Telsa Starts Getting Its Act Together

The regime of new Tesla Motors CEO Michael Marks (earlier post) has already started to pay dividends .

Back at the beginning of the year, Tesla announced that, in addition to launching a new car company, it was going to into the battery systems market. What, taking on the established old guard automotive industry isn't enough? You also need to pick a fight with the rapidly growing a hyper-competitive new battery technology crowd? Sounded like a two front war... one that would have stretched company resources to the breaking point.

Enter Marks (replacing former CEO Martin Eberhardt) and exit the battery business. In the company blog, Marks makes clear that the focus is on the company's nascent vehicle business.

While tearing up the $43 million contract the company had with Norwegian EV maker Think (careful following the link: annoying audio after the jump) couldn't have been easy, it allows Tesla to concentrate resources on nailing down outstanding issues related to the launch of their roadster and, ultimately, the four doors sedan.

ZAP Struggles for Relevance

Poor ZAP Auto (ZAAP). Given a big head start (founded in 1992) in the race to develop alternative transportation systems, ZAP is getting lapped by relatively new entries into the market like Tesla Motors and Phoenix Motorcars.

Part of this problem is of their own making. The company is notorious for not delivering on promises. Witness the questionable decision to begin selling the Smart car without:

• Permission from brand owner Daimler-Chrysler;
• Approval from National Highway Traffic Safety Administration

No surprisingly, the resulting struggles left most people with certain lack of the faith in the company. Not that CEO Steve Schneider believes this is unjustified:

"Certainly, it would appear from a public standpoint we over-promised and under-delivered."

Not the kind of statement that rallies employees. Or investors.

Give ZAP credit, though: they're not going down without a fight. In recent months the company has:

• Announced development of a crossover type vehicle with Lotus that is theoretically capable of 644 hp, a top speed of 155 mph, and a range of 350 miles on a charge. Oh, and it'll charge in 10 minutes.
• Announced ANOTHER prototype car designed to compete directly with Tesla's roadster. Though it was announced after the aforementioned crossover vehicle, it is supposed to be ready prior, and cost around $30,000.
  
• Ordered $5 million+ of polymer lithium-ion batteries from China's Advanced Battery Technologies (ABAT.OB), the first order ABAT has had from a US company. The batteries will at first be used for testing in "a range of Zap vehicles."
• Launched their new corporate mascot: "Pluggy".
  

Now, I love mascots as much of the next guy. But it seems to me that if your company has a hard won reputation of not delivering on its promises, time would be better spent focusing on the core business model and producing a product that people will want to buy and can compete with in a rapidly growing market segment.

Until then, ZAP's relevance will always be in question.

PHEV Converters: Great idea, Not Sustainable

Lots of news about PHEVs these days:

• Ford and Southern California Edison are announcing today a partnership to examine customer usage of PHEV modified Ford Escapes. Ford apparently hopes that focusing on the Escape (rather than a concept car like the Chevrolet Volt) will allow them to bring a PHEV to mass market more quickly.
• The federal government continues to bat around a number of ideas on how to spark development in PHEVs. For example, the House included provisions in the recently debated DRIVE Act aimed at providing for 5,000 PHEV conversions in 5 test locations.

So it appears the PHEV gold rush of the early 21st century is officially on. While the main automakers slowly move their behemoth operations to fill this rapidly expanding niche, several after market PHEV conversion operations have spring to life. These include:

• EnergyCS: One of the first players in this space. Like most PHEV converters, focuses primarily on the Prius with lithium ion technology.
  
• Hybrid-Plus: Lithium-ion conversions. In addition to the Prius, also offering Fortd Escape conversions. While most converters target fleets, Hybrids-Plus targets individuals as well.
• Hymotion: Recently acquired by much ballyhooed A123 Systems. (Admittedly, I'm guilty of abetting the ballyhooing). Canadian-based company converts both Priuses and Escapes for fleets. Will start offering conversions for individuals in 2008.
  
• EDrive Systems: Uses technology originally developed by EnergyCS. Not yet installing.
  
• Green Car Company: A relative new player in this space. PHEV conversions are one of several alt fuel conversions products. Uses lead acid batteries.

That's not a complete list I'm sure, and there will be new additions on a regular basis.

But is it worthwhile from a business perspective? I'm not so sure, for a couple of reasons.

