Sunday, May 19, 2013
* Transcriptions provided by Climate One at the Commonwealth Club are provided as convenience and reference only. Please listen to the audio before quoting from the transcript to check for accuracy.
Greg Dalton: Welcome to Climate One, a conversation about America’s energy, economy and environment. To understand any of them, you need to understand them all, I’m Greg Dalton. Today we’re taking a spin cars built to visit a gas station less often or not at all. In March, Americans bought record numbers of gas electric hybrids and pure electric vehicles, as fuel prices continue to climb. Fifty-two thousand cars or about three-and-a-half percent of total sales were gas sippers or gasoline free. That’s heartening for clean car enthusiasts but alternative vehicles still have a long way to go before moving from the coastal cities to the American mainstream. In the next hour we’ll discuss the new generation of cars coming on the market. The companies making them and the emerging technologies they’re betting on and as always we’ll include questions from our live audience here at the Commonwealth Club in San Francisco. Joining us, we’re pleased to have three auto experts. Chelsea Sexton, a former General Motors marketer featured in “Who Killed the Electric Car?” is now an EV advocate and consultant. Katie Fehrenbacher is senior writer at GigaOm, an online news site and Ucilia Wang as contributor at Forbes. Please welcome them to Climate One.
[Applause]
Um, Chelsea Sexton let’s begin with you, thank you for coming up from LA for this. Uh, first before you left LA I understand you sent out a tweet. What was that tweet that you sent out?
Chelsea Sexton: I might have suggested that I was heading here to do my first girl-on-girl-on-girl experience.
Greg Dalton: Okay, well.
Chelsea Sexton: Anyone was welcome to come join.
Greg Dalton: Well here we are.
Chelsea Sexton: I am--I am you know um marketing at heart right?
Greg Dalton: Marketing and raised here in San Francisco. You’ve been doing this a long time, you could--ah been involve--involved with electric vehicles for a long time. Could you give us uh the context give us a brief shining moment for electric vehicles in the late ‘90s, early 2000s and then things died down, where are we now?
Chelsea Sexton: You know it’s a little deja vu all over again, this generation versus last. We’re in that same little vulnerable valley of death a little bit. You know we had cars in the road last year for years, look very promising, the automakers started out seemingly dedicated and a couple years in it kind of all went south. Now we’ve sort of gotten them to come back to it. We have some automakers more into this than others but there’s at least a handful that are fairly aggressive and yet I think there’s a little too much complacency going on right now. Okay the momentum’s there, this is inevitable we can all just sort of move on. And having seen what could happen, I don’t think that’s true.
Greg Dalton: Katie Fehrenbacher, you know do you think the glass--glass is half empty or half full on this do you think that it’s you know.
Katie Fehrenbacher: Well I think the current public sentiment and political environment, I feel like it’s definitely trending towards the glass half full. You know there’s this--in 2012 there’s been a big backlash kind of against electric cars, the Volt has been politicized. So in that respect, I would say glass half empty. Kind of hearing Silicon Valley over the past couple of years I think and you know, we’ve had Tesla IPO couple of years ago and so I think in Silicon Valley there’s this kind of--there has been this kind of trend where you know there’s this rising tide and you know we’re just gonna hit this peak, and I think that’s also not true so. I guess I gave you a half answer in this.
Greg Dalton: Yeah, yeah it says both glass half empty and half full.
Katie Fehrenbacher: At the same time.
Greg Dalton: Ucilia Wang, sometimes people think there’s a lot of hype in the EV market, is that true? Don’t you think that they’ve been overhyped?
Ucilia Wang: I don’t know if they’re being over hyped, I think there’s just a lot of high expectations for what the sales can be and we’ve seen that with General Motors involved and Nissan Leaf where they set their sales forecast and they couldn’t meet them, right? So that was I think a big problem last year when, you know, at the end of the year they sort of have to come to the recognition that really--you know not as many people want those electric cars as they initially thought.
Greg Dalton: That was 10,000 cars, not a huge number for General Motors that’s a pretty small number, I know some EV advocates some are Chelsea’s friends wanted them to build a lot more of those right?
Chelsea Sexton: Right. And I think it’s part of this managing expectation. It’s not whether the cars are great or performs as expected or whether they can really achieve you know fuel savings. It really is just what the company says it has to do and when they don’t achieve that goal, then it just makes them look bad. So I guess, I don’t know if that would be consider a hype but I think they show a lot of education that’s needed to really I think popularize EV’s and I don’t think it’s not as it should have been done. So I’m not sure I would agree that there’s complacency or perhaps am not sure why they are never but-- I’m not sure if there’s a complacency I think there’s actually a lot of concerns even on the part of automakers and how we’re gonna make all this work considering how much money they put into it.
Greg Dalton: So what do you mean by complacency Chelsea?
Chelsea Sexton: I mean more by the stakeholders and those would have been sort of pushing for this and trying to make it happen and policy and all the very supportive mechanisms. And--and to certain degree even the community itself, the EV advocates and enthusiasts. You know have been wanting for so long and it seems like so much is happening and it’s absolutely true compared to a few years ago. Tons is happening compared to what we actually need to get done in order to make sure this is sustainable, we’re just not there yet but at the same time on the sales numbers, you know a lot of debts sort of setback to the veterans of the industry about what’s been sold is what we expected. You know--nobody thought that Nissan was going to sell 25,000 cars you know shame on Carlos for saying it but 10,000 best case scenario was about what we were expecting first year out. And you know, just like earthquake, there’s a couple of things we couldn’t predict but GM didn’t fall very short of theirs, Nissan hit right--or you know just under 10,000. And so part of the frustration is a little bit that whether it’s media or opposition or whoever is, I would say confusing corporate sales projections or goals with more industry analysts feels of what’s realistic versus what someone wants to put on the press release.
Greg Dalton: And another thing that veteran say is they understand who these buyers are. So let’s talk about the market, who buys electric cars? Is it just the tree huggers?
Chelsea Sexton: No, no--I mean it’s always been assumed to be a very crunchy California environmental thing, and there’s certainly some environmentalist that are buyers but you know as long as I’ve been doing this they’ve been the smallest group of people buying these cars, and the largest has been ‘I want it cause it’s cool, it’s fast, it’s a fun new thing to have. Classic early adopters. And then the second and very large and largely overlooked group are those that love the technology that you know, classic Engineer types this is how I came into it, not as an engineer but as a geek, who just love the efficiency and loved the technology and that’s what thing that would not necessarily be classic early adopters but on this they are because they love the technology. And then after that comes all the cost oriented folks whether it’s environmental or engine security and behind them somewhere you know a couple of years it’s more the economic argument pragmatist generally.
Greg Dalton: And do car companies understand this?
Chelsea Sexton: No.
Greg Dalton: Do their marketing campaigns reflect this market segmentation that you’re talking about?
Chelsea Sexton: Judging from the standpoint that Nissan’s very first ad had a polar bear hugging somebody, I’m thinking no.
Katie Fehrenbacher: Well it mean GM said itself that it was revamping its marketing for the Volt over the next couple of weeks they kind of didn’t get it right at the beginning.
Chelsea Sexton: And the new owner ads are terrible.
Greg Dalton: And they has some very confusing ads with a person with the Volt at a gas station and the consumer kind of scratching his head explaining yes it’s electric but it goes to gas stations and it seem it’s a hard message to get across. So you blame the companies for not acting upon that research you think they’ve got it wrong headed their marketing campaign?
