It is Becoming Electric!

BMW's i8 Concept car - hybrid (for now)

Long time readers know well my issues with electric cars, not the concept or the idea but the government’s (state and federal) tax credits and other juicy bits that help to make the car more affordable. In other words take from you to give to me. And of course the headlong rush to promote the electric car as the savior of the world has or will lead to other unintended consequences.

Most state and federal highways in the United States are paid for out of the various taxes placed on the sale of gasoline. It doesn’t take a high school math student to understand that as we sell less gas there will be less money for the roads and highway infrastructure such as bridges and tunnels. Electric cars put as much wear and tear on these facilities as gas powered vehicles—no matter what the HOV sticker on the rear bumper of the electric car says. Look for a revolution in how we fund our highways. The tax fund will decline—decisions on how to go forward will have to be made now not later. This will be a significant change to how we fund this all-important part of the American fabric. Will there be point of sale assessments? Will there be usage fees charged through internet connections with the car talking to state and federal computer (now that will be interesting)? Will there be usage assessments made at the electric meter at you house? It will get complicated before its simplified.

With the decline in gasoline demand the urban architecture of America will change. Across the American landscape, at prime highway corners, are gas stations, tens of thousands of them. Think what will happen as they disappear, what will replace them? What new architectural gem will fill this half-acre of extremely prime real estate? The corners are too small for most land uses, access is difficult (we make allowances for service stations), and clean-up is necessary. I think that housing has a chance here.

There may be the inevitable shift to replaceable batteries. These would require a location like the gas station but would allow for the quick replacement of a standardized battery pack—thus freeing the electric car from its extension cord. It is this flexibility that will allow the electric vehicle to achieve parity with gas.

There are now eleven all-electric cars available on the American market—and maybe another dozen more coming soon from GM, BMW, and the other international brands. A significant change in the overall transportation industry is coming. And it’s coming very quickly. These cars are simpler and safer. Less moving parts, no container of high explosive fuel under the rear seat, no pollution, and no having to take the car in for 3,000 mile oil changes. You know there’s a change when Ferrari is making an electric car (hybrid of course).

And when this change reaches the tipping point when there are more electric vehicles than gas vehicles on the road—what will the environmental crowd bitch about then?

Stay Tuned . . . . . . . . . .

Random Thoughts

Starbucks – Rusky style

There was quite a kerfuffle last week over the NBC admission that they were violating Olympic rules by allowing their own personal Starbucks loose on the unsuspecting Russians and tourists wandering the venue grounds. Buckaholics became unhinged when they saw these special NBCrs carrying their own Starbucks cups outside their compound and had no way of participating. New Olympic rules forbid this illicit coffee from Russian and Olympic territory – only McDonalds, who had paid handsomely for the right to sell American coffee, was permitted (and maybe a few others). For the Olympics it is "pay-to-play." I can think of many towns in the USofA that would be thrilled for a Starbucks. You wonder how much NBC paid for the creation of the first Russian pop-up Starbucks. GO HERE

Electric News

Tesla's stock is soaring after a bit of a dip toward the end of last year. At Thanksgiving last year it was trading at 120, now it's at 253, a 200% climb. While the bottom feeders are trying to steel everything Fisker Automotive (not to be confused with the scissor maker – an honest mistake - one vowel e for an a) has in its government supported plant, the other government supported electric car maker (Tesla) is going gang busters with huge growth projections hampered only by a reliable battery supplier. The other government supported battery makers lost the ability to recharge their company with money and went upside down. As you well know I am not a fan of government handouts (no matter what the experts say about past successes); it is always quality management and business skill that outweighs any federal handout or sexy brochure, and Elon Musk seems to be that guy at Tesla. The Fisker Karma was cool. Maybe somebody with business sense will make it work, but then again, maybe not.

And it is no surprise that Tesla is looking outside the state of California to build its $5 billion battery plant. Seems that all the nasty stuff needed to make the necessary things that make environmentally friendly cars go is not tolerated in uber-green California. Do as I say – but just not here. GO HERE

Solar Power

While it is grist for the subsidy mill (see above), the solar industry keeps plugging along. I was very pleased to see that Shea Homes is now applying their zero-net-zero homes to their new Trilogy Active Adult communities. Their goal is that the house has zero energy cost to the buyer over the short and long term. Called SheaXero, it is a state of the art solar energy package that, for a limited time, is at no extra cost to the buyer. There is absolutely no reason that these systems don't become mandatory, like modern heating and cooling systems built into homes today. These "modern utilities" are built into the cost of the house and are, for the most part, invisible except for normal maintenance. If we build a million equipped homes every year, think of the environmental and energy savings if each is solar. MORE HERE

Internal Migration

Recent analysis of census data and other population counters such as home building reinforce the fact that people are moving to the suburbs. While some cities have shown some numbers improvement, others have not. New Yorkers (Manhatten) are moving to the Bronx and Queens (yes, these are considered suburbs) and east out of Los Angeles to San Bernardino and Riverside counties. Whether housing costs or safety are the concern are regional issues. But, I can assure you, this is not the last of the discussions or cultural trashing of this post WWII choice of home and hearth (that is where you can burn wood in your fireplace). HERE

And the Density Is What?

