Who will build the electric car — start-ups or big firms?

Phoenix Motorcars

Phoenix Motorcars’ 1937 Cabriolet Reproduction (CARB certified)

While Hollywood focuses on the murder of the electric car, businesses continue to circle the opportunity. Mitsubishi is the latest, announcing last week that they are bringing their electric vehicle to the States (previously just destined for Japan). They join quite a few startups including Tesla and Phoenix Motorcars, as well as plug-in hybrids from “hacked” Toyotas and Fords.

For sure, electric cars, like hydrogen cars, are no panacea. They are zero-emissions vehicles, but that just means no emissions come out of the tailpipe. Electric vehicles still require energy to run, and usually that energy comes from a local utility, which certainly is a source of emissions. An electric car in Nebraska could be more properly thought of as a coal-powered car. Still, these vehicles create less emissions than comparable conventional autos, and that by itself is exciting.

What intrigues us is wondering which business will capture the electric car opportunity. Will focused startups win the race or do established firms have too much of an advantage? There is no doubt Tesla is hot, but can they really match the engineering and distribution muscle of Toyota?

Startups do have a history of innovating in transportation. Preston Tucker brought disc brakes and fuel injection to cars 30 years ahead of time. Of course, he also went bankrupt in the process.

Ultimately, electric cars may in fact be what business nerds term a disruptive innovation. Clayton Christenson might argue that the incumbents will be reluctant to chase the new technology, judging it to be inferior and not satisfactory for their mainstream clients. As an example, all the big telecom firms have neglected voice-over-IP services, letting companies like Vonage emerge.

Anyone care to take bets? Is Tesla the next Vonage? Or will Tesla’s fame be limited to a Francis Ford Coppola documentary?

Hat tip to Green Car Congress for the Mitsubishi news.

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  1. pradwastes - October 11, 2006

    There is plenty of coal in this county for the next 200 years. It is imperative that coal powered power plants shut down ASAP. We can use anything but coal and not trade so much CO2. I have read of fitting more batteries to a Toyota Prius and tweeking with the computer to get 70 to 100 miles just using the elecric motor in the car. This translates to about 150 MPG for that first 100 miles The trick is to plug it for a several hours before taking off. There is some discussion about Toyota will come out with a plug-in Prius in the near future. The the cost of the electricity is only a fraction of gasoline. The gasoline powered engine is just in reserve in case it is needed for going up hill or driving more than the 100 miles at a time. That still does not get Nebraska off the hook for having no way to generate power but coal.

  2. benny - October 11, 2006

    i think one thing we often overlook about electric cars is that the infrastructure is already there. we already have electric outlets in almost every home in america, and slowly (too slowly!) people are investing in green energy. our geographic ability to tap into solar and wind power is astonishing, and it’s a growing market. it’ll take a lot of effort to be able to switch over, but voting with our dollars spent and buying green energy certs is really a great way to show your support for the technology.
    electric cars are already here.
    they’re a california based company (actually, originally based in my hometown), they ended up sueing mercedes after having purchased the rights to sell the smart car from them and they went on a huge campaign to ruin the vehicle. in any case, the xebra is here in america… it’s a 3 wheeled vehicle (which means you only need a motorcycle licence to operate it), runs 40 miles to a charge and goes up to 40mph.
    google the “voltsrabbit”, lots of people are converting their old volkswagon rabbits into electric only to much success.
    pradwastes… something that’s actually really cool is the working concept of the “plug in” hybrid. you can actually do this now… lots of people are, actually. very soon a canadian based company will be offering this on a larger scale, but essentially you can plug in your hybrid overnight to let the batteries charge, and for the first 100 miles or so they will run at over 100MPG. it really is too bad that automotive companies claim this is five to ten years off into the future when people are converting their hybrids in their own garages for less than five grand.

