Photo GallerySorry there are no photos!
IN THIS ISSUE:
Detroit’s Symbolic Ride to Congress, in a Hybrid
Lawmakers blasted the CEOs of the Big Three automakers last month for bringing their tin cups to Washington in corporate jets. On their follow-up trip, they traveled in hybrid cars.
LA Auto Show Roundup
Hybrids, clean diesels, and electric cars in the Los Angeles limelight.
New Study about Slow Rise of Electric Cars
Production of all-electric vehicles will take another eight to 10 years before reaching the level of today’s hybrid cars.
Signs of Collapse for Biofuels
In the past week alone, VeraSun—the largest public ethanol producer in the country—filed for bankruptcy, and Germany became the first country to formally scale back its commitment to biofuels.
Green Car Technology Plans of the World’s Richest Investors
Six megamillionaire green car entrepreneurs are about to learn that most small green car and alternative fuel companies face an uphill battle.
Greetings, Hybrid Car Enthusiasts,
The hybrid car movement is facing a double-whammy of a severe economic recession, and gas prices in a free-fall. In this issue, we look at the fallout for green car investors, the biofuel industry, and Detroit automakers. Despite all the bad news, hybrids have come to symbolize a brighter future for the industry. We’ll take a look at the hybrid news from the recent Los Angeles Auto Show. Thanks for checking out our monthly report of the good, the bad, and the ugly.
Detroit’s Symbolic Ride to Congress, in a Hybrid
Lawmakers blasted the CEOs of the Big Three automakers last month for bringing their tin cups to Washington in corporate jets. This time around, they seem to have learned a lesson in the value of political symbolism (oh, around $25 billion). So for this trip to Capitol Hill, the Ford and GM CEOs traveled in hybrid cars, no doubt with their tin cups safely nestled in the cupholders too.
So what are we taxpayers (and car buyers) to make of this? Clearly, in not rejecting a bailout immediately, Congress is telling us that they’ll help Detroit if the Motor City helps them too. Their voters want environmentally friendly cars; they want to see innovation and forward planning. In exchange, maybe Detroit gets access to federal funding.
But lawmakers would be well advised to examine the symbolism of the specific vehicle models chosen by the CEOs for their journey.
Alan Mulally Rides a Ford Escape Hybrid
Mulally, Ford’s top executive, made the trip in a Ford Escape Hybrid—introduced in 2004 as the first hybrid gas-electric vehicle made by an American car company. With city fuel economy of 34 mpg, the Ford Escape remains the most fuel-efficient SUV available today. When Mulally steps out of the greenest SUV available today— a vehicle that offers flexibility, sure-footedness, segment-leading fuel efficiency, and the best in advanced hybrid technology—lawmakers should see a CEO ready to lead his company and the American auto industry in a better direction.
Rick Wagoner Takes a Chevy Malibu Hybrid
Wagoner, GM’s CEO, traveled in a Chevrolet Malibu Hybrid. GM has sold fewer than 3,000 Chevy Malibu Hybrids since the model’s introduction in January 2008. The low production numbers—and the fact that the 2008 Malibu Hybrid ekes out a negligible fuel economy improvement compared to the conventional Malibu—symbolizes GM’s half-hearted attempts at making hybrids under Wagoner’s watch. Now, as the company makes big promises to Congress, and moves on to its next green pet-project—the Chevrolet Volt plug-in hybrid, which is not yet available—lawmakers should wonder if GM’s U-turn away from supersized vehicles and toward green technology is more show than substance.
Robert Nardelli’s Ride: Canceled Hemi-Hybrid
Nardelli, chief executive of Chrysler, was last to announce his wheels to DC. Chrysler also has hybrids—the Dodge Durango Hybrid and Chrysler Aspen Hybrid, a pair of Hemi-engine V8 hybrids that don’t quite manage an average of 20 mpg. These monster hybrids were put into production this fall, but will go out of production this month when Chrysler shutters its Newark, Del., assembly plant. That’s right. Chrysler’s only hybrids will arrive in showrooms for the first time only weeks before they die for good. Chrysler is holding on by a thread, and seeks taxpayer money to stabilize the company until it can be merged with or sold to another automaker. The fact that Nardelli might not have a viable Chrysler hybrid to drive speaks volumes about the company’s ability to make good on federal support.
What we drive says a lot about who we are. For the CEOs of the Big Three and the lawmakers deciding their fate, that’s never been truer.
LA Auto Show Roundup
Hybrids took center stage at 2008 Los Angeles Auto Show in late November. Thirty hybrid models were on display—revealing the diversity of options coming to the market, including small affordable hybrid cars, luxury hybrids, sporty hybrids, hybrid crossover SUVs, hybrid pickups, and even a Toyota Camry Hybrid concept that runs on a combination of electric power and compressed natural gas.
2010 Honda Insight
The 2010 Honda Insight made its American debut in Los Angeles, after an unveiling at the Paris Auto Show last month. The original two-seat version has been reborn as a practical four-door model—and at the affordable price of about $19,000. At that price, the Honda Insight could immediately become one of the most popular hybrids on the road. Honda aims to sell 100,000 units in 2009. No definitive word yet on fuel economy, but it’s expected to hit the mid- to high-40 mpg range.
