Tesla a Bright Spot in Still Dim, but Improving Electric Car Industry

Photo of Nissan Leaf S courtesy of evworld.com

Photo of Nissan Leaf S courtesy of evworld.com

Anyone watching the still slow but improving progress of the electric car industry may have seen the Bloomberg Businessweek story on the “Tale of Two Electric Car Makers: Tesla Soars, Fisker Flops” (http://www.businessweek.com/articles/2013-05-08/a-tale-of-two-electric-car-makers-tesla-soars-fisker-flops). Tesla Motors not only produced a profit in the first quarter, as advertized, but also increased its guidance on sales for the year, from 20,000 to 21,000 cars. TSLA revenues were up 83 percent year-over-year to $562 million and the stock is soaring (see below).

While the article outlines supply chain and battery issues and other “kinks in its processes” Tesla needs to iron out, their stock is soaring and the outlook looks good. The contrast was provided by Anaheim, CA-based Fisker Automotive, which is laying off employees and hiring bankruptcy consultants, the article reports. Another electric car maker, Los Angeles-based CODA Automotive, recently filed for bankruptcy protection and announced it was “focusing its business strategy on the growing energy storage market,” according to a company filing.

For more positive electric car news, the BBC posted an article this week on the Nissan Leaf (http://www.bbc.com/autos/story/20130509-leaf-charges-into-mid-life) as it “charges through mid-life.” The Leaf, billed as “the first truly global mass-produced electric vehicle,” now includes the Leaf S, a lower cost model “designed to lower the barrier of entry to EV ownership.” One of the cost cutting moves was to move its assembly line from Japan to another Nissan factory in Smyrna, TE.

The BBC put the Leaf through its paces and managed to get 75 miles from a full charge, right about in line with Nissan estimates. Competitors mentioned in the article include the Toyota Prius PH-V and Ford C-Max Energi, both plug-in hybrids.

If anyone out there is charged up about the electric vehicle market, and knows of a small cap stock play in this market, please let us know. Meanwhile, we’ve been following a few small caps, plus Tesla to see how their stock is moving. We’ve also added a new company, Car Charging Group, to our list.

Palo Alto, CA-based Tesla Motors (Nasdaq: TSLA, http://www.teslamotors.com/) manufactures the Tesla Roadster, the Model S and other electric vehicles and electric powertrain  components. It’s way too large for our small cap blog focus, but just as a reference, the last time we looked at Tesla last February 20 it was trading at $38.90 with a market cap of $4.4 billion. As we mentioned, TSLA stock has been on a huge roll. It closed May 15 at $84.84, up $1.60 for the day. Its 52-week trading range is now $25.52-$97.12.

Santa Rosa, CA-based ZAP (OTC: ZAAP.OB, http://www.zapworld.com/) makes a variety of all-electric vehicles including trucks, motorcycles, shuttle buses and sedans and was formerly known as ZAPWORLD.COM. When we last checked on Feb. 20 its stock closed at $0.08 with a market cap of $24. ZAAP closed May 15 at $0.14, up 3 cents for the day, with a market cap of $42 million. Its 52-week trading range is $0.06-$0.27.

San Diego-based Maxwell Technologies Inc. (Nasdaq: MXWL, http://www.maxwell.com/) was formerly known as Maxwell Laboratories. The company manufactures ultracapacitors that are energy storage devices and power delivery systems for use in transportation, automotive, IT and industrial electronics.  MXWL closed back on Feb. 20 at $10.01 with a market cap of $292 million. It closed May 15 at $6.36, up 11 cents for the day, with a market cap of $185 million. Its 52-week trading range is now $4.90-$11.08.

Miami Beach-based Car Charging Group (OTCQB: CCGI, http://www.carcharging.com/) caught our eye with the announcement March 12 that it was acquiring EVPass, a company building destination charging networks for EV charging. CCGI  is also in the business of building charging station networks and has been busy making more acquisitions. Earlier this month, CCGI announced it had acquired 350Green LLC. CCGI closed May 15 at $1.34, up 4 cents for the day, with a market cap of $70.8 million. Its 52-week trading range is $0.60-$2.

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Q/A with John O’Dell, Senior Editor, Green Car/Alternative Fuels and Powertrains Specialist for Edmunds’ AutoObserver.com

John O’Dell, a longtime reporter and editor, has written about automobiles for more than 10 years. A former longtime staff writer at the Los Angeles Times, where he covered a variety of beats and was a member of several investigative political journalism teams, he co-founded and wrote for the Times’ premier automotive feature section, Highway 1. In 2007, O’Dell started Edmunds.com’s Green Car Advisor news and features blog on advanced technologies for cleaner, more efficient cars. The blog has now been merged into Edmunds’ AutoObserver.com industry news site.

O’Dell is currently senior editor and green car/alternative fuels and powertrains specialist for Edmunds’ AutoObserver.com.

Smallcapworld: Will Americans pay up for electric or hybrid vehicles after the early adopters?

O’Dell: Yes. The move from early adopters to the broad, general market will take a big longer than many in the green movement had hoped for, however. We don’t see market penetration of electric-drive vehicles of all types — conventional and plug-in hybrids, battery electric and fuel cell electric — topping 5 percent much before 2025 unless there is a significant and permanent increase in the price of gasoline, perhaps as much as $7-8 a gallon.

Q: How long will it take and how much will it cost to get a charging infrastructure in place?