Whoever thought that the Shed Shop would become a homebuilder? They are building 99-foot square houses is in Madison, Wisconsin for the homeless and environmentally concerned. Developed by former organizers of the Occupy Movement, this shelter has a bed, a table, and a compostable toilet. The density by my calculation, since most of these people can't afford a car, may be as high as 150 detached single-family units per acre. I'm reminded that after WWII the government put out helpful pamphlets on how to convert a chicken coop into a home. This is, I'm sure, an idea that most cities will politely say no too. MORE HERE

Stay Tuned . . . . . . . . .

TWEET THIS!!

Well Twitter has gone and done it; in less than 140 characters it has made hundreds if not thousands of new millionaires this morning. I have no idea as to the internal workings of stock distributions and stock options offered to employees during the company’s growth but there are a lot of happy people who will be filling San Francisco bars and restaurants tonight. Tomorrow the Tesla showroom will be packed. And good for them.

To show the power of an IPO just look at San Francisco Mayor Ed Lee. He has already charged Twitter and its employees to give back to the city. He has his hand out and after all the help he gave Twitter to convince them that Market Street was the place to be he has a right to get something. This seven year old company has turned the communications industry on its head in mini-bites of knowledge, information, and self-promotion, one tweet at a time. Now it can do the same thing for the troubled urban core.

If there is one social issue that comes to the fore is that this company is an urban/city business. It can be said that most of the tech growth from the early days of Sun Microsystems and IBM and HP was and continues to be in the suburbs. Their business filled the large corporate parks that ring the big cities, Silicon Valley was a countryside of prune orchards and farmland, now paved with all the big names and most prominently Apple and HP. I even worked on these developments back in the 1980s; where the Apple mothership lives was once acres of fruit trees.

Twitter’s growth and its sense of itself seems to be a different model - they go for the city center. It even has the courage to put its Michigan office in the downtown of Detroit. And with the other tech brands along with Twitter also moving into the M@dison building on Broadway nothing ill can come from it.

Twitter leased their San Francisco space from Shorenstein Properties, it’s a 1937 eleven story Art Deco styled building in one of the nastier parts of the city. And it’s just a few blocks from city hall. Urban core property, tough neighborhood, BART station a block away, bums sleeping in the alleys, perfect. They hold a ten year lease; a lot can happen in ten years.

Already Spotify, Square, and Yammer have moved into this neighborhood. The city has branded it Central Market, offered tax incentives that exempt these new companies from the city’s onerous payroll taxes, and are pushing redevelopment with new apartment towers and other opportunities. There are new restaurants and other changes that are dramatically altering everything about this once bright center of the city more than seventy years ago. Change can be good.

Todd Rufo said, “You had a once vacant and blighted area that is now a gravitational center for some of the most innovative companies in the world.” He’s the director of the San Francisco Office of Economic and Workforce Development.

Once the ball begins to roll it gathers a lot more than moss, there are dramatic things waiting for San Francisco and Detroit. As these newly minted tech millionaire’s cash in (but they have to wait almost six months) they will do a lot more than change the character of a neighborhood. They are pushing up apartment rents to astronomical rates, homes sales (if you can find one) are stratospheric, even the price of a drink in the tonier bars is ridiculous. But that’s what happens with success and it is a lot better than peep shows, topless bars, drug deals, and pandering politicians.

Go tweet yourself.

Stay Tuned . . . . .

Musings for October

Parking Meters:

At the barbershop this morning there was an interesting discussion about parking meters and rates. Seem our little town has decided to go big time and now charges up to $2.00 an hour for the privilege of parking on our city streets. Of course this is denied by the city as a revenue generator, it is to insure an adequate turnover rate on the streets. Higher hourly rates equal more street parking. This is an old argument dating from the advent of the parking meter. The city wants you to use their parking garages (not the free ones at the adjacent mall). The prices at the garage are a little less and the machines more convenient (yeah, sure). The bottom line is the bottom line; it is about revenue, revenue to the city and the incredibly high parking fines (with surcharges) that are being stuck under your windshield. The more inconvenient you make something the greater the resistance to its use. There may be gains in the short run, but in the long run you will turn customers away.

Storm Drainage:

With the increase in agencies and their desperate need to justify themselves we planners and architects are at the cutting edge of their desire to make our planet cleaner. They can’t do it without us so they have to create ordinances and guidelines that make sure we toe the line. The most contentious issue (at the moment) is the statewide California water quality requirement of treating all surface runoff on site before it leaves the property and joins the rest of the region’s storm drainage (ditches, creeks, streams, rivers, etc.) This is done through the standard design of a fascinating treatment basin that requires all run off to pass through before leaving the site. For one small forty by forty foot basin in a multiunit residential property we are involved in we have had more than ten meetings to figure out how to make the residents happy. They claim these basins are 1) Unsightly, 2) Unsafe, 3) Dysfunctional, 4) Lower Property Values, and a myriad of other negatives that include contributing to West Nile disease and swamp fever. And that’s just the homeowners. The real issue will be when they discover how expensive they will be to maintain; they have no idea, yet. Besides the homeowner issues, they just plain do not work. They are designed to too close a tolerance and with any sort of 100 year storm will fail miserably and even dangerously. Will this state ordinance be repealed? Not a chance.