  3. Chad - October 11, 2006

    pradwaste: This is slightly off topic, but we get more than half of our electricity from coal. Like it it not, we are stuck with it for decades. The only feasible replacement for it in the medium-term is nuclear. There simply is not enough natural gas, while PV, wind, and other renewables are far too expensive and/ or face geographic or technical limitations.
    Having a renewable policy and a conservation policy is great, but having them alone cannot be said to be having a complete energy policy. The reality is that dinofuel is going to be the primary source of our energy for decades to come, regardless of the pace of innovation or what the government does. I am sure we both wish otherwise, but it is necessary for us to have a plan to utilize nuclear, coal, gas, and oil in the least-damaging manner that is feasible. Just wishing coal away is not the answer.
    As for electric cars, they are on their way, from big companies. Small companies do not have the infrastructure to produce automobiles. These vehicles are the future, but will be marginal for quite a while as costs will be high and performance compromised for the sake of the pile of batteries.

  4. Joe G. - October 11, 2006

    This is the same disillusioned argument that spins around the environmental and renewable energy sector each time there is an innnovation or proposed policy. Why do we need to debate electric vehicles within the framework that they will be the only vehicle? Did we not learn from our gasoline addiction the danger of betting on one solution?
    Instead, we should be focusing on promoting and using electric vehicles where they make sense and encouraging other modes of travel where they don’t make sense. For instance, electric vehicles powered by the CA grid and used for urban or short-range commuting make sense. Conversely, electric vehicles powered by the traditional midwestern grid (e.g. coal) and used in rural ares do not make sense. It would be good to see the environmental sector approach issues in a clinical fashion. Not all patients respond the same way to similar drugs or treatments, just as certain areas, lifestyles, climates and environments do not respond the same to electric cars.
    Lastly, they should not be seen as a solution but as a stepping point. We should start discussing their role in putting electricity back onto the grid at night to save money, balance peak loads and drive down electricity production demand. I wish we would give each technology, policy and social change due diligence by discussing its’ merit in terms of being a piece of the “solution” puzzle and not the one-stop solution.

  5. Anonymous - October 11, 2006

    One solution to the transportation problem is not to have everyone riding alone in a 3000 lb. automobile. The idea of public transportation has been around for a little while and with the age of instant messaging and e-mail, it seems reasonable that car-pooling would be much easier.

    I prefer to think in terms of “people-miles per gallon”. So even a Ford Taurus with two people riding to work together gets as good a “people-mileage” as a Toyota Prius with a single rider.

    And then there’s my bicycle. I haven’t allowed any additional riders on it, but it is pretty efficient.

  6. Anonymous - October 11, 2006

    FYI: The Commonwealth Club in San Francisco is hosting a round table on October 25th on:
    ROBERT GRAHAM, Transportation Area Manager, Electric Power Research Institute
    KIMBER HOLMES, Executive Director, Biodiesel Council of California
    DANIEL SPERLING, Director, Institute of Transportation Studies, UC Davis
    J.B. STRAUBEL, Chief Technical Officer, Tesla Motors
    Amid sky-high gas prices and worries about climate change, alternative fuel sources are a hot-button issue at the pumps and among policymakers. Though some car buyers and manufacturers are actively searching for innovative, unconventional sources of energy, circumventing oil’s $70 per barrel price tag remains a challenge technologically and infrastructure-wise. Our panel of experts will discuss alternative fuel technology and examine the reality of greener travel.
    11:30 a.m., Check-in | 12:00 p.m., Program | Club office, 595 Market St., 2nd Floor, San Francisco | Free for Members, $12 for California Automobile Asociation Members, $15 for Non-Members | Co-sponsored by The AAA of Northern California.