A: Decades and a couple of billion dollars for the kind of network I think would be necessary to end range anxiety as an issue. A lot less and much more rapidly — perhaps just one decade — if the goal is simply to provide a mix of Level 2 and Level 3 chargers along the major transportation corridors and let people use home charging and a handful of strategically located commercial and public Level 2 chargers in city centers. If the idea is to get plug-in vehicles to actually start replacing conventional ICEs and hybrids in people’s garages, rather than serving as 2nd and 3rd cars for commuter purposes only, then we’ll need Level 3 charging locations just about everyplace there are gas stations in this country, and we’ll need to have multiple chargers at many locations. Either that or batteries that can take 80 percent charges in 3 or 4 minutes and/or a national network of battery exchange stations such as those proposed by Better Place. But if the proper roles of pure electric vehicles is to handle short-distance driving for people who can afford to have two or more vehicles in their garages and can afford to use a fairly high-priced EV as a second car, then we probably only need home charging and a few public chargers and the infrastructure needs are minimal and will occur naturally as people buy EVs.

Q: Do pure EVs actually save energy?

A: Yes. They are far more efficient than gasoline or diesel engines. Granted, it takes energy to produce electricity, but everything I’ve seen leads me to understand that on a generation-to-wheels basis, electric vehicles are more efficient than petroleum-burning conventional vehicles. Greenhouse gas production is another issue altogether — electric cars are only significantly cleaner than gas cars if we can decarbonize our electric grid. Otherwise, we are just relocating the emissions from the tailpipe to the generating plant.

Q: What is the real payback period on pure EVs and/or full hybrids?

A: Depends on the intial purchase price and how you are using the vehicles. It will be different for everyone and depends on the premium you pay for the hybrid or EV. Those premiums can range from $3,000 to $10,000, roughly, so it’s not really possible to say that there’s one magic number — 6.8 years or some such — that will get you to payback. If you drive then a lot, they will earn back their costs sooner — particularly if you don’t need any expensive off-warranty repairs. If gas prices continue to rise they will reach payback sooner than if gas prices stagnate or roll back. My wife and I lease a 2011 Nissan Leaf and with all the bells and whistles they hit you with, the lease, including taxes, is $483 a month. That’s ridiculously high in my mind. But we also have a 3 kilowatt solar system on our roof and take advantage of our electrical utility’s special EV owners rate system. The upshot is what we save on household electrical costs and gasoline each month pretty much pays for two-thirds of the lease and makes the whole thing affordable. But that’s our scenario. To figure the real payback period you’ve got to compute the fuel savings along with the maintenance and repair costs — and there’s not a history yet for EV repair costs. Ford has made estimates that its electric Focus would save in maintenance and parts replacement costs for a five-year period. You’ve also got to figure in the social value of reducing national oil consumption and greenhouse gas emissions — that’s important for at least some part of the consumer base.

Q: Can auto manufacturers cut carbon and increase mpg with micro-hybrids, or do they have to put a lot of pure EVs on the road to get their fleet numbers down?

A:  To hit the 2025 CAFE and GHG reduction numbers that administration is proposing we’ll need a lot of micro-hybrids, a lot of conventional hybrids, a lot more improvement in conventional ICE efficiency — which is definitely doable — and some small percentage of battery and/or fuel cell EVs.

Q: Will the EC postpone its upcoming carbon mandates so that auto manufacturers can have more time to comply?

A: I have no inside knowledge, but I suspect that will be the case. I suspect that will happen here as well, when the 2025 CAFE plan comes up for its midterm review. If the auto industry is adamant that it can’t make the goals in the time stated — and if the consuming public continues to resist the advanced technology vehicles that are necessary to hit the goals, there’s not much else governments can do.

Q: With Ener1 virtually gone, A123 staggering and Johnson Controls/Saft torn apart, who will supply the lithium-ion batteries for cars?

A: The Japanese and South Korean giants will be a big source initially; Chinese suppliers will come into the market and I’d expect some of the U.S. and European ventures to gain strength and market share, perhaps through consolidation over the next few years. I’m not sure we’ll ever be at a point where 100 percent of the advanced chemistry batteries we need for electric-drive vehicles will be 100 percent U.S. sourced and manufactured, but I don’t think we’ll be entirely dependent on foreign-sourced batteries, either.

Q: When will lithium-ion batteries be fully recyclable?

A: That’s not my field of expertise, but from what I’ve heard, I expect full recyclability to come hand-in-hand with broad market acceptance of the vehicles that use them. Another decade or so.

Q: Will lithium-ion batteries come down enough in price that they will not have to be leased and then sold after a couple of years for other uses?

A: Never say never, but probably not for a long time.

Q: The assets of Beacon Power were just bought out of bankruptcy by a NY-based energy investor. Do you think that technology is viable in cars?

A: Yes, for some applications. Perhaps as power boosters in ICE, hybrid or all-electric sports cars or as the energy storage device in a range-extended plug-in.

Q: Is there a real market for advanced batteries in hybrids and EVs, or is it just a limited niche market?

A: The market is real, but it will take time to develop. We’re just at the starting gate.

Q: The big distributors have yet to commit to anything more advanced than AGM and glass-mat lead-acid batteries. What will break through that stalemate?

A: Demonstrated public acceptance of conventional hybrids and plug-in vehicles. Once the market grows beyond the early adopters, I think the big companies will have to start providing advanced batteries, unless they are willing to simply abandon that market.

Q: What do you think of PbC batteries or other lead-acid batteries with carbon additives?

A: I like the idea, but I simply don’t know enough about the progress that’s been made to have an informed opinion. I’ll have to wait and see. But I’m for any battery that advances us beyond what we’ve got. And I’m chemistry neutral.