Tom Konrad

href="http://stockgumshoe.com/2010/10/one-62-company-just-perfected-sunless-solar.html">Last
week, Stock
Gumshoe
sleuthed
out Jeff Seigel’s recent tease of a “$0.62 Company
[that] Just Perfected Sunless Solar.”  The company is href="http://www.altenergystocks.com/comm/content/newenergytech/">New
Energy Technologies (NENE.OB), which was trading at $1.20 after the
close on Friday.  Here’s what the Gumshoe has to say about the
company:

And of course, maybe Siegel’s right, maybe these guys will be to
First
Solar what href="http://www.altenergystocks.com/comm/content/ibm/">IBM was to
Smith Corona … I’m just not holding my
breath.

For more information on the company, which did stage a href="http://finance.yahoo.com/news/New-Energy-to-Unveil-bw-2766835715.html?x=0&.v=1">demonstration
of
the
technology
in
Tampa last month, you can certainly visit
their website and poke around a little — this solar product of theirs
is called SolarWindow,
and
their
other
project
is called href="http://www.newenergytechnologiesinc.com/motion_power">MotionPower
(that one somehow generates energy by collecting extra kinetic energy
from vehicles who are stopping at drive-thru windows and tollbooths).

You can read the href="http://stockgumshoe.com/2010/10/one-62-company-just-perfected-sunless-solar.html">full
article
at Stock Gumshoe.  The quick rise of the stock probably has a
lot more to do with all the attention for a tiny stock than the
company’s true prospects.  If you like this sort of technology
play, you’re probably better off waiting until the hoopla dies down and
you can pick it up again around $0.60.

DISCLOSURE: No Position

I'm already getting pretty frustrated with the unnecessarily politicization and partisanship of clean technologies, particularly by outsiders.

In case you missed it, JD Power came out with a report (note: pdf) concluding that the market for electric vehicles and plug-in hybrid electric vehicles will underperform versus all the hype around the sector, through 2020.  It's well worth reading.

They base their conclusions on some critical assumptions, existing market data, and survey data.  It's a credible effort to forecast the market.  And it's getting talked about among those who opine on political issues:  This morning's WaPo editorial by Charles Lane is particularly breathless and unnecessarily partisan and harsh, for example.  But taking a step back from whatever ulterior reasons Lane might have for using the JD Power report as an excuse to take a roundhouse swing at the Obama administration, the report and the reactions do raise a very legitimate question, "Does it make sense to subsidize electric vehicles"?

Lane argues no.  He points to the Chevy Volt's cost and concludes that it is Exhibit A of why electric vehicles are a foolish thing to subsidize.

Let's take a look at what the JD Power report actually says, tho, since Lane is clearly not a very good reader of detail.

1. They expect Hybrid Electric Vehicles (HEVs) and Battery Electric Vehicles (BEVs) [pay attention to these specific terms, they're important] to grow from a little under 1M vehicles sold per year to 5.2M vehicles sold per year in 2020, worldwide.

2. One major reason that will hold back HEVs and BEVs is the cost premium associated primarily with battery packs, both upfront costs and disposal.  And in large part this is because battery packs are "prohibitively expensive to manufacture at large scale" at $10-15k per.  

3. Survey data shows that consumers' interest in purchasing a HEV drops from over 60% to 30% when they're told the price premium will be $5k.

4. Gasoline prices are low and JD Powers expects them to stay that way because "the supply of oil remains steady, as is widely expected."

5. Environmental justifications for purchasing an electrified car might be undermined by the fact that they "might only be transferring the exhaust-emissions problem upstream." 

6. As far as BEVs go, consumers will be concerned about limited driving ranges and significant time required to recharge, as well as the current lack of recharging infrastructure.

7. In light of all of the above, customer economics and dollars per kilometer driven remain unknown.

Let me be clear before diving in here: I've never directly invested in an electric or hybrid vehicle company or battery company, and I don't have an axe to grind here. I was just really struck by the unnecessary harshness of Lane's screed this morning and thought it was worth looking at, you know, some actual facts.

So first of all, how does the JD Powers report hold up to what we know about electric vehicles and the like?

There's a lot of merit to the report, which is pretty well-informed from what I've read.  But I do quibble with some of their assumptions and how they use them.