  7. Jim Crimmins - October 11, 2006

    Three points:
    1. We will be using coal for a long time, probably more than currently, and also nuclear power, probably more than currently, and natural gas to generate electricity. We should make these technologies as clean and safe as practicable. They should be penalized via consumption taxes for environmental problems they cause. As emerging clean technologies come on line to compete- great.
    2. We have in place a method of distributing power that is ubiquitous and relatively efficient – the electric grid. It should be used for the forseeable future – at least 25 years. That way we can focus on making 1000 power plants clean instead of 500mm cars, which can run on electricity/batteries or some hybrid technology. We will also continue to have some [probably a lot] of gasoline powered vehicles where they are necessary. They should be penalized via consumption taxes for the environmental problems [and national security issues] they cause.
    3. Hydrogen and fuel cells are really just a replacement for the electric grid and batteries – they don’t change the generation problem at all. They havn’t shown a compelling advantage yet to the existing electric grid technology – I’m not sure what that advantage might be in the forseeable future unless it could be shown to be a lot cheaper? Anyone have an idea?

  8. benny - October 11, 2006

    how can you say that small companies don’t have the infrastructure to produce them? i think what you mean is that they don’t have the infrastructure to produce them on a scale large enough to make a significant impact… because small startups are already producing and selling them in the U.S., but the market is too small right now. plans are already in the works to make a scion conversion to electric, but even that is 2010 at the very very earliest. if people want electric cars, they can have them, and relatively cheap. ~10k or so for a new, short range electric.

  9. P.J. Onori - October 11, 2006

    I truly think that we’re going to see a green boom very similar to the dotcom boom of the late 1990’s. I also think, just like the dotcom boom, it is going to be driven by new, innovative startups with some forward thinking and willingness to take some risks. The signs are all there – high demand, technology ripe for use, a tech-centric market that is basically untapped in this country.
    I think it will be the small innovators like Tesla which will spark a new market which the old behemoths will slowly jump on (if it makes financial sense).

  10. Chad - October 11, 2006

    Bennie, I meant actually making the cars from the beginning. The small companies that exist are modifying Priuses and the like (which is great). However, Toyota will always have an advantage over the tinkerers, not only in terms of resources and R&D, but in the ability for them to actually modify the Prius itself in order to accomodate the battery packs gracefully.
    I believe this is the direction Toyota is heading, and the other large companies will follow. The tinkerers will be swept to the wayside, and will move on to tinkering with something else at a different level.
    On a different track: What about the dilemma of owning an electric car vs living in an apartment? Unless one owns their own home, one probably does not have a garage or outdoor electric outlets. Given the tens of millions who live in apartments, and especially considering that these people are disproportionately the young, childless, city-dwelling types for whom first-generation electrics would be most suited, is there an easy solution to this problem?

  11. jennifer blakeley - October 11, 2006

    Hello from Kansas where coal is king and nuclear is nasty. We have more wind power than the entire mid-west can use, and are currently debating where to install the giant windmills. Please don’t say or think that coal and nuclear power will be in use for the next 50 years(perhaps even more than currently) with such abundant wind and solar power at our fingertips. The word safe and nuclear don’t belong in the same sentence. Did you know the radioactive half-life of the biproducts of nuclear energy can be more than a million years?
    Our next door neighbor Missouri decided to dispose of their nuclear waste in an old “abandoned” baseball field in St. Louis and the children in the surrounding neighborhood started dropping like flies from leukemia. Ends up the had essentialy sandwiched the waste between two membranes of plastic (hefty trash bag, anyone?). It had leaked all over the place, not to mention the children were still playing on the baseball field. This was an impoverished neighborhood with no-where else to play and no knowlegde of the waste in their backyards.
    I love Joe G.’s comments about each solution being a piece of the solution puzzle that fits together for sustainability. The more diverse an eco-system is, the more likely it is to survive. Let’s visualize those windmills.

  12. Anonymous - October 11, 2006

    I must comment on two things you wrote. I agree with your alluding that while electric cars are no panaceas to our energy and greenhouse issues they can be a significant factor in at least REDUCING energy use and reducing dependence on overseas oil.
    But —
    (1) Hydrogen fuel cells are worse than “not a panacea” — they are a technologically enamoring red-herring: Worse than the current situation.
    Hydrogen fuel is a source of energy. It is a reasonably clever non polluting way of distributing energy energy.
    Hydrogen is plentiful. All water is H20, and the Hydrogen can be easily extracted from it.
    The big catch is it takes ENERGY (electricity to be specific) to extract hydrogen from water.
    In fact it takes SIGNIFICANTLY more energy to extract, say, a gallon of liquid hydrogen than you will get out of burning/using it later to drive a car, and more than if you used that original fuel (coal, natural gas, or whatever) directly in a conventiional engine. Today if we made hydrogen fuel 70% of the energy we use to make the electricity to get that hydrogen would come from burning oil, coal, or gas
    (only 8.8% or our electrical energy comes from solar, wind, geothermal, or renewable non-polluting sources and 19% is nuclear.)
    This means that if we suddenly today converted every car in the country to run on hydrogen fuel cells it would do not improve our energy situation or pollution, it could make both worse.
    So to talk, as the Bush administration does, your site does, and most advocates of the so-called Hydrogen Economy do, about hydrogen fuel without a corresponding massive commitment to alternative energy sources to extract(“make”) the hydrogen fuel, is at best misleading and at worst going to fool people into not putting pressure on to get those alternative energy sources (solar, etc) ramped up.
    Without that it’s just a red herring giving people comfort as we drive over the cliff with the illusion that “don’t worry — GM is working on Hydrogen cars and when we run out of fossil fuels we’ll just use hydrogen which is plentiful.”
    This policy (promoting hydrogen fuel without first addressing where the energy to extract that hydrogen from water will come from) could easily be the most tragic and massive mistake in the US energy policy.
    And I sincerely wish that you would not participate promoting this flawed policy.
    Can you please verify what I’m telling you (any honest energy engineer or analyst will confirm what I write –or just read http://www.thecrimson.com/article.aspx?ref=514359) and then back off on any support of fuel-cells for cars?
    Alexander Censor, M.S.
    (2) Electic cars are definitally not ‘zero emmissions.’
    Simply put: Over the USA as a whole only about 30%, at best, of the energy used to generate the electricity is renewable and non-CO2 producing; So, while there is about a 30% reduction in emissions about 70% of the power to charge those batteries is producing emissions.
    Not at the tailpipe, but elsewhere.

  13. Tim - October 11, 2006

    Agreed: The hydrogen economy fogs the issue. It would take fossil and nuclear energy to extract it.
    Just to help spread good ideas…
    1) Regarding pluggable electric hybrids (PHEV): the pay back period for a modest 2.1 KW grid intertied PV solar system on my California roof was 18 years, mostly because I don’t use “enough” electricity to save much. 18 years is too long for most house owners. Now, if my roof supplied me with transport fuel too, the story can have a new ending.
    2) Feebate. a proposal to subsidize fuel efficient cars with
    penalties on guzzlers. Tuned to be provide a, say, $3K rebate
    for a 60 mpg car, $2K off price for a 50 mpg car etc, payed for by those who city shop in Hummers/Tahoes/Suburbans etc. who claim 12 mpg.
    3) The grid needs constant balancing against hourly, daily and seasonal fluctuations. 1000’s of pluggable cars, intertied to the grid for power and internet for data exchange provides a
    source and sink for a huge amount of energy, that grid managers can utilize and may even pay you to do so. Google PHEV and V2G
    for more.
    4) E85 is 85% ethanol, 15% fossil gasoline. Under the banner:
    “Lets pay the mid west farmers, not the middle east royals” many are talking of miles per fossil gallon. Brazil maybe admittedly cutting too much forest to grow corn to make it’s ethanol but with cellulistic ethanol from switch grass and other biomass, the numbers and sustainability start looking attractive. search biodiesel too.