• Market: Most of the converters are focused on the broad swath of Prius owners as their target audience, figuring that these early adopters will be willing to pony up for a product that dramatically extends the range of their vehicles. But with manufacturer built solutions about 3-5 years away, my impression is that the vast majority of owners will wait for one of these. These cars will provide the personal statement that early adopters are seeking (the main reason people buy a Prius in the first place) that a converted car cannot provide.
  
• Expense: Conversion aren't cheap. Baseline at present is $10,000 USD. Will the mass market use those funds to convert an older car or use it as a down payment on a newer one when it becomes available.
• Bandwidth: Converters are small companies. By the time they effectively ramp up to deal with potential demand (for both installation and service), the big players will be that much closer to roll out their own products. Which, by the way, will be supported by their existing warranty and service infrastructure.
  

PHEV converters have played an invaluable role in drawing attention to the promise of these vehicles, and have spurred major automakers to really commit to the development of PHEVs.
Unfortunately, the long terms viability of these companies remains in doubt.

UQM is Motorin'

Let's review the last several months for UQM Technologies, maker of propulsion systems for the growing electric vehicle market.

• Phoenix Motorcars orders $9.25 million of UQM motors for Phoenix's new all electric SUT.
• Forms strategic alliance with advanced battery maker Altairnano, one of the fastest risers in this critical market space.
  
• Obtains over $1.7 million in two separate contracts from the US Air Force.
• Announces development of a new 150kw motor ready for use in high performance vehicles (are you reading this Tesla?) and heavy duty commercial/military vehicles.
  

UQM has over 25 years of experience developing electric power systems for advanced vehicles. They've got proven contacts in both military and civilian markets. Their technology is proven, and is advancing.

As developers of next-gen EVs look for suppliers of motor systems, the safe bet is that UQM will be on their short list.

All Charged Up: Quick Battery Update

Lots happening with some of the leading makers of advanced batteries targeted for the transportation industry.

• A123: GM announced the winners of their Volt battery beauty pageant, and Germany-based Continental Automotive Systems, a division of Continental AG, was one of the two winners. A123 supplies Continental with their battery technology. GM will evaluate battery product through June 2008, and then make a determination of how to best to move forward.

• Compact Power, Inc. (CPI): CPI is the other GM pageant winner. Based in Troy, MI, CPI is owned by Korean battery maker LG Chem. CPI's large format batteries use a proprietary formula that apparently can withstand 300K recharge cycles. The company further claims a 15 year product life span. Key point: LG Chem will develop and supply all the batteries; CPI is only responsible for design and assembly of the cell packs that will be supplied to GM. Essentially the opposite of the relationship between A123 and Continental AG.
  

• Altairnano: The good news for Altairnano is that performance claims surrounding their batteries were recently verified for the California Air Resources Board by AeroVironoment. AV ran "50 ten-minute fast charging cycles at the module level with a 120-minute discharge to simulate travel at 60 mph" with no battery degradation at all. The findings seem to confirm Altairnano's claim that the battery should be "good for tens of thousands of cycles equivalent to 500,000 miles of vehicle travel." Also, looks like the folks at Altairnano found their Tesla. London-based Lightening Car Company will produce an EV sports car using Altairnano's NanoSafe batteries. At a cost of close to $300K US, it's not going to be a big seller. But, then, no one expects the Tesla Roadster to gain wide market share either. The purpose of an exotic is to draw attention to a technology that will eventually find broader application.
  

Friday Round Up: Some old friends...

Worth noting a couple of news items featuring some folks we've blogged on in the past.

GreenStar Products (view previous entry) recently completed "Phase 1" of a demonstration facility for their algae to biofuel technology process. The objective of Phase 1, apparently, was to determine if they were able to sufficiently control H2O quality (temperature, salinity, ph, etc.) to create an optimal growth environment for algae stocks. Here's a link to the (long) GreenStar press release that includes a couple of pictures of the test facility.

I've got some issues with GreenStar (which you can review in that previous post), but algae conversion to biofuel is an interesting opportunity to bears watching. Hope the company gets it's stuff together.

Tesla Motors scored another $45 million in series D financing. The capital will be used for further development of the White Star EV passenger sedan, developing sales and service infrastructure, and mass production of the Dark Star Roadster.