Housing:

Will the government shut down cause the nascent housing market to fail? Really don’t know, the marketplace is a flexible beast and there will be work arounds to be sure. The sad part is the massive impact it will have to those desperately trying to buy or sell a home right now. The FHA controls far too much of the lending market, and we see with its current ‘shut down,’ this impact across the housing markets. A week may not make a difference, just look where we have been the last five years, but confidence is a sticky commodity in today’s world. If one public bank controlled as much of the lending market as the FHA the government would break them up. They did in telecommunications with AT&T, but I doubt they will do it to themselves. Maybe Canada with their far better banking system should get into our residential market. They certainly could do no worse.

Electric Cars:

Yesterday a Tesla car caught fire and the footage was on all the news stations. Their stock was down 7% at last check for a car that is exceptionally cool. Now I’ve gone after the electric car market for the past three years, mostly due to the government subsidies: Why should I pay $7,500 (and more) for some dilettante rich environmentalist’s $100,000 car? And I still believe that at any price for any electric vehicle. If the market is there they will sell. And they are beginning to sell. This whole thing with the fire will be fixed; the marketplace will absolutely demand it. If Elon Musk doesn’t fix it he’s toast (pun intended). And by the way when I fill my Volkswagen (22 gallons and an FHA loan) I have so much explosive power in that tank I don’t even want to think about it. The electric car catches fire and burns, true; but my SUV catches fire,  it explodes, and spreads the burning fuel across the pavement. Just saying.

BTW: The feds aren’t sending an investigating team to find out what really happened, they are off work due to the government shutdown. And how many teams did they send out when that rear end Pinto exploding thing happened back in the early 1970s? Just asking.

Stay Tuned . . . . . . . . . . .

Is the Government Screwing Up the Electric Car?

The Fisker Karma - very cool but bankrupt

There is nothing stranger and sadder than thinking you can manufacture demand. Sure you can spend millions marketing the “Leaf” with every conceivable cultural bribe you have in your bag, environment, style, design, and sex (electric sex is certainly better than gasoline sex, don’t you think?). You can offer federal grants, tax rebates, and even push for higher gas taxes. All to push the consumer into something they still fear – and I mean fear. I’ve written at least five blogs on the problems and blessings of the electric vehicle:

The Urban Umbilical Cord – Part 1 – August 26, 2010 

The Urban Umbilical Cord – Part 2 – September 3, 2010      

The Electric Dream Car – March, 2011         

and others that looked at batteries and bribes.

My favorite economist Ludwig von Mises famously said in his great book on economic systems Human Action, A Treatise on Economics, “The market is supreme.” And right now the market is saying an emphatic, “NO!” There is too much confusion, an accumulation of never ending poor news, and the overriding sense of an industry that is failing. Battery makers (with government guarantees) going out of business, car companies failing (the Fisker Karma bankruptcy is the most dramatic due in great part to poor construction, software, and price – against its very cool design), and the confusion about hybrids and electrics in general.

This is not an argument against the product, it will be the primary type of urban vehicle at some point in the future but it has to get past this welfare image that tells a buyer that the only way they can come to market is through some sort of government gift or outright grant. They will tell you in marketing perception is everything and right now the electric car is very, very questionable. Visions of an out of work Depression worker with his hand out comes to mind when I think of the industry.

Will I run out of power before I can get home? Will it be safe? Will it explode if the battery overheats? What happens if the battery goes to zero – can it be recharged or will I have to pay $30,000 to fix it? Is this only a product for the rich and ostentatious? Is Tesla really telling us the truth about its mileage or do I have to buy one to find out?

Like everything there is a classic bell curve of acceptance, a long slow climb then acceleration to the level of almost a fad – it happened with everything including the radio, television, computer, even the mobile phone. The time frames were long or compressed but the curve is still there. The electric automobile still has a way to go. And the competition is increasing; look for more cars powered by natural gas (which we have a lot of now and it’s cheaper) and the technology for those vehicles is a lot closer to the gasoline and diesel powered machines.

I have maintained that a vehicle with a replaceable (think refuelable) battery is the future – the extension cord at work and home is all so very DIY, but the electric vehicle’s use as a replacement for the gas-guzzler must meet a different standard. They are two different technologies – car building versus battery making, ask Boeing about that. Build the car with a slot that accepts a battery with a range of options: range (storage amount), price (to essentially rent the unit), and source (nuclear, wind, solar, natural gas). The last is for the touchy-feelies out there.

The government (feds and state) keep trying to pick a winner by throwing cash around like drunks at a strip club. For what was wasted at Solyndra ($535M loan) and Fisker ($529M loan) we could keep the airport towers operating for two years (FAA cut due to sequestration is $600M). That is why the electric car is in trouble – government diddling.

Stay Tuned . . . . . . . . . .