A recent BCG report on battery packs (note: pdf), for example, does lend credence to the idea that battery packs will remain more expensive to produce than the price targets of $250/kwh that have been cited.  That would still represent a significant drop in cost versus the current $1,000/kwh price tag of such battery packs, but given the JD Powers survey data about how sensitive customers are to price premiums, even a significantly reduced battery pack cost may still mean a larger premium than customers would support.  Nevertheless, it's unclear how much of JD Powers' market forecast is based on battery pack cost assumptions that reflect current costs versus realistic costs 5 years from now.  Lithium ion battery prices may fall 19% in 2010 alone, for instance. 

I've seen a few companies looking to develop non-lithium ion technologies with even better price performance, and I know the engineering teams at Tesla and elsewhere are putting resources into such efforts.  So there's hope that BCG's "glass floor" on non-scaleable lithium ion battery pack costs can be broken or just avoided at some point.  But I don't expect such technology efforts to bear significant volumes of new very low tech much before a 2020 timeframe.  But li-ion battery packs should continue to rapidly decline in price, which should help on the price premium and vehicle performance challenges.

Furthermore, customers may be more willing than JD Powers found to take on a higher cost vehicle if the customer economics net out in their favor, and it's important to recognize that JD Powers didn't have a conclusion about customer economics.  But as we've repeatedly seen in the cleantech space, even when paybacks are attractive upfront cost premiums can be stifling to rapid adoption.

Also, their description of shifting the "exhaust-emissions" problem upstream ignores the fact that in many U.S. regions the electricity generation mix isn't coal-based, but is a cleaner mix of hydro, nuclear, renewables and natgas.  And in many of the regions where hybrids and EVs will be most popular, that tends to be the most true.  Plus there are plenty of arguments to be made about the better efficiency of using centralized large-scale generation rather than many small, variable internal combustion engines.  And they also completely ignore the energy independence benefits of ANY domestic electricity production versus often-imported oil.

Driving ranges and recharge times are indeed another barrier to adoption of pure electric vehicles.  But here's where Lane departs pretty significantly from JD Powers' logic.  Reading the JD Powers report, it does strike me that they didn't do a very good job of describing where PHEVs fit into their worldview.  Ostensibly, an extended range EV (such as the Chevy Volt), which they define as belonging to the HEV segment and not the BEV segment, avoids such range challenges and even some of the charging time challenges.  They confine their criticism along these lines therefore to applying to BEVs, pure electric vehicles like the Tesla, and not to ER-EVs like the Volt.

Lane's stepping off point, of course, is the Obama administration's support of the Chevy Volt.  In fact, he CRITICIZES the Volt for (gasp) using gasoline for drives over 25-50 miles.  He declares that this means "much of the time the car will be running on gas".  Define "much"?  The average American commute is something like 16 miles one-way. Most of these cars will be used for commuting. If the Volt is plugged in at night to recharge and has a commute like that it would be running electricity most of the time. 

Then the part that particularly fired me up to blog on a Saturday morning: Lane then turns around and misquotes the JD Power survey.  It says "Rather than rushing to commercialize BEVs, the industry might be better served to pursue continued fuel economy improvements in ICEs and the mass production of HEVs." Lane conveniently changes "HEVs" (which JD Powers very specifically defined to INCLUDE ER-EVs like the Volt) to "conventional hybrids".  

So basically, Lane took a quote where JD Powers suggests investing in Volts rather than Teslas, and twisted it to suggest they said investing in Volts is a bad idea too.

Okay, so Charles Lane can't be bothered to tell the basic differences between types of hybrid vehicles and electric vehicles. Frustrating to see something like that turned into useless partisan hackery, but those are the times we live in.  What SHOULD we take away from the JD Powers report?

First of all, seeing hybrid and EV vehicle volumes grow 5x over 10 years would undershoot some analysts' expectations but doesn't feel unrealistic to me, and would frankly still be a big win.  Elsewhere in the JD Powers report they state: "The near future will depend on improving existing technologies, while also experimenting with new technologies that will carry the global community into the next 125 years." In other words, it's not that they conclude EVs have no future.  It's just that they don't expect EVs to take over the market over the next 10 years.  Agreed.

And I also would point out that some of JD Powers' assumptions, such as that gasoline prices will remain low, could be wrong.  There appears to be a lot more upward pressure and potential on oil prices right now than downward potential.  If nothing else, we can expect oil and gas prices to remain highly volatile.  It's entirely possible that there will be another period, perhaps prolonged, of high gasoline prices, and if so this would significantly change customer perceptions of electricity versus gasoline as their transportation fuel.

