct-sale operations.
The Tesla “corporate-owned stores vs. franchised dealer stores” debate could be a talking point in the 2016 presidential election. Senator Marco Rubio (R-Fla.), a rising GOP star who’s expected to run for president, says that Tesla has the right to directly sell its electric cars. That will likely put him at odds with another expected Republication candidate, New Jersey Governor Chris Christie. Gov. Christie will probably dispute Rubio’s claim and defend his decision against Tesla’s stores in New Jersey. The politics may also have something to do with what state will get the $5 billion lithium battery “Gigafactory” project. AutoNation CEO Mike Jackson thinks it’s quite ironic that Texas and Arizona – the states with the toughest pro-dealer franchise laws, are now considering lightening up on laws allowing Tesla to have retail stores in those states. Previous attempts to gain exemptions in those states had failed; now state politicians are courting Tesla. These states, along with Nevada and New Mexico, are finalists for the Gigafactory project.
General Motors CEO Mary Barra told lawmakers in Washington yesterday that she’s “deeply sorry” for the error on an ignition switch defect, and will be fully transparent once the company discover what went wrong. It’s part of a large recall that only involves one alternative fuel vehicle – the 2014 Cadillac ELR extended range coupe. The recall will correct a problem with the diagnostic function of the software that controls the electronic stability control (ESC) in about 656 ELRs built between September 26, 2013, and February 14, 2014.
Toyota’s Asset-Backed Green Bond, a $1.75 billion fund announced last week, is part of a much larger global financial trend in green bonds. Unilever, the world’s second-largest consumer goods company, last week issued a $415 million bond for reducing waste, water use, and greenhouse-gas emissions. Bonds used to finance bonds that are friendly to the environment are gaining popularity worldwide, according to Christopher Flensborg of SEB, a Swedish bank; Flensborg is considered to be the inventor of green bonds. Unilever’s issuance was part of $6 billion in green bonds in the first quarter of 2014, which is much higher than in the first quarter of 2013; that year ended with a total of $11 billion in green bonds. World Bank president Jim Kim thinks it will rise above $50 billion next year. Toyota Financial Services’ (TFS) $1.75 billion was upsized from $1.25 as institutional investors have expressed interest in this clean transportation investment opportunity. TFS will use the proceeds from Green Bond toward the purchase of retail finance contracts and lease contracts for Toyota and Lexus vehicles that meet high green standards.
Clean Cities will be offering about $4.5 million more in available funding in three areas of interest: an alternative fuel vehicle demonstration and enhanced driver experience; alternative fuel training for first responders, public safety officials, and critical service providers; and incorporating alternative fuels into emergency response and preparedness operations. On March 24, the Vehicle Technologies Office, Clean Cities’ parent office, issued a Notice of Intent for a potential upcoming Funding Opportunity Announcement, available on Grants.gov (second item in the table) and the EERE Exchange site. Clean Cities also announced last week that it’s rolling out nine new projects with the National Parks Service. The projects will bring alternative fuel and fuel-efficient vehicles to the road, cut vehicle idling, and improve vehicle efficiency. Almost all of the projects involve installing charging equipment for plug-in electric vehicles and many will also add EVs to the National Parks Service’s fleet.
Tesla’s “Gigafactory” lithium battery factory concept is raising a lot enthusiasm with investors and fans of cleantech; however, Tesla Motors’ primary supplier of lithium ion cells for its Model S is still thinking about it. Panasonic Corp. hasn’t committed to investing in the ambitious US battery plant that’s been proposed by Tesla CEO Elon Musk. Joining Tesla’s Gigafactory battery project would raise investment risks, according to Panasonic President Kazuhiro Tsuga. Whoever partners with Tesla on the Gigafactory will be sourcing raw materials within North America, according to Tesla – and that counts for graphite, cobalt, and other materials. “It will enable us to establish a supply chain that is local and focused on minimizing environmental impact while significantly reducing battery cost,” said Liz Jarvis-Shean, a spokeswoman for Tesla.