Chelsea Sexton: I think they’re too incredibly underutilized resources in this industry, whether it’s the automakers, utilities, politicians whomever--the EV drivers, those with experience using the technology using the charging stations, we have absolute data users –usage pattern of things and those that have worked with those consumers and have worked the front lines and were leftover from the last generation of deployment. There’s a lot of needs that we already scanned and if we don’t know everything but we know enough to prevent scanning some of them again and yet we’re having to sit back and watch that because there’s so much arrogance and so much hate, everyone that did it before stupid that was just a little generation, we got nothing to learn from that, we know how to do this.
Ucilia Wang: What do you mean by using the EV users in commercials and sort--
Chelsea Sexton: No I mean for Intel.
Greg Dalton: Focus groups have sort of -- but they do have focus groups now and they don’t listen to them?
Chelsea Sexton: There are some focus groups like started really, really late. Really late, but you know one day of couple hours with somebody is not necessarily enough as we’re seeing.
Katie Fehrenbacher: I think one of the problems also is that the EV drivers are so split like you are saying so there’s all these drivers who bought the Roadster and you know buying the $100,000 car is going to be so completely different than the DIY geeks who are--you know doing their own EV’s you know back--
Chelsea Sexton: You would think, not so much.
Katie Fehrenbacher: Well I mean someone who buys a $100,000 car is a completely different buyer--
Chelsea Sexton: Generally, generally.
Katie Fehrenbacher: -- compared to the -- like the Mitsubishi I mean at some point.
Chelsea Sexton: No, I agree with the sentiment but I--I’ve watched several you know retired professors who would never spent that kind of money on a car mortgage their house because they just believe in this so much and it was the--the next thing that they could get after EV-1 and they want the support Martin Eberhardt and there a lot of the technology enthusiasts fell into that group as well even though normally that would never be their behavior but instead of taking vacations and buying stuff this was their splurge, yeah.
Katie Fehrenbacher: And these aren’t mainstream people necessarily either right. So--
Chelsea Sexton: No, but--
Katie Fehrenbacher: --I mean to get past that early adopter to the mainstream is going to be even be more difficult to market that to that whole set.
Ucilia Wang: They didn’t order, said that they’re gonna target really just we put in the consumer with EV buyers. So they’re not really targeting the mainstream.
Katie Fehrenbacher: No but it’s interesting how he said yeah, Jim Farley recently--
Greg Dalton: Who is--who’s Jim Farley?
Katie Fehrenbacher: He’s the Global Marketing--Head of Global Marketing for Ford. And he recently--he had a comment that just we all love so much that basically said “We’re not--we’re advertising the Ford Focus EV to people who would buy EVs not to you and me.” Because those are just weird people over there that would buy electric cars and it sort of interesting the sentiment, but it encapsulates how automakers thinks of these early buyers. And by early adopters and fast followers we’re talking the first, two, three years of buyers not the first six months but they tend to think of those people so fundamentally different from normal people from the mass market and I think they’re more concentrated versions maybe in some respects but they’re not completely different animals and that’s been a misunderstanding.
Greg Dalton: Well let’s compare that with General Motors, who spent years advertising the Volt, I know some people thought it was just vaporware that would never get built issues just sort of delay tactic ride that some people were actually accepting that it was, it actually got built. So GM spends tons of money, sells 10,000 cars the first year. You’re at Ford you are thinking well but that--was that well money spent? Well maybe not maybe we should go a different path, right? So let’s compare Ford and GM in terms of their big splash versus very targeted marketing approach. Which one’s more effective? Ucilia?
Ucilia Wang: Well I think--with what happened with GM is I think they’ve spent several years touting the Volt but then you have the whole financial market crisis and economy tank and it’s just not a good time to market a car that’s so expensive. So I think – so there’s a basic economics. Yes, I would like to drive an electric car or you know a plug-in hybrid but it’s just not the price range that I can afford at this point. So I think you have to consider the timing of when GM actually introduced the Volt and tried to market it to the wider audience.
Greg Dalton: Do you think Ford is halfhearted?
Ucilia Wang: I don’t think so. I’m not really sure about the idea of using reality show and Facebook game though as vehicles to promote the Focus. I don’t know if you’d played the game. I’ve seen demo--I mean there’s a video of it and I’m not quite sure who the audience is and the people really would play the game and then say “Oh I really wanna go try the Focus.” I think it’s more like when you go to dealers and you look around and you say “Oh I’ve heard about this car but I don’t know much about it and I’ll test drive it and well darn its too expensive I don’t think I’m gonna buy it. “
Greg Dalton: Chelsea Sexton, you think Ford is half hearted?
Chelsea Sexton: If half, yes that’s the glass is less than half full I think. Yeah Ford is--I mean there are very different approaches. If you want to compare GM or Nissan, they both pick their particular vehicle technology and they are an inch-wide and a mile deep. Ford is a mile wide and an inch deep and they sort of doing these the rules they have to, they launch the Ford Focus EV in December, they have put 12 of them on the road. Mostly to the utilities and making them sign agreements that they won’t let anyone test drive them. They finally started media drives five months after they started delivering vehicles. They have tried so hard to not actually put this car out there and absolute evidence of how they’re marketing it, I mean the demographic is not someone’s gonna watch a reality TV show on Yahoo.com it’s just not. You’re trying to appeal to the--to the folks that are interested in these cars -- that’s not how you’re gonna do it. Meanwhile, Alan Mulally is running around saying no one actually wants a plug-in car, they just want gas hybrids. So the leaders are thrashing their vehicles at the same time they’re going, “Oh yeah but we’re so serious it’s all--it’s all press release and if GM did the same thing they’ll be setting the building on fire. I mean people would never tolerate it and that’s part of why GM hyped that car so much and they have to convince all of us that they were serious given the EV-1 and what had happened. Did they do it to the degree that we kind of made fun of them for various things? Sure, but it did take that flogging the fact that they were doing this in the technology in there and all the transparency was required just to get anyone to believe that they’re doing this car at all. So that was mainly for the media and the advocate’s benefit as much as it ever was for consumers trying to sell that car. So they’re very different approaches and reasons why they’ve taken the marketing purchase they have.
Greg Dalton: Sure GM was atoning for its sins.
Chelsea Sexton: Something like that.
Greg Dalton: Ford, I heard Alan Mulally speak recently, Bill Ford has been sitting here on this stage recently. He would say their strategy is one platform and we can put electric motor in there, plug in, hybrid or gasoline hybrid ‘cause they don’t know which one we all gonna buy. So you are blaming them for not marketing and selling more, and they would say “Hey it’s the consumers, they’re not buying them.” So--
Chelsea Sexton: But again I go back to if only there are ways to find out some of this information, if only there were drivers and if only there were people who’ve worked in the industry and they can’t sit back and say we have absolutely no idea. You know it’s one thing to say we’re not sure exactly if the plug in hybrid or EV-1 win in there and would it happen in 10 years? Of course not. But to say we’re building literally one at a time and we’re gonna put a couple hundred on the road, that’s CARB numbers. Those are compliance programs. Those are -- we are doing these because we have to, to get the CARBs that we have to get.
Greg Dalton: Carbon-- the California resources boards like please--give your regulators some candies and then just go about your business.
Chelsea Sexton: But I would love Ford to prove me wrong.