But in short, I largely agree with the JD Powers report's overall conclusions that hybrids and EVs will see strong growth over the next 10 years, but not the stratospheric growth some pundits have been calling for.  And that does have significant implications for cleantech investors.

Especially since the report's forecasts of market shares suggests not much room for new entrants.  Those investors backing standalone hybrid and EV OEM startups won't find much to cheer in the report.

But does all this mean government incentives and investment to promote early adoption of hybrids and EVs is a bad idea?  

I'm not going to pull a Charles Lane and tell you what you should think about this, there are legitimate arguments to be made on both sides of the question, and the JD Powers and BCG and other recent reports on the topic can lend evidence to support either answer.  But I'll point out that the supposed purpose of incentives into costly new technology areas is to help bridge the gap and encourage a market ramp-up so as to accelerate the scale-driven cost declines that it would take for the technology to stand up on its own.  You're welcome to draw your own conclusions as to whether a) it's warranted for this technologies; and b) if it will work for these technologies.  It's a worthwhile discussion to have, based upon the fundamental potential of the technologies and whether they can ever achieve good customer economics at scale, and these reports are additive to that debate.

But it's wrong to point out that the price premiums are too high for the first few products and thus conclude that incentives are a bad idea on that basis alone.  Because really, that price premium is the rationale for those incentives.  Charles Lane needs to go back and re-read the JD Powers report.  Or at least pick another topic to get angry about.

Cleantech is just not a partisan topic.  Or at least, it shouldn't be.

Photo: Less and More

Is your unorganized cosmetic case slowing down you daily beauty routine? From a single piece of solid poplar–made entirely without glue–comes a simple way to organize your cosmetic case: Etsy’s Less & More offers the Scarlet Makeup Holder which holds lipsticks, mascaras, makeup brushes, and other makeup items–meaning your morning routine can be free of rummaging through rose-, carmine- an…Read the full story on TreeHugger

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Photo credit: merfam/Creative Commons

Defying all expectations, Ray LaHood, the former Republican Congressman appointed as head of the Department of Transportation, has emerged as a vocal advocate for high-speed rail and passionate advocate of bikes.

His most important—and for some, surprising—move, however, has been to Read the full story on TreeHugger

John Petersen

October has been a fun month for me as JD Power and Associates rained
on the electric vehicle parade with a new report “ href="http://businesscenter.jdpower.com/JDPAContent/CorpComm/pdfs/DriveGreen2020_102610.pdf">Green
Drive
2020; More Hope than Reality?” that forecast a 1.8% global
market penetration rate for cars with plugs in 2020; Maxwell
Technologies ( href="http://www.altenergystocks.com/comm/content/maxwell-technologies/">MXWL)
announced
a design win in the automotive stop-start market; href="http://www.pikeresearch.com/newsroom/hybrid-locomotives-to-play-an-increasing-role-in-the-global-rail-industry-by-2020">Pike
Research issued a new report on power systems for hybrid
locomotives; Nanomarkets LLC
reported that lead-carbon batteries will be a leading contender in the href="http://www.windtech-international.com/industry-news/us-1-billion-market-for-wind-energy-storage-by-2015">$1
billion
wind-power storage market; Lux
Research began
advertising an href="https://www2.gotomeeting.com/register/324373083">upcoming webinar
to introduce their new report on stop-start micro-hybrid systems that
will be used in 34 million cars per year by mid-decade; and Johnson
Controls ( href="http://www.altenergystocks.com/comm/content/johnson-controls/">JCI)
didn’t
even mention lithium in its href="http://seekingalpha.com/article/232461-johnson-controls-q4-2010-earnings-call-transcript">fourth
quarter
earnings call. After a couple years of feeling like I was
wandering alone in the wilderness, I’m glad for the company.

The JD Power report was based on detailed surveys of consumer attitudes
in the US, Europe, Japan and China and concluded that there were seven
major hurdles to market acceptance of electric vehicles:

• Range anxiety;
• Support infrastructure deficiencies;
• Power and performance deficiencies;
• Fuel economy concerns;
• Limited battery life and replacement cost concerns;
• Overall cost of ownership concerns; and
• Charging requirements that will keep EVs out of service for
  several hours a day.

While the list is fairly comprehensive, it overlooks two overriding economic
realities that strike me as even more important.

