Over the past few months everyone has been taking shots at the U.S. auto industry as our focus has turned to what went wrong with Detroit and if U.S. taxpayers should fund more corporate bailouts. Most notable was a recent Wall Street Journal article titled, “Just Say No to Detroit” on November 15, 2008 proposing no bailout for Detroit (subsequently we have seen “loans” extended to GM and Chrysler).
It is worth noting that amid the gloom from Detroit, there is real innovation in the auto sector coming from places like Silicon Valley, and yes, even Ford.
So, while for the most part Detroit struggles and we focus on what went wrong, let’s look at how sustainability is “driving” innovation in the auto industry.
Project Better Place – this is one of the most exciting VC funded businesses in the auto industry right now (www.betterplace.com). Shai Agassi, CEO of Better Place, is well on his way to reinventing the entire transportation model with electric vehicles and supporting infrastructure. The model is simple (although challenging to execute):
- “Drivers pay to access a network of charging spots and conveniently located battery exchange stations powered by renewable energy;
- Drivers pay for the miles they drive;
- Cars are made much more affordable – even free in some markets – by the business model’s financial and environmental incentives to add drivers into the network; and
- Better Place operates the electric recharge grid that brings it all together.”
Better Place operates the electric recharge grid that brings it all together.”
Better Place has recently signed on (December 18, 2008) Oakland, San Jose and San Francisco to collectively create a network of electric vehicle charging stations and supporting regulations by 2012. This follows commitments and interest in building the electric vehicle infrastructure in Denmark, Israel, Australia and Hawaii.
Tesla – One of the hottest electric cars on the road (yes, it is in production) is the Tesla Roadster (www.teslamotors.com). The 2009 Roadster was reviewed by Road and Track and highlighted by the Wall Street Journal Magazine (November 28, 2008). The all electric roadster accelerates to 60 in around four seconds with a range of more than 200 miles.
Honda – Although a hydrogen infrastructure for autos is years away, Honda is leasing a hydrogen fuel cell vehicle (the FCX Clarity) with an approximately 280 mile range. The vehicle is available for lease on a small scale for a bit less than $600 per month. Honda is betting that if you build the vehicle, the infrastructure will follow (the Model T preceded gas station infrastructure in the U.S.).
Toyota – In January, Toyota will unveil their third generation Prius Hybrid with more interior room and increased gas mileage. Toyota is committed to building upon the success of their best selling hybrid. Speculation is that the 2010 model will likely have a 1.8 litre engine with about 100 horse power and may have solar panels on roof to charge accessories!
BMW – Yes, the very popular Mini Cooper will be available as an electric vehicle. As BMW puts it, “hug trees as you hug corners.” BMW plans to lease 500 cars to drivers in Los Angeles and New York City for about $850 per month. BMW is relatively new to the electric vehicle market. However, they plan on rolling out a mass produced electric vehicle by 2010.
Ford – It is easy for Ford to get lumped in with GM and Chrysler these days. However, I believe there is a fundamental difference between Ford and the rest of the pack. Ford understands the current shift towards a “green economy” and the business opportunities this presents (GE ecomagination?). They are also keenly aware of the legacy of the Ford name. According to the New York Times (November 24, 2008), Ford has a “green agenda” and is focused on electric vehicles and fuel economy in general. This is a refreshing long term view beyond the current cheap oil and low gas pump prices. Ford could likely be the real innovator in Detroit.
X Prize – Prize money to spur innovation? Why not? The goal of the Progressive insurance X-Prize (www.xprize.org) is to “inspire a new generation of viable, safe and super fuel-efficient vehicles.” The $10 million prize will be awarded to the teams that win a cross-country stage race with “clean, production-capable vehicles that exceed 100 miles per gallon or energy equivalent fuel economy (MPGe).”
So, despite the trauma in Detroit and Washington, DC, innovation in the automotive sector is alive and well and coming from likely places (Ford) and unlikely places (Silicon Valley).
This is encouraging!