Greg Dalton: Which electric car maker is most exciting to you all right now?
Katie Fehrenbacher: Tesla.
Greg Dalton: Same?
Chelsea Sexton: Yeah.
Greg Dalton: Chelsea’s husband works for Tesla so, Ucilia.
Ucilia Wang: Well Tesla for the sexy cars, but that’s it as far as.
Greg Dalton: So why Tesla, let’s talk about Tesla they certainly accomplished making electric cars cool. Ten years ago, electric car made a go-car with funny wings and ride little lawn mower or something. Now, electric car means cool, sexy Model S.
Katie Fehrenbacher: Well I think the Tesla is one of the only startup companies that has kind of not necessarily succeeded yet but has made it to certain milestones and they’re doing reasonably well. And I think that, you know, it’s exciting to me that there can be a disruptive startup company that’s trying to disrupt the car companies in general versus you know the large automakers creating their own EV’s or just a little bit less you know disruptive and exciting from that perspective, from that media perspective.
Greg Dalton: Others would say that Tesla has a huge stock price whether they got $3 billion evaluation. When the CEO of General Motors was here, I looked at the Tesla stock price since the GM IPO and Tesla had outperformed Ford, GM and Daimler from that artificial starting point. So the stock market’s liking Tesla, some people might say that they just been announcing lots of products it’s also heavily shared on the stock market. A lot of people are betting on Tesla’s failure, Chelsea tell us some more.
Chelsea Sexton: Look Elon is a showman. I mean there’s absolutely some storytelling and some showmanship as part of all this. And yeah sometimes I’d say more showmanship than substance and vice-versa, but the reality is that for a long time they have put more electric cars on the road than any major automaker out there. And I do--I agree with Katie that the first ones -- first startup that looks even remotely viable that we’ve seen. And the--you know--what’s interesting about them and I think what people resonate to is how aspirational their vehicles are. They’re the one company that kind does get, that these are an emotional purchase and it’s not some dumbed down appliance you have to make really boring to get people to accept. Vehicles are all about passion in one way or another, and they are about the emotional experience. For some people that’s performance, for some people that’s quiet and smooth, for some people it’s the HOV lane and it’s easy, it doesn’t matter. But they kind of get that that’s what’s--what it’s about. And so from that perspective and from a design perspective and showing what’s possible, I think they’re interesting. From a long-term success, I really like the guys who understands that a 100 or 150 mile car, real world 100 something miles is where it’s at and making that cheap enough for more and more people to afford is actually more important than making a 300-mile version that only a few people can afford. So it’s a little bit of a bidirectional goal but--
Ucilia Wang: Yeah, but that’s the problem I have so much for Tesla can actually or when it’s gonna actually make that affordable cars. Right, for the second model, I remember a couple of years ago Model S was supposed to be like marketing to the masses but it’s still too expensive. So I thought that the third model is going to announce, it’s coming out, and maybe that the price will come down. No, it’s not coming down it’s the same with--
Katie Fehrenbacher: Well the third model is based on the Model S. It’s gonna be the third blue star or whatever it’s just to be the super cheap ones that’s 30,000 it’s like a couple of years away.
Chelsea Sexton: Right.
Katie Fehrenbacher: I mean it’s taking awhile but--
Greg Dalton: Thirty-thousand super cheap I guess in EV terms, yeah.
Katie Fehrenbacher: Super cheap, yeah.
Chelsea Sexton: Yeah, I guess--I’m not I don’t expect Tesla to make the affordable car. It’s going to be Nissan or Mitsubishi or somebody like that to make the 100-mile every-man-car that I could actually afford maybe. And Tesla will make the one that I aspire to, and you know, I have to get a roadster fix every once and awhile ‘cause I like torque and horsepower more than anyone reasonably should.
Greg Dalton: But the other thing that Tesla is doing is kind of need they’re having different battery packs. You can buy more mileage. You can have the 100-mile version, the 200-mile version, the 300-mile version, something like that and you pay more each. Now that sounds like something interesting for the industry.
Chelsea Sexton: Absolutely.
Greg Dalton: Is that going to address different buyers with different wallets and different levels of range anxiety?
Katie Fehrenbacher: I think so--I think they’re also thinking outside the box in terms of how they’re gonna sell it in terms of design features. I mean that’s also why they’re exciting instead of you know Ford CEO saying like we’re not going--we’re only selling to the EV drivers, they’re trying to sell to just a reg--not a regular person but a person that’s not an EV enthusiast. They’re trying to bring them in with other features like you know this different range things and kind of weird, unique designs like with their SUV, minivan yeah.
Ucilia Wang: I liked the roominess of the van, I think that would really be appealing because the Ford Focus electric, I think part of the trunk of the back has actually taken up with the battery so you don’t get as much trunk space, and then for somebody who you know has a lot of athletic equipment or kids with a lot of things you know that might be, you know, not a selling point for Ford to do that.
Katie Fehrenbacher: So the model-S is the first like car, electric car designed from the bottom up to as an electric car instead of--
Chelsea Sexton: Of this generation.
Katie Fehrenbacher: --instead of taking another chassis and putting in batteries basically into conventional guard so. So I mean--I think they’re trying to think outside the box whereas a lot of the big EV makers are not.
Greg Dalton: We’re talking about electric cars and plug in cars at Climate One our guest like Chelsea Sexton, former GM--General Motors Marketer and EV advocate and consultant. Katie Fehrenbacher, senior writer at GigaOm and Ucilia Wang a contributor at Forbes, I’m Greg Dalton. Battery prices have been a big obstacle to EV adoption getting the price down. Let’s talk about battery prices, are they falling or are they still -are they falling with deployment or they’re still the biggest obstacle to--to EV’s?
Ucilia Wang: I think that they’re falling with deployment. I think for some reason figured about 14% decline in the prices but they’re still very expensive.
Greg Dalton: Per year or--
Ucilia Wang: It’s over a year, yeah. I think it’s over a year but these are very expensive and I think these most recently sighted figures are--I think they are costing about 12 to 15 thousand for the Electric Ford Focus and that’s about third of the price of the car. So that’s still too high and, you know, we talked about Tesla and yeah you can always pay more for more powerful batteries and that would give you the range you want but ultimately you want long range and cheaper batteries so that you can really get a massive option that way. So yeah, I think it’s still too expensive, it needs to come down.
Greg Dalton: Anyone else--I mean people say that they’re not falling fast enough certainly Moore’s Law doesn’t apply to batteries as it does to other electric conductors etc.
Katie Fehrenbacher: Yeah, I mean I think that’s one of the problems where there’s been a lot of startup electric car makers in Silicon Valley that have been expecting battery prices to drop the way Moore’s Law has dropped prices for chips. So um, that’s been one of the miscalculations I think in terms of the startup community.
Chelsea Sexton: But at the same time I don’t think that battery prices have ever been the biggest obstacle to EV adoption or the vehicle price for that matter. You know, production has is--currently the single biggest obstacle. There’s not that many available and there might be, you know, Leaf and Volt and I mean it’s they’re here but instead of look at the urban areas and the broad early adopters who want EV’s right now, there are not that many. And for all the talk of cars getting sold as so many last year they predicted they also haven’t been sitting around on the lots. There--there has been an availability issue from the very beginning in one place or another. So variety will help sales, production will help sales and yes we want prices to come down no question and they are but not as fast as we want. And yet for this stage of the market, it’s not been the biggest obstacle, in three years? Two years? Absolutely. If we’re still--if we still have this prices in two years, we got a problem, but today that has not been the issue.