First, we’re mired in the depths of the worst recession since the
1930s. While the economy is slowly recovering, consumers in all income
brackets are getting more conservative in their spending and increasing
their savings at rates not seen in decades. HEVs were introduced
in 1999 and took ten years to achieve a 2% market penetration in a
strong economy. That makes it very hard to swallow the suggestion that plug-in
vehicles, which promise less simplicity, reliability and performance at
a higher cost, will achieve comparable results in a weak economy.

Second, life is unpredictable, people are frequently careless and in a
problem situation where a driver can blame himself or blame his car,
it’s a safe bet that the car will be portrayed as the villain. It won’t
matter how good the new generation of EVs are in reality. They will
still suffer immense reputation damage as tales of users who forgot to
recharge their batteries, who couldn’t use their car in an emergency
and who pressed their luck “just this once” begin to proliferate and
compound. The inevitable horror stories can’t be avoided and they can’t
help but dampen or even kill consumer demand.

I expect electric cars to be the great technological failure of the
decade and am the first to admit that my views are extreme, but my
reasons for those views are well documented in my href="http://seekingalpha.com/author/john-petersen/articles">other
articles including “ href="http://www.altenergystocks.com/archives/2010/09/alice_in_evland_six_impossible_things_1.html">Alice
in
EVland; Six Impossible Things.” The only thing that will prove me right or wrong is time.

Notwithstanding a cynical view of electric cars that need huge amounts
of battery capacity and use it inefficiently, I believe there are
tremendous opportunities in heavy applications like buses, commercial
fleets and locomotives that are prodigious users of energy and
represent cost-effective markets for conservation technologies. There
are also tremendous opportunities for cost-effective storage to
maximize the stability and usefulness of wind and solar power. Last but
not least, the humble baby steps applications like stop-start idle
elimination will surprise everyone with their growth and vitality.

Once you get beyond delusional visions of electric cars, nobody cares
what kind of battery a device uses. There’s a reason that 85% of the
electric bikes in Asia use lead-acid batteries – they’re good enough
for the job and they’re far cheaper than the alternatives. In all
real battery markets, engineers and cost accountants are responsible
for choosing the best energy storage device for a particular
application. In applications where size and weight are mission critical
constraints, the designers will choose lithium-ion batteries. In
applications where size and weight don’t matter, other technologies
will frequently be a better choice. No matter how hard people beat the
table, energy storage will never be cool; batteries will always be a
grudge purchase; and we’ll all keep using the
adjective damned to modify the noun battery.

For a little over two years my consistent message has been that
developers of gee-whiz battery technologies for electric vehicles
are dangerously overpriced while established manufacturers of cheap and
reliable batteries for the masses trade at bargain basement levels.
That dynamic has not changed yet, but the mainstream is finally beginning to consider the vast gulf between technically feasible and economically sensible. As the EV rose wilts and more mundane
applications like buses, commercial vehicles, hybrid locomotives, renewable
power integration and stop-start idle elimination generate profits rather than losses, market expectations and
capitalizations will adjust to business realities. Wayne Gretzky was
great because he tried to play where the puck was going to be. Prudent
investors will do the same thing.

Disclosure: Author is a former
director of Axion Power International ( href="http://www.altenergystocks.com/comm/content/axion-power/">AXPW.OB)
and
owns a substantial long position in its common stock.

Photo: Rosalind Jackson, Vote Solar

This year’s World Series, as you’re likely aware, features a showdown between the San Francisco Giants and the Texas Rangers. It’s an interesting matchup — neither team has made it this far in years, and the Rangers never have. The last time the Giants won a World Series was over 50 years ago — before they moved to SF from New York. But there’s another reason folks are excited about the series: Clean energy activists have honed in the event to draw a parallel between Texas-based oil companies trying to <a href="http://www.treehugger.com/files/2010/09/california-prop…Read the full story on TreeHugger

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According to pick your favorite cleantech and carbon media outlet, California is at war.  AB 32 is California’s carbon cap and trade law.   The law is most the way ready to implement, with the rulemaking in process now.  It’s aimed squarely at two goals, one, reduce California’s greenhouse gas emissions, and two, since such a [...]

From Stockholm, Sweden, to Zaragoza, Spain, bike sharing can be found in 100 European cities. Photo courtesy The Bike Sharing Blog.

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“You won’t believe it… You’re safer on the bicycle than on the sofa!” That’s the official slogan of a Copenhagen campaign—run not by the department of transportation or bike safety advocates, but by the city’s public health office.

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