Breaking through range anxiety and other EV stumbling blocks

For those of you championing the benefits of plug-in electric vehicles, here’s a few points you may want to mention…..

Nissan is sharing real-world experience from Leaf owners on its website. Those interested can submit questions that will be answered by Leaf owners who drive the electric cars every day. Range anxiety continues to be the leading concern; owners say that the Leaf’s EPA rating of 84 miles on a charge is more than adequate for suburban or urban commuting. Two Leaf owners did run out of energy while driving – one of them was stranded by a closed charging station and the other admitted not having learned how to read the car’s range meter.
US electric vehicle owners saved themselves $100 million last year by not having to buy gasoline. The Union of Concerned Scientists said that 160,000 Americans saved that much by not having to go to gas stations and buy 45 million gallons of gasoline last year. Carbon reduction is another point to make; for example, California EV drivers were able to reduce emissions of carbon dioxide by 140,000 tons last year.
A new report from the World Health Organization (WHO) estimates one of every eight deaths around the world can be traced back to exposure to air pollution. WHO estimates that in 2012 about seven million people died as a result of air pollution exposure. Government agencies around the world are expecting EVs (along with other zero emission vehicles such as plug-in hybrids and hydrogen fuel cell vehicles) to play a significant role in reducing air pollution and greenhouse gas emissions.
As I’ve discovered talking to stakeholders in alternative fuel vehicles, being able to effectively answer questions from consumers, fleets, company executives, and regulatory agencies, is essential for growth in adoption of EVs and other fuels and technologies. Education and public awareness programs are very much needed. Some of the issues that typically come up during conversations include:

Where the electricity comes from – coal versus cleaner energy.
Lifecycle ownership costs, price comparisons to similar gasoline-engine cars, maintenance, and resale values.
Safety issues for EV owners and first responders in the event of a crash.
Where the EV battery technology is going – becoming lighter, longer range, and less expensive.
Charging infrastructure – how many charging stations are being installed, how available and reliable are the chargers, and the cost of charging.
What will it take for fast chargers to become more widely available.

Big Picture: More actions on Tesla stores in Ohio and Arizona, Toyota Financial Services starts up Asset-Backed Green Bond

In the wake of New Jersey’s decision on Tesla Motors’ right to run corporate retail stores, there are two more states seeing developments. Ohio Gov. John Kasich has received a letter from General Motors expressing concern that the state would allow Tesla to expand beyond the two Ohio stores it currently has in operation. GM thinks the state should oppose legislation allowing Tesla to open more stores, as it would allow Tesla to compete under a different set of rule. “We understand discussions are ongoing over legislation which could provide a broad exemption for a single manufacturer, Tesla Motors Inc., to circumvent long-established legal precedent on how new motor vehicles are marketed, sold and serviced in your state,” Selim Bingol, GM’s senior vice president of global communications and public policy, wrote in the letter.

Arizona may allow Tesla to sell directly to consumers at retail stores within the state – if the company is willing to have a service center in the state to handle repairs and warranty issues. The state’s Senate Commerce, Energy and Military Committee voted three-to-two to push forward this bill in the legislature. Arizona Senate Majority Leader John McComish called the bill a “pre-emptive strike” against future laws that outlaw Tesla’s direct-sale model. The bill will need to go before another committee for review, then would go to the full Senate.

And in other clean transportation news…….