Greg Dalton: So when I went to buy my Nissan Leaf , in South San Francisco, there were four or five Leafs on the lot. I have my pick of red, I got my blue one, so there were certainly a number of supply in San Francisco, and this is one of their top markets. Chevy, you know idled their Volt production plant for a while--so I think the car makers would say, demand is the problem not supply.
Chelsea Sexton: And yet every day I have someone coming to me saying “Help me find a Leaf or a Volt.” I mean--as soon as GM shut the factory down, I still had people contact me every day saying, “Help me find one, I can’t find one.” And I’m asking you know five thousand people on Twitter, “Anyone know where these thing are sitting ‘cause I can’t find them.” I had one Virginia dealer coming to me saying. “We got four.” Nationwide, I’ve not--I’ve never found the pocket of Volts that was sitting around that GM had to shut that factory down. So could there be a supply-demand mismatch geographically? Sure I mean those certainly are issues that we have to resolve but there has not been -- we have 100,000 vehicles and we have you know 10 different models, and you know, no one’s buying them. We have two basically and we’re starting to get the [unclear] or the Eye. And so part of it is do you want one of those two cars or are you waiting for the couple--one of the couple of dozen that are coming.
Greg Dalton: Sure, but they’re still premium products, Katie Fehrenbacher are battery prices or prices overall an obstacle for these--I’ll throw in even hybrids not just pure electric. They cost more than regular gasoline cars and that’s an obstacle particularly with a tough economy.
Katie Fehrenbacher: Yeah I mean of course, you know battery prices are gonna be one of the problems for electric vehicles I think for a significant amount of time. Um, you know there are some startup that are and you know big battery makers that are trying to do different types of breakthroughs to bring the price down you know there’s some in Silicon Valley, some are called MVA that we heard about recently. You know IBM has like a new breakthrough, 3M is working on some stuffs but the best might take a long time, you know, it’s not Moore’s law it’s going to take decades for that.
Greg Dalton: We talked about Silicon Valley investors and how--the car making is--making cars is not like making chips. Kleiner Perkins is one of the most well regarded most famous firms in Silicon Valley. They’ve made several bets on automakers haven’t work out so well. Chelsea, what do you think of Kleiner Perkins as an auto investor?
Chelsea Sexton: I would really like them to stay away from my playground. You know--
Greg Dalton: But a lot of the advocates were very happy when Kleiner Perkins went in and saying, “Hey, look this is smart money. Silicon Valley -- these guys know what they’re doing. This is a validation of the sector. This is no longer hippies in the woods. This is like real money.
Chelsea Sexton: No, I think that--I think we’re all excited to see venture-capitalists become interested in these technologies. Absolutely, and Kleiner was one, Vantage Points invested in Tesla and in Better Place, and so we have it in the others that are sort of sub--subsets of that but you know we were excited for the enthusiasm but whether it’s investing in the company or developing policy, we still want to see experienced wisdom in the conversation. And that’s what has sort of been lacking and I’ll say that the issue is not so much what Ray invested in. It’s everybody else who followed on believing that Silicon Valley has a crystal ball. And didn’t do their own diligence, and likewise, didn’t invest the wisdom in those conversations. And you know, believing in the crystal ball is part of what has gone wrong.
Greg Dalton: And they’ve been--sorry.
Katie Fehrenbacher: I think part of – I was just saying part of the problem is what Chelsea said is that venture capitalists will make these investments, and then you know, well-known venture capitalists, and then you know, government money will follow, well known venture capitalists because you know they have a long history of success. So you know the DOE, will say, okay you know we’ll go with, you know, that company funded by so and so and then, you know, sometimes that doesn’t work out.
Greg Dalton: But these are risky investments of VC’s if they win on 10 or 20 percent of their investments their happy then they win big and most to what they invest in fails, they don’t talk about that as much right. And so autos are no different right, so we should have expected this.
Katie Fehrenbacher: We absolutely should have out of the venture investments and the venture investments are not the problem. It’s everybody who followed on, and the DOE is the classic example. “Oh my gosh! Kleiner Perkins is like the celebrity venture so they must know something we all don’t know back here and let’s invest in them because Ray did. And yet “--
Greg Dalton: Ray – are you talking about Ray Lane.
Katie Fehrenbacher: -- At Kleiner yeah, and venture capitalist expect an eighty something percent failure rate. The DOE and taxpayers can’t afford that failure rate. They’re fundamentally different approaches that need to be involved and yet they’ve been a little too co-dependent for the last few years.
Greg Dalton: So has government money help or hurt the electric car sector?
Chelsea Sexton: Yes.
Greg Dalton: Ucilia?
Ucilia Wang: Well I think--I think mostly I think it has helped only because it’s you know Tesla, the car that we are excited about surely has gotten a big government help in building a factory and in getting the models going. So I think--
Greg Dalton: An old General Motors factory in Fremont that now is coming to life again to build electric cars it just--.
Ucilia Wang: The Model S, right, and the power training of business that they have. So I think Tesla is a good example of something that has worked so far. With Fisker’s--Fisker’s a bit different only because, you know, the government sort of cut off Fisker’s ability to draw--
Greg Dalton: Let’s say what Fisker is.
Chelsea Sexton: Oh, Fisker Automotive is another electric car company they make plug-in electric hybrids so it’s let’s them work with the gasoline and electricity--
Greg Dalton: Gorgeous, gorgeous cars.
Ucilia Wang: It is a beautiful car. The first one is the Karma that they launched recently and--they’re actually based in California in Irvine I believe right? So--so they built the first car and launched it and it’s about a $100,000 price tag. It’s similar to the first Tesla model. And then they wanted to make the second car, the second model. And they got a government loan to do it but they didn’t meet certain goals, so milestones set by the government. So the Department of Energy basically said that you can’t draw down on this loan anymore until—unless or you meet the goals. So as a result, Fisker recently had to go out and raise I think near $500 million to help you know get that second model going. But in that case, I guess it hasn’t really worked out for Fisker because you know, you have to go out and seek private money and also has to--has had to contain with a lot of technical problems with its first car, so it’s trying to sort of repair its reputation at the same trying to design a second model and trying to get that going.
Greg Dalton: So is Fisker, gonna die?
Katie Fehrenbacher: I think they’re really gonna struggle still, I mean they already have struggle in the past few months. I think they’re going to continue to struggle this year.
Greg Dalton: Which the guys in Detroit would say, “See there’s a reason why no successful startup has come in to the auto industry in what last 30, 40 years remember John DeLorean. It’s not easy to do what we do. These startups—a lot of them are not going to make it ‘cause it’s a tough business especially at anytime.
Chelsea Sexton: True, although part of the issue with Fisker is you know that--the investment didn’t make sense from the beginning to a lot of the veterans and since Kleiner Perkins put the first $10 million in there, and there have been whispering in the corners of the EV conferences who Henrik must have had naked pictures off.
Greg Dalton: Henrik Fisker is the founder of Fisker an auto industry, veteran designer.