  14. Chad - October 11, 2006

    jennifer: Coal will be here for 50 years or more. This is reality. It does no good to pretend it is not true, and it is absolutely necessary that we have a coal policy as part of our energy package. Yes, Kansas may have lots of wind, but almost no one lives in Kansas. This is generally true across the country – what wind resources we have are far from population centers. In any case, wind alone cannot provide more than a small fraction of our energy needs.
    I am a bit confused by anonymous’s railing on hydrogen. From well to wheel, hydrogen is about a wash with the other “most efficient technology” that we currently can produce – hybrid diesels. However, it is cleaner with respect to other pollutants (sulfates, nitrates, etc – diesel is very dirty), and these pollutants can be produced outside of population centers. Also, pure biodiesel is not really an option, especially in cold climates. Both diesel and hydrogen can be produced from renewable resources. It is not clear which would be more economical.
    And is there anyone here who ISN’T buying green energy from their provider? It’s even easier than buying a Terrapass!

  15. Adam Stein - October 11, 2006

    Obligatory shilling: but a Home TerraPass is about 66% cheaper than the average utility green power program. Plus we’re verified. Plus you get nifty ego-goodies with your purchase. OK, I’m done now.

  16. pradwastes - October 12, 2006

    I case anyone was interested my “pradwastes” is a contraction of Permanent RadWaste Solutions. I have not been able to earn any money at this but I am submiting it to the DOE to try to convince them it is cheaper, more secure and safer than Yucca Mountain for getting rid of high level nuclear waste. Coal is 99% carbon and the rest of it is Sulfer and Mercury. The Sulfer causes Acid rain and the Mercury is why we have to limit the the amount of fish we eat to not get too much of it. We must use more wind and solar energy but to replace the coal burners we have to use some up-to-date nuclear power plants.
    To Chad: In Brazil they make ethonal from sugar cane, not corn.

  17. chris brandow - October 18, 2006

    one thing that always bugs me about articles about EV’s is that even with vehicles that have ranges over 50 miles, the authors typically make the big point that such a range will STILL require owners to have a second vehicle for longer trips, etc. Of course, I don’t know anyone, with kids anyway, who doesn’t have a second car.

  18. Anonymous - October 19, 2006

    Totally off topic but wanted to try and get some feedback on something I’ve been thinking about while driving my 10 year old Jeep around town…The artilce Hybrid economics by bret posted earlier this year alluded to the economic benefits accrued should a hybrid owner keep their car for longer than five years-or something along those lines…I’m wondering if there is not a environmental benefit to me keeping my old Jeep on the road instead of going out and buying a new one? My logic goes something along the lines of “I won’t buy a new car as the amount of energy that goes into producing it is far greater than the amount I am using (although high) while driving the same car I’ve had for 10 years. Plus, my current car still has life/energy (?) in it so why should I “throw this away” (or refuse to expend this inherent energy), or use the car past it’s projected life span, rather than consuming something new..?” Kind of the justification I use to explain it to my wife-sorry I’m not an engineer or economist but hopefully you can follow my line of reason. I guess I’m wondering how you could quantify my refusal to consume another product (in this case a car). Any thoughts?

  19. Adam Stein - October 20, 2006

    Hi Anon —
    Good question. I don’t have a rock-solid answer to your question, but generally the energy content required to manufacture a car is considered to be about 10% of its total carbon footprint. In other words, about 90% of the emissions from a car come from driving it. In your case, that figure will be even higher, because you’ve been driving your car for a long time, and because it doesn’t get great mileage.
    Also, you can always replace your present car with a used car that gets better mileage. This way, you won’t be responsible for putting a new car on the road (although this argument is slightly dubious — you will be creating demand for an additional car, after all).
    Anyway you slice it, you’ll probably be doing the environment a favor by retiring your old jeep.
    – Adam

  20. johnandrews - July 14, 2008

    Can we run our car with water and gas?
    Can anybody tell me is the HHO Gas is real working or is another scam?