Toyota has a very interesting offer through its Toyota Financial Services (TFS) captive finance arm – the auto industry’s first-ever Asset-Backed Green Bond; the company is outlaying $1.75 billion, which was upsized from $1.25 as institutional investors have expressed interest in this clean transportation investment opportunity. TFS will use the proceeds from Green Bond toward the purchase of retail finance contracts and lease contracts for Toyota and Lexus vehicles that meet high green standards as established by three criteria: gasoline-electric hybrid or alternative fuel powertrain; minimum EPA estimated MPG (or MPG equivalent for alternative fuel vehicles) of 35 city / 35 highway; and California Low-Emission Vehicle II (LEV II) certification of super ultra-low emission vehicles (SULEVs) or higher, which would include partial zero emissions vehicles (PZEVs) and zero emissions vehicles (ZEVs). Qualifying models from Toyota include: Prius, Prius C, Prius V, Prius Plug-in, Camry Hybrid, Avalon Hybrid, and RAV4 EV. From Lexus, qualifying vehicles are CT 200h and ES 300h.
Producing more than 5,000 compressed natural gas (CNG) fueling tanks last year is one of several positive signs that Quantum Fuel Systems is on a turnaround that should continue, according to stock market analyst website Seeking Alpha; that’s more than double the amount of tanks that were produced in 2012. The company was close to collapsing 12 to 18 months ago, but a corporate restructuring has been completed and seems to have a brighter future. Quarterly earnings were reported earlier this month – positive earnings were reported for the first time in quite a while. The company’s share price has increased by more than 250% in the past 12 months. About 10,000 tanks are expected to be delivered in 2014.
The Energy Independence Summit will be taking place in Washington, DC, March 30-April 2. Leaders in clean transportation will be gathering to share best practices and educate federal policy makers about the benefits of the US Dept. of Energy’s Clean Cities program. The need for additional tools and resources to overcome barriers to the widespread use of clean vehicles and fuels will also be discussed. You can contact Ken Brown at Transportation Energy Partners at ken@akbstrategies.com or (202) 674-7777 if you have questions or would like additional information about the Summit.
The CHAdeMO electric vehicle fast charging protocol, which was initially adopted in Japan by domestic automakers, has been officially recognized as an international DC charging standard by electrical standards organization the International Electrotechnical Commission. The final draft international standards were approved by committees in January 2014, and were finally published last week on the IEC website. The number of CHAdeMO fast charging stations doubled in 2012 to more than 2,000 units are expected to grow, the association said last year.
Dish Network unveiled 47 new propane-powered vehicles at an event on Friday in Hawthorne, Calif. Roush CleanTech converted Ford E-Series vans for Dish Network, and the company’s goal is to deploy 200 of these alternative-fuel vehicles that will run on propane autogas.
Volvo Trucks is bringing its full range of alt-fuel vehicles to the 2014 Mid-America Trucking Show in Louisville, Ky. That lineup will include: Volvo VNL 300 CNG with 400-horsepower 11.9-liter Cummins Westport ISX12 G engine; Volvo VNL 300 LNG with 455-horsepower Volvo D13-LNG (compression ignition) engine; and Volvo VNL 300 dimethyl ether (DME) with 435-horsepower Volvo D13-DME engine.
BMW plants to produce more than 100,000 electric vehicles per year to meet tougher European emission standards that reach a key mandate level by 2020. CEO Norbert Reithofer told reporters that BMW will increase production levels of its i3 and i8 in 2018 in anticipation of getting up to 100,000 units annually in order to meet the stricter carbon dioxide emission standards. BMW was pleased to see that its i3 took 10,000 internet orders when it went online last fall.

Telling Your Story: How Tesla builds brand value without spending a dime on marketing

Tesla Motors, which doesn’t have a marketing budget, is benefiting from a creative video spot; the automaker didn’t need to spend one dime on it. In the commercial, “Modern Spaceship,” a little boy imagines himself breaking the speed of light while driving his father’s new car, a Model S. Everdream Pictures, a production company started by recent college graduates, spent $1,500 to make the commercial. So far, Tesla hasn’t paid for it, but may collaborate in the future; Everdream met with Tesla CEO Elon Musk in January to talk about possibilities, and Tesla may hire them for a future project.

As for now, Tesla has been streaming part of the video on its Facebook, Twitter, and Instagram pages; and Musk tweeted about the video recently. Tesla Motors sold 18,650 of its Model S electric luxury sedans in 2013 after launching it in the summer of 2012. The Model S sold less units last year than what Nissan Leaf and Chevrolet Volt each experienced, but for its price range – with monthly lease payments ranging from $1,051 for the 60 kilowatt-hour (kWh) version up to $1,421 for the 85-kWh Performance model – those sales figures are quite impressive – especially for an automaker that really hasn’t been around for very long. Tesla has been promoting a less-expensive lease deal to raise consumer interest (more on that later).

Tesla’s brand value has been surprising to observe (as witnessed by its incredibly strong stock prices) given that the auto industry has historically been dominated by a small number of majors with startups going the way of failed 1940s Tucker sedan. Here’s my take on how Tesla Motors has been effectively telling its story…….

Fine product: While Tesla has been getting a ton of press and social media coverage in the past year (with the Hyperloop, Supercharger, and Model S recall fueling most of it), Tesla would have faded by now if its cars had gone the way of the DeLoreon concept car. The Tesla Roadster, built on a Lotus chassis, was impressive being the first production-scale electric vehicle after it was launched in 2008. It was the Model S that turned heads and managed to impress Toyota and Daimler enough to invest in its electric powertrain components. Driving one of them isn’t easy – you don’t get to show up at a dealership and get behind the wheel with a sales rep answering all your questions. You have to show up at a Tesla ride and drive and wait in line to drive one of them; or have a friend who lets you experience what may be the strongest torque ever in a passenger car – and the unique, double-TV-screen dashboard for navigation and apps. There’s been a lot of buzz about its upcoming Model X crossover with double-hinged doors. It’s more affordable Model E compact is scheduled to roll out in late 2016.

Removing range anxiety: Fear of having an electric vehicle’s battery poop out and being stuck on the side of a road has been the major stumbling block for selling a lot more EVs. Tesla has no plans to roll out a plug-in hybrid to alleviate that range anxiety. There are two factors that seem to be helping – one is impressive per charge range. For example, the US Environmental Protection Agency reported that the Model S Performance can go 265 miles on a single charge. Another step forward is coming through with its Supercharger stations that can recharge a Model S faster than any of the CHAdeMO or SAE Combo adapter fast chargers can deliver.

Creative financing: The Tesla Model S has a sticker price ranging from the low $70Ks to the mid-$90Ks depending on the package you choose. Even with federal and state incentives, it’s much more expensive than other EVs and you can find a lot of other quality luxury cars for a much lower price. Tesla has been working with U.S. Bank and Wells Fargo on a lease program that guarantees the residual value during its three-year contract. Tesla says it will have the top residual value of any high volume premium sedan brand – Audi, BMW, Mercedes, or Lexus. Tesla is also pitching the novel idea that the cost goes down to about $500 per month. The argument goes along the lines that you can save $267 per month in fuel costs compared to the BMW 5-Series, and you can subtract more dollars and save more time by gaining access to carpool lanes while driving solo. So, creative marketing and creative financing are paying off.

Leaders with personality: It certainly helps to have a self-made multi-millionaire celebrity like Elon Musk captain the ship. While competitors like GM and dealer networks likely despise him, Musk probably isn’t losing any sleep over it. It also helps to have JB Straubel serve as chief technical officer and Franz Von Holzhausen as chief designer. They’re getting a lot of media attention and respect from car designers – and Straubel and Von Holzhausen tend to be eloquent and analytical about the Tesla technology.

Guerilla marketing: It is quite strange to see the Tesla brand go viral and ubiquitous in such a short period of time. It’s taken Hyundai a lot longer to reverse its negative image and to start winning accolades. Tesla is benefiting from getting strong ratings from Consumer Reports and NHTSA safety ratings (at least before the battery fires last Fall). Its tactics are paying off – with appointment-only ride and drives helping, attention-grabbing retail stores, and sales maneuvers that probably would have impressed P.T. Barnum. An example of this tactic is how good Tesla is at teasing its audience about the upcoming launch of its Supercharger, Model X, etc. Tesla is taking advantage of the digital media/marketing environment where brand value can be increased for free – if done the right way. Getting an email from Musk explaining how the automaker is dealing with the battery fire problem is a very good example of it.

Problem into opportunity: “When written in Chinese, the word crisis is composed of two characters – one represents danger, and the other represents opportunity.” U.S. Senator John F. Kennedy said in a 1959 speech. I chose this quote from JFK on my LeSage Consulting website because it eloquently states the challenge clean transportation is experiencing right now. For alternative fuels and vehicles, every one of them faces huge challenges to break through consumer and fleet acquisitions and building the essential charging/fueling infrastructure. Elon Musk and his team have so far been masterful at becoming well established in the ultra-capital intensive and challenging car business. It also makes for a colorful story of a company delivering cool new technology in this rapidly changing, global economy.

New Jersey’s Tesla decision a watershed for dealer franchise vs. OEM corporate stores

“This [the ban on Tesla] is a disturbing trend and deals a big blow to the future of automotive retailing. It also pushes the US behind the rest of the world. So far the resistance to Tesla and any kind of progressive thinking in auto sales had been relegated to the southern states. New Jersey’s decision could now influence states such as New York and Massachusetts, which have so far been more supportive of Tesla.” – Kumar Saha, senior industry analyst with Frost & Sullivan’s Automotive and Transportation research group.

On March 11, New Jersey Gov. Chris Christie’s cabinet members and appointees voted to block Tesla from direct sales. The administration ruled in favor of a state requirement that new cars must be sold through licensed franchises from a rule proposed last October by the New Jersey Motor Vehicle Commission; that happened around the same time Tesla opened two of its own stores in the state. Tesla CEO Elon Musk took a shot at Gov. Christie, accusing the expected 2016 Republican presidential candidate of making a “backroom deal” to keep Tesla out of the state. Musk put more pressure on Christie, whose administration has been taking heat for alleged bullying of opponents – the most notable event occurring last year when former high-ranking officials faced potential criminal charges after ordering lanes approaching the George Washington Bridge be closed, creating a traffic nightmare.

This dramatic decision by New Jersey follows several state-by-state battles in the direct OEM sales versus state franchise law battle. Auto dealers in Ohio, New York, Minnesota, and Georgia have fought Tesla. Texas dealers successfully backed a law setting the nation’s toughest restrictions on Tesla. Arizona, Colorado and Virginia also imposed limits.

In New Jersey, the New Jersey Coalition of Auto Retailers spent more than $155,000 on lobbying last year. Gov. Christie received about $65,000 in campaign contributions from people associated with the auto industry during last year’s primary and general election campaigns.

There’s a lot at stake in how these lawsuits and lobbying ventures play out. The legal history of state franchise laws protecting dealers are not too clear – that varies by industry with many retail sales transactions being conducted in corporate stores without any franchised operators in these branded networks. The state franchise laws are about a century old now, and other automakers have taken on the fight of breaking them long before Tesla Motors. Dealer networks have been very successful at lobbying in state legislatures and winning court battles.

Ford Motor Co. and General Motors Co. attempted to operate a few company-owned stores in the late 1990s and early 2000s as internet sales became more economically viable. Dealers won that battle – today you can shop for, and spec out, cars on OEM websites, but you have to buy or lease them through a dealership. Truecar.com experienced a similar experience after its 2011 Superbowl commercial promising the best local market price from dealer in their area. Dealers in several states attacked Truecar for allegedly violating laws regulating auto brokering, price advertising, and other legal issues. The onslaught hurt Truecar’s finances, as about 2,600 dealers bailed out of Truecar; it forced the company to spend much of the year overhauling its relations with dealers.

As Frost & Sullivan analyst Kumar Saha said, automotive retailing is changing fast. Dealers may be winning some of the state legal battles with Tesla, but may be losing a lot more business in the future as the business model changes.