Katie Fehrenbacher: Celebrity auto-designer --
Chelsea Sexton: And the conversations have only grown as DOE and others have invested in them and it’s not that he’s not a brilliant designer, he is but you generally especially at the venture stage, you don’t invest on the pretty skin you invest in the intel inside. And they outsourced the intel to Quantum which is a contract company that does conversions for different projects but it’s not known for plug-in hybrids it’s known for hydrogen conversions and it’s not known for doing anything in volume. And so from very early on we’ve been very skeptical thinking they proved themselves at some point and they just never have. So you know part of that is the fundamentalist-- not a smart choice to begin with the problem well before you got involve with the DOE or the wisdom of government funding.
Katie Fehrenbacher: Well if you look at Tesla versus Fisker like you’re saying um, you know Fisker was really like a design from the beginning and Tesla was trying to built you know the battery packs and the technology. So they had completely different approaches even though they are two startup companies funded by Silicon Valley venture capitalists and they both got you know DOE funds. So you know we can see how well some have done and how well the other one heas.
Ucilia Wang: Speaking of DOE funds, most of the issue with that loan program that a lot of car--startup carmakers were counting on and that they weren’t able to actually make use of it in the past year because the belief is that the DOE just got a little skittish about approving anymore loans you know given the political climate and what happened with Solyndra. So yeah, so I think the few car companies electric or plug-in, you know, startup companies actually either went bankrupt or you know they just gave up on the idea of developing that model that they wanted to do with the DOE money. So in that regard I guess you know some people will say that government hasn’t done enough or hasn’t actually fulfilled its promise of helping this whole startup industry to get going.
Greg Dalton: Let’s talk about that, the politicization, Dan Akerson the chairman of General Motors was here and he say we didn’t build the Chevy Volt to become a political punching bag. There had been hearings -- he’s been hauled before Congress to say what happened, what’s going on with the some problems with the Chevy Volt battery. How has the politicization of electric vehicles impacted of these companies in their sales? Chelsea.
Chelsea Sexton: Well, I mean I think both the best and worst thing ever to happen to plug in cars was President Obama liking them. You know, we have had for several years now a fair amount of bipartisan support that has gone very quiet on one side because of the politics and because of the election year. And so there’s still fans --they’re just must quieter fans. And that I think has definitely hurt, I mean it has hurt sales but it’s also has feed the NTHSA investigation which turned into just a witch hunt a lot the media’s--
Greg Dalton: That was the National Transportation Highway Safety Administration investigation of the Chevy Volt’s fire in the parking lot okay.
Katie Fehrenbacher: And GM said their sales were down directly related in January and February to that –those hearings.
Chelsea Sexton: Of course. Right.
Greg Dalton: Will it bounce back?
Chelsea Sexton: Oh sure. Yeah.
Katie Fehrenbacher: Well they had a record month in March.
Greg Dalton: General Motors did yeah -- there was I was at a dinner recently were a really conservative Republican that leaned over, and he pulled out of these pocket some photographs and he showed me his Tesla. He was very excited about the Tesla right? Yeah I think they understand that cuts-cuts across and at least it has cut across political boundaries in the past. People like the EVs because of their technology as Chelsea said and as well as getting off oil, all sorts of reasons but that’s--you’re saying that that’s kind of died down now because it’s been political and this political--in this election.
Chelsea Sexton: I think a lot of the more conservative fans have gotten more quiet about it but they still quietly drive their cars. I mean you know, guys like Jim Woolsey and Frank Gaffney have been calling for plug-in cars for years because they want to get off foreign oil. So there’s still--you know sort of that cause oriented argument that are given on one coast that’s more environmental maybe and on another coast it’s more energy security related but it’s definitely there.
Greg Dalton: Some people would say that a electric car is a coal fired car, and there have been reports from The Economist that in China an electric car is actually dirtier than an internal combustion car because of China’s electricity mix. So what do you say that hey running your car on coal isn’t any better than oil from the Middle East, Ucilia.
Ucilia Wang: Well I guess that’s true although I think you’ll find also a lot of EV owners are actually looking out ways to use I guess a greener cleaner source of energy and that’s where you see partnerships like, you know, Ford with SunPower tried put solar panels on the EV owner’s roof so that you can actually get solar energy to power your EVss. And I think there’s overall--an overall a national shift to a cleaner power and so you know regardless of the EV’s development, right. So I think so we are starting to seeing that a lot more and certainly in California where we have a mandate to get more renewable energy. I think 33% of our power supplies are supposed come from renewable sources by 2020. So I mean I can see how the argument that you’re using you’re running your electric cars on dirty power I mean that doesn’t bode well for those who want to see EVss as a green--a very green alternative but I think that would eventually shift as a whole national policy shifts to a more friendly--a more friendly policy to our renewable energy.
Greg Dalton: Yeah there is less coal being burned in the United States now than there used to be a few years ago. Ucilia Wang is a contributor for Ford--ah contributor for Forbes, not Ford. Pardon me, Chelsea Sexton is a EV advocate and consultant, we also have Katie Fehrenbacher, senior writer at GigaOm. But the China thing is interesting, we haven’t talk about China. Is China going to come in to the EV market, a lot of the battery leaders, technologies in China and China is investing a lot on these companies, you know, let’s talk about the China card, are they going to come in and sort of shake this up? Chelsea Sexton.
Chelsea Sexton: Well, three years ago I think we would have said yes, ah certain companies like BYD and Coda look like they might come in and eat our lunch, so to speak. Because they could do it cheaper, and that was the expectation that normally it might fall to the progression of the Japanese entering to the US market, Koreans entering to the US market which is basically it took ten years for anyone to take them seriously. And the Chinese might really jump that a little bit by doing electric cars, sooner or cheaper than anybody else. It hasn’t happened and we haven’t seen them do it sooner or cheaper, it’s generally more expensive and the quality hasn’t been what most people want. So if you’re going to pay more, you’re going to go get a, you know something else.
Katie Fehrenbacher: I think in terms of deploying electric cars in China or specifically two wheelers, electric scooters, I think the one you know, benefit of that market is that kind of the top-down approach. So the Chinese government can say, you know, there’s no internal combustion scooter here--you know cars by our taxi service providers, you know, in the city or--or--or in this place. And then, everyone--you know all the government office will have to buy this certain type of technology. So, um you know it’s the fastest growing electric scooter market in the world.
Ucilia Wang: I think the Chinese companies are focused on domestic market first to and you know before they were really moved to US or Europe. I mean--there are few companies talking about moving out of China but it really, I don’t--they--they would – if I were them I would tackle the domestic market first, just because of government’s incentives involved.
Greg Dalton: Sure, BYD has some plans which has the most noted battery company in China, has eventually has they said they have plans to come to the US not anytime soon. So China as an actual market, is that something that automakers are focusing on to sell EVs there because of the government’s more support, maybe it’s better than the United States, is that possible?
Ucilia Wang: Yeah, very possible only because of the top-down approach that Katie mentioned. When the government says we want this many EVs or you know, we’re going to give these much money to make that happen, that generally really happens, you know there’s not a lot of debate from year to year or because of the election politics. So, I think you will see, I mean--I guess I can’t predict whether EVs will take off a lot faster than the US but I certainly think that China has a greater potential, actually as a EV market right now than in US.
Greg Dalton: We haven’t talk about infrastructure, let’s do that and then we’ll go to audience questions. There’s often this chicken-and-egg conversation about people won’t buy cars until there’s chargers, chargers won’t go in until there’s cars. What’s the state of infrastructure here in California? How much EV charging infrastructure is there out there now, and is it where it should be, Katie Fehrenbacher?
