[SustainableTompkins] boutique carmakers focus on electric models

[GayNicholson at aol.com]

from the October 27, 2006 edition -  
http://www.csmonitor.com/2006/1027/p12s02-stct.html  
Rise of  the boutique carmaker 
Twenty-five years after John DeLorean's gull-winged gas-burner  arrived, 
small, private-label carmakers are decidedly in drive.  
By _Clayton  Collins_ 
(http://www.csmonitor.com/cgi-bin/encryptmail.pl?ID=C3ECE1F9F4EFEEA0C3EFECECE9EEF3)  | Staff writer of The Christian Science Monitor  
SAN  CARLOS, CALIF.  
The slope-nosed supercar sits ready to awaken, latent power in deep red. It  
should be nearly time to savor the harmonics of an engine well built, to smile 
 at an exhaust pipe's burbling notes. 
But today in San Carlos, Calif., in a region better known for silicon chips  
than superchargers, the Tesla Roadster comes to life with the auditory drama 
of  a golf cart. 
An engineer at the wheel, the Tesla - a preproduction sports car that's a  
heavier electric cousin to the wasplike Lotus Elise - engages and rolls away in  
a hush, tires humming on the concrete floor of a hangar-size garage. 
The car, headed off for more tests in advance of its release next year, has  
the capacity to leave this building and run 250 miles before its 900-lb.  
lithium-ion battery pack needs a charge. At a stoplight it could - tapping the  
low-end torque inherent in electric drive - joust confidently with a similarly  
priced Ferrari. All without burning any gas. 
It's one vision, at least, of the automotive future. Twenty-five years after  
John DeLorean rolled out his gull-winged gas-burner, small, private-label  
carmakers are decidedly in drive. 
Several - including some whose creative juice flows back to General Motors'  
famously "killed" electric car, the EV1 - now bank on batteries, tuning out  
critics' static about battery longevity and questions about how electric  
utilities might generate enough power to handle a widespread shift. 
Experts debate what role such boutique firms will play in an industry  
dominated by a dozen alliance-clad global juggernauts. The smalls still lack  
economies of scale, and must eye narrow niches in hopes of winning public  attention 
(if you want a $100,000 Tesla, get in line behind George Clooney). 
But they might be well suited to a coming shift: By 2015, parts suppliers -  
not carmakers - will represent nearly 80 percent of the industry's "total 
value  creation," according to a 2004 report by Mercer Management Consulting. 
"Smaller companies may really benefit from these developments," says  
Christian Kleinhans, a Mercer principal based in Munich, and a coauthor of the  
report. They will gain access to technology in such vital areas as electronics,  he 
says, that they did not fund. 
Nimble little firms can also adapt quickly to evolving consumer desires.  
Tesla, for one, plans another car, probably more mass-market friendly, as soon  
as 2009, says Martin Eberhard, cofounder and CEO. He built the Roadster to  
"convince consumers that an electric car can be something more than an in-town  
runabout." 
Tesla sells direct to customers; its first wave of 100 Roadsters was snapped  
up in August. Orders for 2007 models are in the hundreds, says Mike Harrigan, 
 Tesla's vice president of marketing. 
"You don't have to make a million cars a year to be in the car business,"  
says Peter Morici, a professor at the University of Maryland School of Business  
and former chief economist at the US International Trade Commission. "If 
[small  carmakers] get out there in front, then they will develop expertise the 
big guys  don't have.... I think there's an opening here." 
Pointing to another business realm, Professor Morici cites the example of  
Dell creeping up on a complacent IBM, a firm he says "did not initially grasp  
the consequences of the PC and didn't fully exploit it," lingering instead in  
mainframes. 
Others say carmaking entrepreneurs stand little chance against highly  
motivated giants, even as several of the titans struggle financially. 
"Every generation has its creative geniuses who think that they can beat the  
odds, but the reality is that the car business is more than just the 
challenges  of engineering the car itself," says Maryann Keller, an industry analyst, 
in an  e-mail. "Getting the attention of the buying public with advertising 
and then  setting up a dealer network - no, you can't sell them online - parts 
and repair  investments, etc., are usually way beyond the capability of most  
individuals." 
Ms. Keller also doubts consumers will align with brands whose futures seem  
uncertain. "Remember," she says, "the DeLorean was a failure, except in the  
movies." 
But industry upheaval has generated all kinds of action. Some mavericks are  
focusing on collaborative engineering and low-cost manufacturing in making 
their  runs. Visionary Vehicles founder Malcolm Bricklin, best known for bringing 
the  Yugo to the US, aims to import a vehicle from China-based Chery next 
year, for  example. 
All-electrics, too, have picked up some buzz. Beside Tesla, there is Commuter 
 Car Corp. in Seattle, building the two-passenger Tango. AC Propulsion, the 
San  Dimas, Calif., firm whose founder engineered GM's EV1, has an electric 
based on  the Toyota Scion. 
And if hydrogen fuel cells remain a holy grail for most majors, with  
gas-electric hybrids as a stepping stone, some of the big firms also are  dabbling in 
all-electrics. 
A DaimlerChrysler unit, Global Electric Motorcars, is building a small,  
fleet-type car. Toyota is weighing a plug-in version of its hybrid Prius. (Some  
impatient owners had been making the change themselves.) Mitsubishi introduced  
the third generation of its electric "i" car this week, though it's not 
planned  for the US market. 
Tesla's Mr. Eberhard acknowledges the complexity of creating an automobile in 
 what amounts to a small high-tech shop, with clusters of engineers poking at 
 wire harnesses and whiteboards covered with scrawl about actuators. 
High-voltage  signs are everywhere. 
On one table a battery case lies open. Inside, a blue tube for liquid coolant 
 snakes around the 621 cells on each of 11 stacked sheets. It's one of a few  
tables that can't be photographed. ("There," jokes an engineer, covering it 
with  paper after its display. "Now it's secret again.") 
"There's a lot more to a car than there is to a typical Silicon Valley  
project," Eberhard says. "And remember that in our case, we're not just building  a 
new product, we're also building a new company and a new kind of company, and 
 that takes a fair amount of effort and energy and money and time." 
Money came from a group of investors that included billionaire PayPal founder 
 Elon Musk as well as Google cofounders Larry Page and Sergey Brin. That has  
helped Tesla compress time. 
"In order to get the Roadster on the market fairly quickly, all the choices  
we made were not the most cost-effective choices," says Eberhard. 
The manufacturing is done in England. Some parts - windshield-wiper motors  
and the like - are bought from other automakers in a milder form of the 
sourcing  done by companies like Georgia-based performance carmaker Panoz, a leader 
in  "scavenger" engineering. 
"We're developing a car for $60 million," says Mr. Harrigan. "GM would  
probably spend that on marketing [alone] for its new Chevy Cadaver or  whatever." 
Eberhard says he understands the importance of support and sales  
infrastructures. (Regional "depots" are planned.) As for a nationwide system  that will 
help drivers get around from day to day, he points to the 250-mile  range and a 
portable recharger pack. "You charge at your house and that's  enough," he 
says. "I mean, how much cellphone-charging infrastructure do you  depend on?" 
He brushes off concerns about battery technology, citing steady increases in  
capacity and declining costs. Eberhard seems quietly self-assured, almost  
missionary. As one Boston headline writer put it last summer: "Who's reviving  
the electric car?" 
But even if Tesla and others can push the innovation curve and generate  
broader interest, says Ryan Brinkman, senior analyst at the  
PricewaterhouseCoopers Automotive Institute, that's the full extent of their  impact. 
"I don't think that a small manufacturer is going to come in and  
revolutionize this industry," Mr. Brinkman says. "I would place the probability  of that 
as close to zero." Domestic and foreign manufacturers, he says, have too  many 
billions invested in technologies even beyond electric vehicles. 
Eberhard is used to hearing firms like his sold short. "Excellent," he says  
with a laugh, "I love it. That way maybe the big guys won't see me as a threat 
 for a long time." 
_Full HTML  version of this story which may include photos, graphics, and 
related links_ (http://www.csmonitor.com/2006/1027/p12s02-stct.html)  

----------------------------------------------------
Gay  Nicholson, Ph.D. 

607-533-7312 (home office)
607-279-6618  (cell)

1 Maple Avenue
Lansing, NY  14882
gaynicholson at aol.com

Sustainable Tompkins 
Program  Coordinator 
w_ww.sustainabletompkins.org_ (http://www.sustainabletompkins.org/) 

Southern Tier Energy$mart Communities
Regional  Coordinator
Cornell Cooperative Extension of Tompkins County
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