Green Car Technology Plans of the World's Richest Investors

As concerns over global warming, high gas prices, and dependence on foreign oil snowballed in the last few years, movers and shakers around the country decided to get in on the green car revolution. For six of those megamillionaire entrepreneurs, owning a Prius just wasn’t enough—each has taken major stakes in a green transportation technology. But as these men surely know—or are about to learn—most small green car and alternative fuel companies face an uphill battle. Which of these wealthy tech investors do you think will be the most successful?

1Warren Buffett

          (Net Worth: $62 Billion+)

“Export Chinese-made, plug-in hybrid cars”

The Plan: Warren Buffet recently acquired a 10 percent stake in the Chinese electric carmaker, BYD, for $232 million. BYD hopes to use the money to expand into the US and European markets. The company has unveiled a pair of plug-in hybrid sedans, quoting all-electric ranges from 60 to 70 miles. BYD says it hopes to sell cars in Europe and the US by 2010.

The Reality: Crash tests have proved disastrous for BYD thus far, and manufacturing a car that can meet rigorous American safety standards by 2010 is probably nothing more than a pipe dream.

2 T. Boone Pickens

          (Net Worth: $3 Billion)


“Convert cars to run on compressed natural gas”

The Plan: Before becoming one of America’s most iconic oilmen, T. Boone Pickens spent his youth wildcatting, which is the practice of drilling semi-random holes in the ground in search of oil. His strategy for solving the energy crisis is decidedly more targeted—though it still involves drilling lots more holes in the ground. Pickens spent nearly $60 million promoting the use of compressed natural gas in automobiles, which is the centerpiece of his “Pickens Plan” for energy independence.

In addition to promoting the technology through television commercials and a failed California ballot initiative, Pickens invested $160 million into the development of a mass-market natural gas vehicle. He is also the primary shareholder of Clean Energy Fuels, America’s largest compressed natural gas distribution company.

The Reality: The Pickens Plan can’t succeed without massive government support, and thus far there is little evidence to suggest that his advertising campaign has moved people or politicians beyond moral support to real action—especially considering the current lack of CNG vehicles and refueling infrastructure. Many critics point out that converting American vehicles to CNG simply replaces one form of non-renewable energy with another, setting us up for another energy crisis down the road.

3Andy Grove

          (Net Worth: Around $400 million)


“Retrofit gas-guzzlers into plug-in hybrids”

The Plan: Andy Grove started at Intel in its infancy—he was its third employee—and eventually rose to the rank of chief executive. Since retiring, Grove has become an activist for a post-petroleum America. He fears a future in which the major countries in the world—particularly the United States and China—go to war over the oil that is the lifeblood of their economies.

At a July 2008 energy conference, Grove touted conversions of conventional vehicles into plug-in hybrids as our best hope for energy independence. He called on federal tax credits covering the retrofitting of 10 million trucks, vans, and SUVs by 2012. Grove also asked for more support from venture capitalists and the Small Business Administration to stimulate growth in the sector leading to cheaper, more efficient conversions.

The Reality: It’s one thing to convert a hybrid, like a Toyota Prius, into a plug-in hybrid, but converting a standard gasoline vehicle into a plug-in hybrid is an entirely different matter. It requires impractical and unproven tactics like mounting extra external wheels or motors to existing cars. It’s unlikely that entrepreneurs or a cash strapped federal government will approve the kind of money to support what is widely considered a non-starter.

4Miles Rubin

          (Net Worth: Unknown)


“Manufacture the first mass-market, all-electric sedan”

The Plan: Miles Rubin made his fortune trading textiles and medical devices, eventually running Ralph Lauren’s blue jean line in the ’90s. He’s been involved in the environmental movement since the 1970s when he lobbied Congress to promote alternative energy sources, but Rubin’s big dive into green capitalism didn’t come until 2004, when he founded Miles Electric Vehicles. He’s already invested $35 million into the venture and expects to double that number by the time Miles’ next release hits the market.

The company started out with two low-speed neighborhood electric vehicle releases, the ZX40ST Electric Truck, and the ZX40 (a subcompact car.) The limited market for these vehicles makes it difficult for carmakers to reach the economies of scale that would enable them to be profitable, so Miles’ make or break offering will be the XS500 highway-speed sedan. Slated for release in 2009, the XS500 will be able to hit speeds of up to 80 mph, and is expected to cost between $30,000 and $35,000—after a $7500 government rebate.

The Reality: Miles has yet to complete crash tests on the XS500 sedan, and its prospects are far from certain. Furthermore, as an all-electric car, the XS500 will have a driving range of roughly 120 miles—which is not practical for many car buyers. If the XS500 is forced to compete with similarly priced plug-in hybrids that can run on both gas and electric to achieve a driving range comparable or higher than a gas-powered car, it’s difficult to imagine it succeeding.