Katie Fehrenbacher: Um, I think we are talking about this back in the room but there is kind of a chicken-and-egg problem happening, but there is this problem of over investment and the electric vehicle charging infrastructure, particularly with some new deals. So I don’t think that companies need to go out and build kind of these huge electric car infrastructure networks right now, because they’re not necessarily going to be a demand for them I don’t think.
Greg Dalton: And you said, over invested so there’s too much now, there’s too much money gone into infrastructure, is that what you’re saying?
Katie Fehrenbacher: I think there’s--there’s companies that have started to do this type of investment, so NRG is you know working with State of California, and you know to build out chargers here and NRG has a network that is built out in Dallas as well. So I’m not sure if there’s like a maximum amount of too much money going to space but I think there is a concern, that some of the charging infrastructure won’t necessarily be spent wisely and used, in the near term.
Greg Dalton: Ucilia Wang.
Ucilia Wang: I was just going to say that I think, because infrastructure is really where you going make actually a lot of money, long term right. If you can own the stations, you really own the money that the consumers will fork over and so, I think there’s a lot of speculations you know, sort of people trying to get into the market and build up the stations, regardless of whether there were really be a demand in certain regions, and I think that’s actually the--worry is that we’ll have all the stations but that there won’t be enough cars, actually enough customers really to use those stations, and especially when a lot of these stations are actually funded by public money.
Greg Dalton: Chelsea Sexton, is the money going into the right place, in the right kind of infrastructure?
Chelsea Sexton: No, no I mean I think the assumption that there’s a lot of money to be made in this area, is naïve, very, very naïve, you know, the vast majority of charging occurs at home, you know there’s a little need for a sprinkling of public charging for the range anxiety to--to enable the occasional longer trip, but one on every street corner is way too much and especially for those who want to make a business out of this. The more you put in the harder it is to make a business out of any one of those chargers, because there’s not going to be enough utilization. And charging has been free in this state for 15 years, not because we were too stupid to figure out how to charge money for it, but because retailers and site owners didn’t want to, from their perspective it was much more a marketing expense, I’d rather five, ten grand put the charger on the ground and have someone come to my Ralphs market, and not where I have to worry about monetizing all the micro transactions, and all the administrations and all of that. So you know, there are a variety of issues going on here. Part of it is how much is going in, a lot of it is where, and given the geography of the investments certainly there’s way too much money afforded. And from the standpoint of what’s in the ground and what is needed, there is not quite enough infrastructure in yet, but what is needed most is to finish retrofitting the infrastructure that’s already out there to work with the new cars, not adding new stations.
Greg Dalton: Okay. Ah, let’s have the audience participation, we’d like to invite you to come join the conversation, the microphone is here in the line, we start with our producer. Jane Ann back there. If you’re in this side we invite you to please go out that other door around--please go around the other side, rather than crossing this camera that you’re walking right into. Um, um and then the line will be over there and we encourage you, welcome your one part, one question. Ah, and this often the most exciting part so thank you for your participation. Sure come on up.
Audience Member: Thank you, first of all you know putting this together, this is fantastic. I have some information that I don’t think is widespread at this moment but a couple of weeks ago, I attended a conference with the chief engineer for IBM was talking about project 500, and the reason it has that name is that this lithium ion oxide technology that they’re working on, will allow vehicles to go 500 miles between charges. So that’s one thing, second thing is, I own a Leaf, I don’t think I’m driving around in an affluent vehicle. It only cost me about 22,000 bucks--$22,000 with the government incentives both from the state and from the Federal. So I think that’s priced for the average Joe. And then one last point, to Chelsea primarily is, you are the hero of the first movie, “Who Killed the Electric Car” definitely, there was also a villain in that movie that was Rick Wagoner, who’s heading up GM at the time. Thank goodness he’s gone, however what I didn’t quite understand is when you made the second movie, “Revenge of the Electric Car”, they really soft pedaled GM. GM has not jumped back into the electric car market, what they’re marketing is a hybrid, they’re calling it an electric car but it’s not.
Greg Dalton: Let’s hold it there. Ah, so Chelsea.
Chelsea Sexton: Too many things to say.
Greg Dalton: Yes.
Chelsea Sexton: So the 500 mile battery is the bane of my existence. You can take enough of any battery, stick it in the car and then go 500 miles. So the fact that there’s no specs around that of 500 miles in how many kilowatt hours or how many--for what cost, there’s not enough detail around projects like that.
Katie Fehrenbacher: Oh I just want to jump in because we wrote about that research last week, it’s not -- that battery won’t even be commercialized to like 2020, 2030 time frame if IBM and its two partners can get that out of the lab. So it’s the lab research project right now.
Chelsea Sexton: But also just the fundamental perception of we have to go 500 miles and until we do, EV is not viable. The 150-mile cheap cars looking to go at this point, my Saturn won’t go 500 miles without an extra tank of gas. As far as Revenge, that’s really a Chris Pane question, he directed the movie and he got to write the story, but I will say that while there are people that will differ with GM’s choices to do a plug-in hybrid, they are as all into that plug-in hybrid as Nissan as to their EV. So they made a fundamentally different choice of vehicle and we all have our emotions around, whether that was the right choice but they definitely have been very committed and they do have the most electrified plug-in hybrid out there, especially compared to something like the Toyota plug-in Prius. So, there’s going to be different gambles made, and the market will determine it but the point of the story was just to cover the--the people running the race.
Greg Dalton: Next audience question. Welcome.
Audience Member: Thank you for having this forum. Gary [unclear] from Cupertino, so my question really is long term on the batteries all seem to revolve around lithium, so we could look at that in two ways, what is the worldwide supply and what it would be the production capability, are we limited really?
Greg Dalton: Peak lithium or lithium constraints.
Chelsea Sexton: Not particularly. Yeah, I mean there’s enough different places that have it. We also need not that much of it considering that even lithium ion batteries can be recycled and the core materials are valuable enough that they will be incentive to do so, and they’d be made into new batteries. So, at some point we envision that, just like we went from lead to nickel to lithium, we’ll eventually use something else, we’ll certainly use lithium for the foreseeable future but all of the studies have shown that we are not likely to have peak lithium issues.
Ucilia Wang: Also, it might not be lithium ion battery that we’ll be relying on for decades, it could be other I mean there are other types of batteries being developed now for cars, so I won’t say that lithium ion has won the battle here.
Greg Dalton: Ah, Ucilia Wang as contributor at Forbes, we also have Chelsea Sexton, an EV advocate and consultant and Katie Fehrenbacher, senior writer at GigaOm. I’m Greg Dalton, let’s have our next question please, welcome.
Peter Franklin: Hi there, Peter Franklin from El Cerrito. I have a Volt, and I invested in solar panels on my roof. So, that’s what it cost me to drive. I’m encouraged by increasingly prominent installations of solar panels over parking lots. And of course, there are some charging stations associated with that and you can’t call that over-investment, even if there are several or maybe even a couple dozen charging stations that don’t get used in an installation like that. We’re--we’re talking about a parking lot of maybe 2 acres. There’s still all that lovely pollution free energy going back into the grid even though some of the charging stations might not be in use most of the time. So I don’t call that over-investment.
Greg Dalton: Let’s talk about the these solar, yeah the combination of solar and charging--public charging.
Chelsea Sexton: I mean it’s a great combination particularly because a lot of public charging happens during the day, when utilities are worried about peak usage. I will say that in my case, I’d rather have the power, the panels going in and the wiring there and then add the boxes later, as you need them rather than put all the boxes now and have them out of warranty before you need them. But the promise of solar and the adoption of solar is one of the answers to this what about coal question. And just to come back to that part a little bit, I think EV’s get a bad rep because you know, China’s a very different argument than the US in terms of its coal makeup and electricity generation but on a nationwide grid, EV’s are at least twice as clean as a gasoline car. California is more like 90%. So on some level; we have to not hold a vehicle responsible for the city in which it might be driven and go off something more aggregate, but that also means, that because utilities are making the grid cleaner, the dirtiest day your plug-in car will ever have is the day you drive at home. And if you end up getting solar, in about half of EV drivers do, it gets better from there but twice as clean is really not a bad place to start on the US, even though other geographies have different conversations.
Greg Dalton: Let’s have our next audience question. Yes, welcome.
Maureen Blanc: Hi, thank you for having this panel. I’m Maureen Blanc with Charge Across Town. We’re an educational campaign to advance the adoption of electric vehicles. I have a question for Chelsea. We believe, California will be the epicenter for EV adoption but we think we have a long way to go. Can you tell us what you think will be one of the big hurdles today that we face in getting consumers to take a real hard look at these cars, buy them and move towards adopting electric vehicles.
Chelsea Sexton: I think it’s largely a production and marketing issue. I specifically say marketing over education because, we have so far tried to take a very educational approach, very pragmatic, you know, here’s why they pencil, here’s why they’re not scary. Vehicles are emotional purchase and Words Out recently did a very well respected article that started out, people will pay more for smartphones and plasma TVs but not for EVs. And the reason that is, is because the other two appeal to people emotionally first. People don’t necessarily understand the difference between iPhone and Android, before they know it oh smartphone will enable this lifestyle, it’ll enable this experience and then they go find out the details, same thing with these cars. So part of it is getting the information out there but in the way that is really compelling. In a way that resonates with the people that are currently buying and not aiming at the people who aren’t going to buy for three or four years, but the other thing is production, we simply need more cars, more types of cars and we’ll get there but when there are only two choices and not that many of either, it’s harder to try to convince everybody to get one.
Greg Dalton: And none of the companies really market EV’s on performance--
Chelsea Sexton: No.
Greg Dalton: The EV owner and driver it’s fun to drive, it’s fast, it’s quiet, it’s zippy but none of the ads say that, all the ads say green and righteous or something like that.
Chelsea Sexton: Yeah, I had the most interesting argument with GM ‘cause it’s a funny story so I will tell it. They just got these new owner ads. And I love that they’re using real owners but I hate that half the ads don’t even mention the fact that there’s a plug. And when they did their survey of Volt drivers, the number one thing people like about this car is that they are fun to drive. So I argue with the PR guys about, why don’t you feature fun to drive? And they go, “How do you describe fun to drive in 30 seconds?” Don’t you guys do this for a living, when it’s a Camaro it’s obvious to them but when it’s got a plug on it they just can’t think that way, that there’s an emotional experience involved.
Greg Dalton: I’ve seen Chelsea drive a Volt. She knows how to drive that, fun. Okay yes sir, next question.
Audience Member: Hi, I’m Scott [unclear] from Albany. And I noticed the focus was a lot on why companies aren’t doing more to promote the vehicles. And a lot of statistics just came out today on the internet, so I just want to run down that and then you have your comment.
Greg Dalton: Real briefly, we got a line behind you.
Audience Member: There is 28 vehicles for every thousand people in China, there’s 800 vehicles for every thousand people on the United States. GM is just opening 600 new dealerships in China this year, 2900 to 3500. The production is going from for Ford, they hope worldwide their sales are 4.5 million by 2020, 30 million vehicles is their projection. A Cadillac is going from 30,000 vehicles in 2010 in China to a 100,000 by 2016.
Greg Dalton: So let’s get to the--so auto industry is booming and growing especially in China and we talked earlier about what that means for the industry, any reactions to those statistics?
Katie Fehrenbacher: I mean, place for bets in China? Particularly, I don’t know if he was addressing this but they were like scooter market like I said before but if you’re saying a lot of scooters, you need to be in China.
Ucilia Wang: If you’re selling, you know, batteries, you need to be in China too actually, because you have the electric car market and the energy storage market for the grids, the stationary grids storage. There’s a lot of companies from the US actually have set up shop in China for that particular market.
Greg Dalton: Let’s have our next audience question, yes sir.
Audience Member: Hi, Jerome [unclear] I’m on President Obama’s community leaders committee, I’m also the veteran advisory committee with Congresswoman Spear and veteran of the year for 2011 for California. We’ve been working on this issue, we’ve actually worked with Tesla and have a big job event at a community college recently and that was in the papers. One of the problems and issues I’m very familiar with is the politics, I feel that the politics is there. I feel what the companies are making, they’re doing their part. The thing that I’ve been complaining about with the White House and I’d like you to address is the market side and the market development for electric cars. Consumers still do not know that electric cars are investments. There is still that idea that it’s like a gas car, it will go--it will depreciate in value when that’s not the case. Eric Tischer now works for Tesla, he converted a Volkswagen Passat, costing $2,000, he had it appraised now it’s worth $52,000. To drive, an electric vehicle a thousand miles cost $5, to do that in a hybrid it cost a 130 bucks. There’s no oil changes. You change the battery out after a thousand charges. These are the things that consumers needs to know, these are the things and I know that car companies will not make these promises because then they’ll be held liable. This is something that consumers need to know that--that it is an investment. Why is this not being done?
Chelsea Sexton: Well I think, that’s what I mean about yes awareness and information and education are all things that need to be done and need to be done more intelligently. And need to be done more effectively, so I wouldn’t debate that at all, I think whether its government or automakers or stakeholders it’s that’s the next step.
Ucilia Wang: Well I think, there been actually quite a few reports or surveys about what kind of fuel cost savings you can achieve. So when I think about all of these numbers are really just reference points and as a consumer if you’re looking to buy a car you need to look at it but it really depends on your own driving habit, how often you drive the car, you know how much you spend per month, and even what kind of car you have before versus what you want to buy, to see how much saving you have. So, and I think that--that requires some math which I’m not sure the consumers always willing to go back and you know dig up their gasoline receipts and do that calculations and they really figure them out.
Katie Fehrenbacher: And then on the flipside of that I think there’s also not--they’re some information that the electric car companies aren’t playing the warranty on the batteries and like how much you know the resale value of the car’s going to be. So I think it’s just like that it’s a new niche market too.
Chelsea Sexton: Yeah, I mean they don’t know but aside from policy perspective particularly federal, the single most important thing that they could do in DC right now is fix that tax credit. I mean, that I love that there’s a $7500 tax credit but it is not helping to make cars more affordable because people still have to finance the full amount they still have to pay another 180 bucks a month, every month for five years at least. And then, any year they apply for a tax credit that they may or may not see the full amount of. So from an affordability making things easier for mainstream consumers, the current credit isn’t doing it so, I’d rather have--
Greg Dalton: What should it be, it should be like California gives you cash back?