Ford Fusion Hybrid & Mercury Milan Hybrid
Ford used Los Angeles show to unveil its first hybrid sedans: the Ford Fusion Hybrid and Mercury Milan Hybrid. The company gave the 2010 Ford Fusion a more muscular look, but it’s the Ford hybrid engineers who will be flexing their muscles. The Fusion Hybrid and Milan Hybrid can travel as a fast as 47 miles per hour, and as far as eight miles, solely on electric power. That’s impressive, but it’s the fuel economy—approximately 39 miles per gallon in the city—that will turn heads (and hopefully drive the sales that Ford so desperately needs). The pair of hybrid sedans arrives in Spring 2009.
Chevrolet Silverado Hybrid & GMC Sierra Hybrid
Production of the auto industry’s first full-hybrid pickup trucks, the Silverado Hybrid and Sierra Hybrid, begins this month with delivery to dealers in early 2009. You might not be overwhelmed by the idea of a 332-horsepower V8 vehicle from The General—or the combined fuel economy of 21 mpg—but that is a 30 to 35 percent improvement over the conventional pickups. Price is just under $40,000.
Read about the other hybrids
More News from LA:
Hyundai Motor America announced that it will be able to achieve a fleet average of 35 miles per gallon by 2015, five years ahead of the timetable for new fuel economy regulations. The company revealed its fuel economy goals at the Los Angeles Auto Show, where it unveiled Hyundai’s first gas-electric hybrid vehicle, the Hyundai Sonata sedan—slated for the North American market in 2010.
The brand-new Volkswagen Jetta TDI diesel took the Green Car of the Year award at the 2008 Los Angeles Auto Show. The Jetta TDI won based on its high fuel efficiency numbers—41 mpg on the highway and 30 in the city—and its price point of $21,900.
Carlos Ghosn, CEO of both Nissan and Renault, gave the keynote address to kick off the show’s media days. After nodding to the severe financial pressures facing all carmakers in the current market slowdown, he reiterated Nissan’s plans to offer an electric vehicle in the U.S. and Japan in 2010 for commercial customers and large fleets, with showroom sales to consumers in 2012. Ghosn did not reveal details about the design of any electric cars from Nissan, but a few days later, in an exclusive interview with HybridCars.com, Mark Perry, Nissan’s director of product planning, confirmed that the company’s electric vehicles will be purpose-built and not based on existing models. “We want to make sure it’s iconic, as something different, unique and futuristic,” said Perry at the San Francisco Auto Show. “But not in a Blade Runner, George Jetson kind of way.”
Consulting Firm: Slow Growth for Electric Cars
Electric cars have garnered a lot of media attention in recent months. Some consumers might get the impression that gas-free vehicles will be ready to take global roads by storm in the next year or two. But according to a new report from PricewaterhouseCoopers, production of all-electric vehicles will take another eight to 10 years before reaching the level of today’s hybrid cars—and that’s with significant government subsidies and incentives.
The PWC report acknowledges that electricity is cheaper than existing automotive fuels, but identifies vehicle purchase price as the highest hurdle. The report warns, “Only when pilot programs encouraged at the state level become more widespread, will the full market potential for pure electric vehicles be unlocked for the next automotive generation, otherwise electric vehicles are destined to remain niche.”
Signs of Collapse for Biofuel Movement
In recent years, many argued that the path away from Middle East oil and toward reduced vehicle greenhouse gas emissions would be led by a switch to ethanol and biodiesel. That argument—and the biofuels movement championed by entrepreneurs, industry leaders, and some researchers—is quickly dying. In the past week alone, VeraSun—the largest public ethanol producer in the country—filed for bankruptcy, and Germany became the first country to formally scale back its commitment to biofuels.
From the beginning of the biofuels movement, three critical questions have remained unanswered: (1) Can biofuel be produced in quantity at a competitive price to conventional fuels? (2) Can biofuel feedstock—the stuff used to make fuel—avoid being diverted from use for food? (3) Can you produce biofuels without harming the environment?
The answers to these questions appear to be: no, no, and no—especially for ethanol derived from corn, and biodiesel from soy or palm oil.
The numbers just aren’t there, as prices for corn and natural gas—the main feedstock and the fuel used to turn it into ethanol—increased this past year while retail prices for ethanol failed to keep pace. As companies cancel planned ethanol and biodiesel plants, the road to viability for biofuel alternatives becomes rockier—even with government subsidies.
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 several megamillionaire entrepreneurs, owning a Prius just wasn’t enough—each has taken a major stake 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?
Warren Buffett (Net Worth: $62 Billion+)
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 U.S. 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 U.S. 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.
Andy Grove (Net Worth: Around $400 million)
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 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.
Vinod Khosla (Net Worth: $873 million)
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. 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.
Read about other billionaires and their green investments.
Another wealthy entrepreneur is Miles Rubin, founder of Miles Electric Vehicles. We sat down for a two-hour exclusive interview with the company’s recently appointed CEO, Kevin Czinger, who discussed the corporate strategy, market positioning, and the development of its Highway Speed model. Check it out:
We’ll that does it for this issue. Believe it or not, there are only a few weeks left in 2008. We’ll sneak in one more issue before the fat lady sings—just to share our look back at the past crazy year of highs and lows, and to take a gaze forward at the year ahead. Fasten your seatbelts.