The big oil companies aren’t blind to the threat posed by ethanol. And now it appears they’re doing all they can to hamstring wider access to the fuel by artificially increasing the price of E85 at their gas stations.
I must admit I’ve always been a little skeptical about this idea that diesel can be a “clean-burning fuel.” Anyone who has ever gotten stuck sitting behind a bus in traffic is likely to agree. Read more →
Hydrogen fuel-cell vehicles might be the cars of the future. In fact, to recycle an old joke (because here at Fuel Freedom we’re big on recycling), FCVs might forever be the cars of the future.
The world is filled with rapidly advancing technologies, and the transportation fuels sector is no exception. A few more innovations like these, and our oil addiction will be a thing of the past.
By now, the depth of Volkswagen’s deception is clear: The German automaker deliberately misled American regulators by installing software on 11 million vehicles that reduced emissions during testing, but allowed the emissions to increase by 4,000 percent once they got out into the real world where people live and breathe.
The Wall Street Journal reported last week that Apple has committed to trying to produce an electric car by 2019. Some see it as assuring the transformation of the auto industry, while others see it as Apple’s Waterloo.
Earlier this month the nation celebrated National Drive Electric Week, with events in 195 cities. Read more →
Americans love their freedom to choose. Someone invents something, and competitors rush in with their own similar products to fight for a market that didn’t exist before.
This is what Tesla has done with the electric vehicle: The Model S is making cold-eyed journalists swoon, and the next few months are huge: The company will soon release its eagerly awaited crossover SUV, the Model X, followed by its more-eagerly awaited “affordable” sedan, the Model 3.
But Tesla shouldn’t get too comfortable, because the established auto-makers want to steal some of its quiet, zero-emission thunder with EVs of their own: In the past week, Toyota unveiled the new Prius, trying to assure everyone it can be cool as well as get 10 percent more miles out of a battery charge; Edmunds gave its blessing for the 2016 Chevy Volt; there was a possible sighting of the 2016 Nissan Leaf, the best-selling EV in the U.S.; and there were rumors that Mercedes-Benz is working on an electric car than has a range of 311 miles.
It’s a basic rule of economics: Competitive markets are good for consumers. Which is why drivers should be demanding fuel choice as well.
Gasoline is cheap now, but it doesn’t take much to cause a price spike: The threat of a supply constriction overseas; a refinery going down (and staying down, in California’s case); output quotas in OPEC nations. Anything can cause volatility in the global market. Businesses don’t like uncertainty, and it’s bad for consumers as well.
The only way to reduce the cost structure of fuels over the long term is to create fuel choice, something the United States has never known. To quote former Shell Oil president John Hofmeister: “We will never get past the volatility of oil until we get to alternatives to oil.”
We’re not advocating an end to fossil fuels. We just want fuel choice: Ethanol, methanol, CNG, LNG, biodiesel, hydrogen and, yes, electric batteries. Anything that reduces our dependence on oil is good for America.
If gasoline, the same fuel we’ve been stuck with for more than a century, is the superior fuel for vehicles, let it compete with other choices at the pump. If oil companies don’t want competition, what are they afraid of?
Related posts:
People tend to think that Teslas and the Nissan Leaf are new developments, but in fact the electric car has a history stretching back to the 19th century.
The first electric car was built in 1884 by Thomas Parker, the man responsible for designing the London Underground, plus various overhead tramways in Liverpool and Birmingham, all running on electricity. Parker powered his independent vehicle with rechargeable batteries of his own design.
Soon variations on the EV began to appear across Europe and America. Gasoline engines were still loud and dirty and required a hand crank to get started. Steam cars were regarded as much cleaner and easier to use. Although they took a little while to get warmed up, they did not require long recharging periods, as did the electrics.
As a result, in the year 1900, 40 percent of American cars on the road were powered by steam, 38 percent by electricity and the remaining 22 percent by the infant gasoline engine. Henry Ford, then an employee at Detroit Edison, was as interested in electric cars as the internal combustion engine. In 1896 he was driving an electric “quadricycle” around Detroit. He met Edison, who was his employer, and showed him his plans for an internal combustion engine. Edison encouraged him to go ahead, even though he had his own plans for an electric vehicle.