Seems like that's a lot to ask of $45 million. Keep a look out for Series E...

Tesla: I Don't Get It

Apologies: I know I just posted on Tesla recently. But something's bugging me.

Far be it from me to denigrate the great job that Tesla has done so far with their roadster. They figured out one of the great issues related to EVs: there's no significant market for a electric far that looks goofy. Their roadster, despite a recent drop in estimated total range, is a sexy, exciting high performance car that has changed the way people look at EVs. Yeah, the phrase is tired, but it's a paradigm shift for electrics.

But I can't figure out their marketing plan to save my life. Reading the company blogs related to marketing, you learn that the company is taking the car on a road show. In addition to showcasing the vehicles to suppliers, Tesla staff are visiting car shows, Earth Day events, and all manner of grassroots car events and organizations.

On the surface, this is a HUGE waste of time and money. Taking the Tesla roadster to an Earth Day event is like trying to sell hamburgers to Hindus: wrong market. Yes, environmentally conscious audiences will lust for the car. But it's a long trip from lust to purchase.

Tesla needs to go back to what makes the roadster so compelling in the first place: it's a limited edition, high performance, attractive car that attracts attention. It's aspirational. It's expensive. It just happens to be an EV. This electric status sets it apart from competitors like Porsche, BMW, and the other high end performers that Tesla should be considering competitors.

Marketing plans should be adjusted accordingly. Opening boutique "showrooms" on the most exclusive shopping districts in the US : Rodeo Drive, Park Avenue, the Miracle Mile, etc. Marketing partnerships with other aspirational brands: Rolex, Coach, etc.

With the roadster entrenched as an object of desire, future releases planned for the rest of us will enjoy the roadster's halo effect. That's the pathway to future economic success.

Autos: Tesla Range In Doubt

File this under "too-good-to-be-true"?

Much has been written about Tesla Motors, the electric car start up that has become synonymous with the recent innovation explosion in alterntive fuels and efficiecy technology. VCs (VantagePoint, Draper Fisher Jurvetson, JP Morgan Bay Area Equity, etc.) and private investors (notably Google co-founders Larry Page and Sergey Brin) have provided the company has been funded to the tune of over $65 million.

Initial range estimates for the company's first roadster model (the Dark Star, pictured here) indicated 250 miles before a required recharge. Following EPA compliance testing, however, that estimate has now dropped to 200 miles. The company attributes this to required added weight for the final production version of the car.

Let's hope that this number doesn't change further. 200 miles of range may still be acceptable to their market. Should it drop below, however, perceptions about the car may begin to shift, impacting the ability to move vehicles after early adopters are sated.

Autos: Zap

So Zap is in a pilot program with the city of Richmond to use their all electric XEBRA cars in a fleet setting. The 3 wheeled XEBRA is manufactured in China, and will be sold in the US for about $10K. It apparently has about a 25 mile range and can hit 40 mph.

Good for Zap. But don't run out and gobble up Zap stock just yet.

I've had the opportunity to sit down with members of the Zap team a couple of times in the last 2 years, and have not exactly come away enthusiastic. Like their cars, the management team seems to lack the horsepower needed to make the company go.

Case in point: Zap is the company that figured they'd sell the Smart Car in the US based on a "handshake" agreement with Daimler Chrysler. Then, when D/C decides to sell the car on their own (after then vehicles have been "Americanized" by Penske), Zap is shocked, yes shocked, when they're issued a cease-and-desist related to their own Smart activity.

Needless to say, it's a little hard to find much about the Smart Car on the Zap website these days...

Autos: Phoenix Motorcars

Phoenix Motorcars of Ontario, California is beginning to market an all electric Sport Utility Truck build on the chassis of a South Korean made truck. The battery pack is supplied by AltairNano (more about them in a future post), and company reps claim that the vehicle has a 130 mile range, and can recharged in 10 minutes (at a 220 volt outlet... longer at the household standard 110.)

Interesting news: Phoenix and Pacific Gas & Electric ( the dominant utility in Northern California and major proponent of electric vehicle and PHEV adoption, for obvious reasons) just announced a pact where PG&E will take delivery of 4 Phoenix SUTs.

Perhaps Phoenix finds success in this niche (fleets). It's somewhat limiting insofar as overall growth (e.g. no immediate mass market product), but it certainly bears keeping the company on your radar.