Chelsea Sexton: It should be a point of sale rebate as well as a handful of other things, to help make it you know less costly. I mean a real rebate it should go into vehicles that are sold at or below MSRP, they shouldn’t be absorbed by dealer markets, there’s a variety of smaller things that should also go along with it.
Ucilia Wang: I was wondering, doing that when you’re doing the financing with car companies, whether they can show you how much savings you could achieve like what you do with solar leases, you know a lot of these companies are able to sell them because they actually lay out if you--you know, this is how much you pay for month, it’d be less than what you pay utilities and you don’t have to put up your upfront cost, so it’s a monthly payment. So they calculate the savings for consumers and it’s very easy to understand, and I’m wondering if the same thing should be done when you go and lease a Volt or a Leaf, where you get all those calculations laid out, I mean you can see oh I really can save this much money because of based on my past usage. I think that actually might really help to convince consumers on--
Chelsea Sexton: The utilities, yeah, the utilities actually lead the way on those sorts of calculation. So Southern California Edison and various other utilities have rate calculators on their website and you go and you plug in how long and what your mileages and all these sort of things and it spits out doesn’t take into factor you’re actually lease payment but it shows you the types of savings you can expect.
Greg Dalton: That’s a little different going to a website of utility which, I’m not sure how many people like to do that versus having that at the dealer. So presenting a math at the point of sale right would be very interesting, ‘cause it’s--the math is confusing, I mean the electrical pricing in California depends on time of day, what kind of meter you have it’s very complex. The automakers aren’t quite there in terms of presenting the math to make the sale, to make the case. Chelsea you had some other ideas about, how car makers might bundle car sharing or rentals with sales, to kind of address some of the temporary anxiety. People buy cars for the one, the aspirational trip, not for everyday use.
Chelsea Sexton: Yes, yes as the SUV think, and even the 500-mile battery is the SUV think: I have to have the one thing that will do absolutely everything whether I do it or not. So if Nissan for example, gave someone 10 days’ worth in Budget rent a car for the days they needed their gas car or accept car membership or something. It addresses the psychology of some of these choices and it helps get people more comfortable with the idea, even though at the end of the day, if you sold your gas car, you’d pay for a lot of rental days it’s--it’s the actual marketing of it -- the psychology pairing those things together, so it just seems easy.
Greg Dalton: And car companies, Ford and GM are investing and collaborating with car share, Relay Rides, Zip Car but they haven’t gone, they view them as kind hedges and investments rather than something that sort of get into their core showrooms and any--
Chelsea Sexton: Yeah, but I mean and also I think a lot of it comes down to this issue of even the car companies do not understand the market they’re aiming at. You know you can’t appeal to your consumer, you can’t package things to make things easier or to appeal to them if you don’t understand what it is they’re looking for. And so right now, as long as they think everyone’s looking for nothing but CO2 reduction, it’s going to be tough to expect those sorts of things.
Greg Dalton: Well they have -- auto industry profits are up, they’re doing pretty well right now better than few years ago. I mean, they would say they think they know their business pretty well, and they’re doing pretty well at it.
Chelsea Sexton: Gas cars sure. EVs not so much.
Greg Dalton: We haven’t talk about European car makers. A lot of Californians like European cars, where are the Europeans on this. We’ve been talking about Detroit and Tokyo, where’s Munich and Stuttgart?
Katie Fehrenbacher: I mean, I--we haven’t seen that many goals and connections come out of the European car makers and what I see, and I’ve test driven a couple at the LA Auto Show but there’s no one who has had some kind of big launch.
Chelsea Sexton: No big launches yet it must have been through a pilot programs, they’re another one that they’re going to be subjected to the California Air Resources Board Regulation, and so they’re building little things to sort of address that now. They’ve been a bit more resonant, however, BMW is starting to look fairly promising. There’s a lot of excitement around. They have a vehicle called the I3. And it’s a little bit like the Volt, kind of--kind of between Volt and Leaf. It’s 80 miles electric and then a little tiny 3 gallon range extender as an option for those who want it. So, and they purposely downsize the motor, so it’s not going to be fast and fun to drive in gas mode. They want to encourage you to get home and charge your car and drive it as an EV but just in case you need that extra bit. So it’s kind of a--a middle ground than we’re waiting to hear a price and volume and some of those sort of things but it looks like at least, they are starting to get into it.
Greg Dalton: And I actually saw a pure electric Volkswagen Golf on the street of San Francisco recently, I say, “Whoa, what’s that? I’ve heard of it.” I mean isn’t it the case that European companies have bet larger on diesel, they have different investments and different technologies. They’re not as keen on the batteries because of the capital they’ve deployed and what they’ve -- where they made their bets, is that right?
Chelsea Sexton: That in there has been a lot of--there’s been a lot of choice between plug-ins or fuel cells. There’s a lot of hydrogen versus EV that still goes on, and most of the German companies are still very wedded to hydrogen. But at the same time a lot this, for years, we’ve been sort of suggesting a lot of sales on the consumers as well. And it--it--is important for the market to let automakers, whichever automaker, know what kind of car you want. And so we’ve been focusing a lot of companies like GM but if you want a BMW, whatever or a Volkswagen whatever, call them up and ask for it. And it’s a really underwhelming experience when you call the their 800-number and you say this is what I want to buy, and they kind of go, “Oh, sorry we don’t make that.” but the reason they advise that because they got a certain volume of calls and then they here and they’re going to have to address it. And just sort of you know Bob Lutz received a whole lot of emails to his personal email address and got some religion. So this is in some case it’s a person-to-person thing.
Greg Dalton: And he’s the former Vice Chairman of GM who takes credit for being the Godfather of the Volt. Let’s just wrap up on fuel cells you know hydrogen fuel cells. Lot of automakers talk about that as the final solution, the elegant engineering solution right, it’s clean, the only byproduct is water, is that pie in the sky, vaporware delusional, destruction stuff or real promise?
Katie Fehrenbacher: I mean, I think they will talk about the hydrogen highway in California for so long that you know; there has been some kind of backlash in recent years. I mean I think you know electric vehicles; there was this kind of buzz around electric vehicles over the past couple of years, specifically ‘cause the fuel cell marketing really pan out for cars.
Chelsea Sexton: Yeah, I mean a lot of the enthusiasm for fuel cells has been driven again by the Air Resources Board, who affords them many more credits than EVs. So if you’re an automaker and you don’t really want to be in the auto business I’d rather make ten of this than a thousand of this but at the same time I guess the question comes down to why? It’s hard to make the case that fuel cells in vehicles, stationary is different, offers much more than a plug would anyway. I mean the marketing point for years was we can refuel it faster, fact with fast charging and things not even that’s not necessarily the case and we think people have range anxiety and are worried about finding a plug, try finding a hydrogen station and the expense to put that in. So never say never, but I don’t see it being compelling on the next few decades at least.
Ucilia Wang: I think a lot more money would be put into electric cars than they would put in hydrogen cars.
Greg Dalton: Even though it’s interesting that latest round CAT California rules does try to push hydrogen into the mix. We need to end it there, our thanks to Ucilia Wang, contributor at Forbes, Katie Fehrenbacher, senior writer at GigaOm--GigaOm, am I saying that right?
Katie Fehrenbacher: GigaOm.
Greg Dalton: Om, I should know that, GigaOm and Chelsea Sexton, an EV advocate and consultant. I’m Greg Dalton thank you all for coming to Climate One today.
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