Ford founded his own company in 1903 and introduced two revolutionary changes: the electric starter motor and the assembly line. Soon the Ford Model T, known as the Tin Lizzy, was going through the production process in 90 minutes. With the arm-twisting crank no longer necessary, the internal combustion engine took off, quickly replacing both the steamer and the electric.
Meanwhile, Edison had not lost interest in the electric car. He replaced the lead-acid battery with a more efficient nickel-iron version and announced the conversion of four touring cars from gasoline to electricity. He also wrote in favor of the technology:
Electricity is the thing. There are no whirring and grinding gears with their numerous levers to confuse. There is not that almost terrifying uncertain throb and whirr of the powerful combustion engine. There is no water-circulating system to get out of order — no dangerous and evil-smelling gasoline and no noise.
To this he could have added “no polluting exhaust and no carbon emissions,” but the advantages he mentions still remain today.
Nevertheless, Americans learned to live with the roar of the ICE and the smell of gasoline. Ford’s interest in electricity did not die, however, and as late as 1914 he and Edison were rumored to be working together on an electric car. It was reported that the car would sell for somewhere between $500 and $750 and have a range of 100 miles. Edison wrote:
Mr. Henry Ford is making plans for the tools, special machinery, factory buildings and equipment for the production of this new electric. There is so much special work to be done that no date can be fixed now as to when the new electric can be put on the market. But Mr. Ford is working steadily on the details, and he knows his business so it will not be long.
I believe that ultimately the electric motor will be universally used for trucking in all large cities, and that the electric automobile will be the family carriage of the future. All trucking must come to electricity. I am convinced that it will not be long before all the trucking in New York City will be electric.
Ford even bought interest in a power plant at Niagara Falls to provide some of the electricity. But Edison’s nickel-iron battery proved to have internal resistance and was not powerful enough to propel the vehicle. So the lead-iron battery was re-substituted without Ford’s knowledge. When it proved to be too heavy to be carried by the vehicle, Ford was furious, and the project was abandoned.
So the electric car gradually faded from view. By the 1950s, the only person in America still driving an electric was Walt Disney’s Grandma Duck, who as the grandmother of Donald was a symbol of octogenarian irrelevancy. But the oil crisis of the 1970s changed all that. Once again there was widespread interest in finding a substitute for gasoline and foreign oil.
California got the ball rolling with a mandate that the car companies produce a zero-emissions vehicle or be banned from selling in the state. One result was GM’s EV1, an electric vehicle made in the late 1990s that won praise in the industry but was probably ahead of its time. Vijay Vaitheeswaran, energy writer for The Economist, described his experience when he rented an EV1 during a visit to California:
The vehicle proved to have a much shorter range than I thought it would – closer to 50 miles than a 100. The fact that I sped along at 80 mph in those empty HOV lanes might have drained the battery faster, but only certain highways had that lane; more often, I was crawling along in traffic like everyone else. And most of the time, I was going nowhere at all, since my vehicle kept running out of power. Charging proved the biggest nightmare. There were plenty of chargers around, but some were of the wrong sort; others were locked or nonfunctional. And rather than the “pretty quick” recharge, my useless battery took more than five hours for a full charge. As a result, my entire visit turned into a fiasco of delayed or missed appointments, apologetic cell-phone calls, and panicky exits from the highway to obscure malls and commuter-rail stations in search of a charger.
Most EV1’s ended up in the shredding machines. The story was then told in a bizarre documentary, “Who Killed the Electric Car?”, which found four people who said they would have liked to buy one and attributed the whole failure to a conspiracy by the oil companies.
But the ice was broken, and in 2006 PayPal founder Elon Musk introduced the Tesla, a high-end vehicle that he said would redefine the automobile industry. The $103,000 Tesla Model S P85D was named the “best car ever” by Consumer Reports last week (“on a scale of zero to 100, a 103”). Musk is currently planning to reach the average car buyer with the Model 3 that will sell for $35,000. Nissan’s Leaf, an urban run-around, has racked up 170,000 in sales worldwide.
The obstacles remain the same as those Thomas Edison and Henry Ford faced: limited driving range, long charging time, the weight of the battery and a scarcity of recharging stations. But Tesla and Nissan are working hard to overcome them.
