Thursday, March 8, 2012

Tech Genius vs. The Market – They Must Think We’re Stupid!

The New Tesla Roadster
When politician’s try to create consumer business models, all I can do is cover my eyes with one hand and put the other over my wallet. Example: In Novemeber, 2008 the esteemed ‘Other’ senator from New York, Sen. Charles Schumer said, ““A business model based on gas — a gas-guzzling past — is unacceptable. We need a business model based on cars of the future, and we already know what that future is: the plug-in hybrid electric car.”

Done and Done.

Somehow the idea of an electric car business model that requires the entrepreneurial company to create whole new technologies is foolish. Do GM and Ford continue to find new oil deposits to support their automobile industry? Of course not. Complicated systems require the collaboration of many industries to reach their goal. Each piece of the collaboration must be profitable and (I hate the word) sustainable. The end result is an industry such as computers, television, defense, and even the automobile. Somehow this has been skewed in the current electric car industry. 

Just think, if you were required to prepurchase all the gas your car would need for the next five years, how do you think the auto industry would react (kind of like personally hedging gas futures, I like it!)? Not well. For the average driver this would add at least $15,000 to the price, I can hear the screaming. But in effect that’s what the electric car industry wants. Prepurchase, by buying the battery, your fuel for the next five years (and you get to top off the tank with an extension cord in the privacy of your home). For the top of the current electric car market, the Tesla, this prepurchase amount is 1/3 of the cost of the car.

Tesla is fighting an electrical storm over the marketplace finding out that when the $40,000 battery fully loses its charge it is forever, and entirely, dead. Over 400 pounds of lithium and other stuff dead, I wonder about the landfill issues. The only solution is to purchase a new battery (and the warranty does not cover this). How’s that for not recharging – pretty severe penalty. In addition the car cannot be towed – the motors are locked. I again say: You cannot even recharge the dead battery – its caputsky! This unfortunate result is defined in technical terms as “Bricking.” As in, the car is as dead as a brick. Now, sure, if you leave the trickle charger on while you finally take that around the world cruise, this won’t happen. But do you want your spouse always asking, “Hon, did you trickle?” I ask you. (GO HERE for the article)
There is also the small, yet not insignificant issue, of the eventual replacement of the battery after so many charges (the number is all over the place but typically starts at 400), the replacement can cost more than $8,000 (This is 2,000 gallons of $4.00 gas – or, with a Ford Focus, 50,000 miles). And then there’s the fear of an accident and the 400 volt wiring getting cut, emergency response teams are now training for electrocutions.

The electric car is no different than a standard auto with a different power source. That’s it. But the market place (us guys), with justification, intuitively knows that there are problems. Problems that may leave them stranded on I-5 halfway between LA and San Francisco with too short an extension cord. Even now the electric car industry produces a vehicle that acts as a second car – the “commute car.” It’s not the errand car, the drive to a hundred place with the kids car, the let’s go to grandmas car. I ask you, just check that little odometer that kicks in to tell you how far you’ve driven in one Saturday’s worth of errands – yeh, now you get it. Stuck at Costco, for five hours, recharging just wasn’t in my Saturday plans. 

And the rumor is that the president wants to increase the tax credit to $10,000 from $7,500. Bribery and governmental stupidity – they go hand in hand. My hand is still over my butt.

The market is telling Detroit and Silicon Valley (Tesla) and Fiskar Karma, no. This is not what we want, don’t you get it! How loud do we have to scream? And don’t lay some gasoline guilt trip on us either. Sure the cars are sexy, but wait . . .we aren’t the morons that the coasts think we are. We know you can build a car that gets fifty miles to the gallon and we will buy it. We know that world is a tough place, but we also need to get to Whole Foods and Costco. No matter how you advertise the Volt, it stills come across as a government subsidized, electrified and gasified, Edsel (how’s that for mixing auto companies?).

If you really want to make electric cars work in the marketplace, design them to have slide-in and slide-out battery packs that are essentially rented (like buying gas). They can be exchanged in less than three minutes, put on your credit card, and can be done anywhere (yes, there will be a ramp-up). Then the competition will be between battery makers and “renters” for your business (PG&E are you listening?). It won’t be about cars with a $40,000 fuel tank and a brick in your garage.
The Backup Power Source that Can't be Bricked!

Stay tuned . . . . .

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