5Vinod Khosla

          (Net Worth: $873 million)


“Shift away from hybrids to biofuel cars”

The Plan: Vinod Khosla was co-founder of Sun Microsystems in the early 1980s and went on to form the capital investment firm, Khosla Ventures, entirely with his own money. Khosla has made dozens of investments in green energy firms, and has a special place in his heart—and wallet—for biofuels. Said Khosla in a recent Huffington Post article:

“High cost options like hybrids and electric cars may sound good, but are unlikely to materially reduce carbon emissions. The only cost effective option likely to get broad market acceptance is cellulosic fuel cars in the next decade or two.”

The Reality: Corn-based ethanol is viewed by many as more of a giveaway to farmers than a viable form of renewable energy. Fluctuations in corn prices have lead to troubled times for many ethanol producers, with one of the largest players in the game, VeraSun, filing for bankruptcy protection last week. The so-called second generation of biofuels, such as cellulosic ethanol made from feedstocks including wood chips and switchgrass, face similar financial challenges. And that’s if the cellulosic technology pans out—far from certain.

It’s quite possible that Khosla will end up losing a significant amount of money on his ethanol investments if current trends continue. Billionaire Richard Branson has already renounced his earlier support for biofuels on “economic and environmental grounds,” but Khosla remains committed.

6Elon Musk

          (Net Worth: more than $300 million)


“Build high-end, all-electric cars”

The Plan: In 1999, Elon Musk co-founded the company that would eventually become PayPal, and owned 12 percent of PayPal at the time of its sale to eBay for $1.5 billion. Since then, Musk has split his time between SpaceX, a space exploration company, and Tesla Motors, makers of a $109,000 high-performance all-electric sports cars. He’s already invested more than $55 million of his fortune into Tesla and expects to spend even more before the company launches its slightly more affordable second model.

The Reality: Tesla Motors acknowledged that it is losing money, struggling financially, laying off employees, and closing its Detroit-area office. It’s unknown how long it will take for the company to deliver the $109,000 Roadster to 600 customers with confirmed orders. The Model S, its second model, has been pushed back several times, leading many to take its current 2011 release date with a grain of salt.

From Tesla’s earliest days, critics have questioned its core energy strategy—powering a new ground-up vehicle via 6,831 laptop batteries all wired together.

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  • Niles Romanov

    You failed to mention Elmer Hoosepooter. He powered his coffee maker with hamsters. By putting some Red Bull in their water, just three hamsters powered a generator to make three pots of coffee. He is now investing over $320 to buy more hamsters and hamster wheels. The sky is the limit.

  • J-Bob

    Your comment on the Cons of Buffet’s investment underscore a serious delusion amongst most Americans, that we will be providing the most sales volume for Chinese manufactured cars in the future.

    Simply put, the Asian and Indian markets are going to provide a financial bonanza for Buffet if these cars take off. Since they do not have as stringent crash test requirements in these countries, these cars are going to potentially sell like hotcakes.

    The US doesn’t even need to enter the equation.

  • Samie

    Nice picture of Andy Grove, Where can I find that sweater definitely a lady magnet for sure 🙂

    J-bob you got it right! The only thing I would say is that the U.S needs at least one car producer that can produce for a mass EV market. I would say some of these ideas are short-term business interests with major long term implications. Glad to see that this is spelled out in the article despite many who dislike hearing about long term consequences of some green schemes.

  • Car Dude

    I don’t go for Vinod Khosla’s plan of shifting from hybrids to biofuels. If you want greener cars, electrics would be the way to go. This is why I favor Miles Rubin’s suggestion more than the others.

  • ex-EV1 driver

    You’re being a bit rough on Musk’s investment: Tesla Motors.
    Today, they have passed all crash and FMVSS tests and are delivering cars at about 12 per week today to real, paying customers. A friend of drove #50 home a couple of weeks ago and another friend of mine is picking hers up today.
    This thing is real, Tesla is so far ahead of all the rest that its silly to even compare today.
    Electric is the future. The only issue is when the price will get down to the average consumer’s level.


    Some are left, Mr Berg with his over 20 years effort on lithium batts, Agassi with the system of interchangeable batts packs in energy stations, Mr. Tata with the small cost air compressed car, Velozzi concepts in California with micro turbine concept for electric generation, hydrogen systems base in Mr. Nocera recient announcement of a new low energy electrolysis process….there are may others.

    At the moment MY CHOICE IS WARREN BUFFET, what you says about safety crash is b.shit, it can be and will be solved during next year.

  • nerfer

    Khosla has a valid approach with cellulosic ethanol – it is considerably different than corn-based or even sugar-cane based ethanol. An even bigger promise is algae-produced biodiesel. He recognizes it will take time to develop, but it’s an important part of our future selection of energy choices.

    Electric cars are a good promise and will work well for commuting (as would velomobiles at lower impact, lower size requirement and provides some exercise – they’re enclosed recumbent bicycles, generally with 3 wheels, some with electric assist). But they won’t work for everything, and natural gas will help for some situations, but we need a diversity of approaches because no one approach can completely replace petroleum.

    I find it odd that deliberately wants to trash these well-meaning approaches to solving problems, and several of these do have merits. I would expect this negativity at some hot-rod or closed-minded nationalistic website, not one devoted to green car technology.