So will the electric vehicle once again be consigned to the ranks of those novelties that never quite worked out? Or will it fulfill the long-lost dreams of Thomas Edison and Henry Ford as a legitimate alternative to the internal combustion engine? We’ll know in about two years when the Model 3 hits the market.
The month of September will mark a turning point as to whether Tesla Motors will be just another overhyped technology stock or whether it is truly about to lead a revolution in the auto industry.
The month will mark the introduction of Tesla’s Model X, a $90,000 crossover SUV that will test the company’s ability to compete against the other automobile giants. If it passes this test, Tesla will be in a great position to mass-market the $35,000 Model 3 sedan when it goes on sale in late 2017. If the Model X turns out to be a dud, however, Tesla will face a much tougher climb in trying to break into the mainstream with the Model 3 two years from now. At stake will be Tesla’s market capitalization of $31 billion – higher than Chrysler’s – plus that $1 billion “gigafactory” the company is building in the Nevada desert to supply batteries for the anticipated sales of the mid-range Model 3. Plus the home -energy storage market.
The possible success of Models X and 3 is so unprecedented that it has caused economists to revise one of the most cherished theories of economic change, the idea of “disruptive technology.”
The idea of disruptive technology comes from the 1997 book by Harvard Business School economist Clayton Christensen and has made the phrase one of the most popular buzzwords in the field of economic progress. The title of Christensen’s book, “The Innovator’s Dilemma,” described how well-established companies often miss important transitions when newcomers break into the market with simplified products targeted at the bottom end. Christensen used the success of personal computers and steel mini-mills to illustrate how newcomers entered the field with cheaper and more convenient products targeted well below those segments claimed by leaders such as IBM or U.S. Steel. Eventually the upstarts toppled the giant.
There’s just one problem in positing Tesla as a disruptive technology: It has been overwhelmingly aimed at the richest auto customers, rather than the poorest. This prompted another Harvard B-School professor, Thomas Bartman, to write an article in the May issue of the Harvard Business Review arguing that Tesla is not disruptive but just another high-priced item aimed at biting off a luxury end of the market. Bartman argued that Tesla is too expensive to be disruptive, but that golf carts and those minimalist electric vehicles being produced in China were the true disrupters of automobile technology. They would catch on as courtesy vehicles for motoring around senior citizens’ centers and eventually upgrade to an urban vehicle convenient for making short shopping trips and finding a place to park.
This challenge has prompted other economists to revise the theory of disruptive technology and to create a new category into which Tesla easily fits. This is known as “high-end disruptors.” Jeff Dyer and Hal Gregersen make the elaborate case, in Forbes, that Tesla is only one of many new high-end disruptors whose chances for success are just as likely as those disruptors coming in from the low end of the market:
Unlike classic disruptive innovations such as steel mini-mills, personal computers and, in the car business, cheap Japanese imports, Tesla never pursued the classic route of going after low-end, price-sensitive customers first with cheaper, inferior technology. It doesn’t pursue nonconsumption, or customers who don’t currently drive cars. Tesla automobiles look and drive much like other cars, use established infrastructure like roads and confine much of their product innovation to only one aspect: the power system.
… Tesla has instead proved to be a different kind of disruptor, a high-end version that can be just as troublesome for the incumbents …
High-end disruptors produce innovations that are leapfrog in nature, making them difficult to imitate rapidly. They outperform existing products on critical attributes on their debut; they sell for a premium price rather than a discount; and they target incumbents’ most profitable customers, going after the most discriminating and least price-sensitive buyers before spreading to the mainstream. If you look within some large companies, you can flesh out previous examples: Apple’s iPod outplayed the Sony Walkman; Starbucks’ high-end coffee drinks and atmosphere drowned out local coffee shops; Dyson’s vacuum cleaners now have solid market share; Garmin’s GPS golf watches have taken much of the business from range finders. The incumbents didn’t react fast enough, and the high-end disruptors took over their market.
So it may be with Tesla. The company may not just disrupt the auto market but may force a revision of one of the most cherished new economic theories — that disruptions must always come from the bottom. Once again, Elon Musk may have outfoxed the experts. But it will all depend on how automobile consumers start responding to the new models targeting the mainstream.
By next month we should start to find out.
Related posts:
