Matthew Engel

Science and Technology Advocate

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Daimler Buys 10% Stake in Tesla Motors

June 8th, 2009 · No Comments

The battery powered Tesla Roadster and Daimler Smart cars side by side

In May this year, the German heavyweight automaker Daimler purchased a 10% stake in the Silicon Valley-based Tesla Motors. Tesla, known for their electric Roadster, has been looking to expand their business by building manufacturing facilities in the U.S. for mass producing a new line of electric cars. The Model S would be an electric 4 door passenger sedan- as opposed to the 2 seater Roadster currently on the market. Daimler and Tesla have been working together for over 6 months on lithium ion battery powered technologies for Daimler’s new fleet of 1,000 Electric Vehicle (EV) Smart Cars to be depolyed this year.

The $50 million deal will bring a massive influx of sorely needed cash for the startup American automaker, along with the backing of an established auto giant. The deal gives Daimler a seat on the board as well as greater access to Tesla’s financial and business plans, perhaps tempting them to increase their stake in the future. Physically, the deal gives Daimler experience in battery pack and charger engineering.

Tesla Roadster at Yahoo Headquarters, CA

Reportedly, there are rumors that Daimler is testing the waters for a future buyout, however these are purely speculative and probably false as the German maker seems to respect Tesla’s ability to bring products swiftly to market and nimbly respond to changes- attributes which a large manufacturer may stimy. A complete buy out could cause Tesla to lose these capabilities. In fact, a buy out is highly improbable given the fact that Tesla has supposedly designed both of their vehicles from the ground up completely independent of external influence. I doubt they would continue to proceed this way, if their goal was to simply be bought out. Besides, Stuttgart already covers many brands such as Smart, is probably not looking for another “mouth to feed” and is still recovering from their unprofitable dealings with Chrysler. On a very positive note, the $50 million deal gives Tesla a very positive valuation at roughly $500 million.

Tesla Model S with base price of $57,400

For Tesla, this entire ordeal has acted like a shot in the arm. From a tiny no name brand, to the leading designer of EV cars, Tesla is undergoing a major transform. In fact, they have been able to faithfully follow their business plan over the last several years since I started tracking them. Their goals were to demonstrate that the EV does not need to look ridiculous, like a Toyota Prius or Honda Insight, bring down the price of their roadster (~$125,000) and launch a new highend EV in the form of a 4 door sedan geared towards the average consumer. The Model S was designed to compete directly with consumers interested in purchasing a new vehicles, such as the BMW, but wanted an electric car. Tesla was way ahead of the curve developing EVs and working to remove the stigma assocoated with them for roughly the past five years. The new Model S comes with a choice of three different battery packs with either a 160, 230 or 300-mile range. The 160-mile base price model will sell for $57,400 after the $7,500 federal tax credit. Their batteries are designed to be easily swapped and a larger one could be leased or replaced for extended trips. In addition, the batteries are designed to be recycled when they are totally depleted after approximately 7-10 years, limiting waste and increasing value.

In fact, Tesla is seeking a much larger source of funding from the federal government to build a factory in Southern California for producing the Model S (Images from the LA Times). Honestly, I would have much rather seen Tesla get federal financing than General Motor, as this would have ensured a steady stream of EVs into the U.S. market. In fact, I would thought that GM would be much more interested in aquiring Tesla or at least invest in a stake, with all the hype surrounding the Chevy Volt. Perhaps they could not afford it, however a deal involving a stock swap could have potentially worked.

Daimler Smart EV

In the U.S. last year Daimler sold 24,622 Smart ForTwo microcars. They are continuing to build prototypes and deploy them globally, about 100 of them have been running in London since last year. Ultimately for GM to be competetive, it will have to make a broad niche in this market and seriously start selling EVs now. The hybrid car is a defunct technology – why bother to use gas at all when you can charge your car at home using a solar panel on the roof of your house for free? GM is still continuing to promote their line up of hybrid vehicles including the Chevrolet Malibu, Tahoe and Silverado, GMC Yukon and Sierra, Cadillac Escalade, Saturn Aura and Vue. Notice a large portion of these vehicles are SUV’s with relatively bad gas mileage, even with the hybrid technology. In the future I will try and develop a table which will compare the price, mileage and sales figures of all these vehicles including the Smart ForTwo and Toyota Prius. Why is GM still selling SUVs with hybrid technology? As far as I can see, they are very, very far behind the curve and a stake in Tesla would have given them a competetive advantage. Unfortuantely, for the American manufacturer, they were beat to the punch by Daimler.

GM’s Bob Lutz Shows off the Chevy Volt on Late Night with David Letterman

GM is hoping to have the Chevy Volt on sale by 2011 with a sticker price of $40,000 after rebates. Apparently there has been a back and forth between Tesla and GM on the show, which I think is good to stimulate discussion and thought about the differences between the two products. Elon Musk, CEO of Tesla quirped about the Volt’s 40 mile range, but failed to acknowledge the gasoline powered back up motor which will be used to charge the battery. A more thorough comparison of these two vehicles is sorely needed, however neither of them are on sale yet to it is difficult to speculate.

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The Firing of R. Wagoner and its Effect on the Hybrid Vehicle Industry

April 30th, 2009 · No Comments

Originally Written March 29, 2009

 2010 Honda Insight
What an interesting 48 hours for the American auto industry. With the CEO of General Motors canned, a new onslaught of fast, fun, and fuel efficient cars should be arriving on the market. Since Rick Wagoner took hold of the GM as CEO in 2000, shares have declined ~20 fold.  Apparently, their business plan involving the Chevy Volt, was not speedy enough for the Obama adminstration. Strategically, I think this was a necessary move to begin pushing our country into greener technologies. However, I have never before heard of the federal government firing a private sector employee for their job performance.

But then again, I’ve never seen the government invest $6 billion in a private company either, so I suppose its within their equity rights as a shareholder to do as they please. Obviously, Rick Wagoner was not about to say ‘no’ to the President. 


2010 Honda Insight Hybrid Unveiled at Paris Autoshow

If I could, I would ask Rick “Why does Honda have a nice looking car which gets 40 mpg in the city, and you don’t (see new Honda Insight – some reviewers were able to get 70 mpg )? If it’s so hard to do, why are the Japanese already able to design and manufacture such cars and sell them with a base price of $19,500? How come no American car makers have any hybrid or electric cars on the market? I thought GM was supposed to be a leader in innovation and technology!”.

We have a right to be upset at American auto manufactures and they deserve to be punsihed for their lack of vision. (Click here to see more pictures of the Insight from the show).

However, it would be foolish to simply disband them all, lose our manufacturing capability and destroy an important sector of our economy. The trick is to simply help them refocus their research, development, manufacturing and investments to begin making cars which do more with less. We are all doing more work, more activities these days with less, why shouldn’t our cars? The other option would be to begin eliminating the personal transportation vehicle all together and begin massive restructuring of our public transportation systems, which may be the better option long term. 

  Former GM CEO, Rick Wagoner I’ve suspected there has been something up Obama’s sleeve after Monday’s firing. Many analysts were completely surprised by the timing. Why now, they asked? I would suppose the answer is so that we, as a nation, could move forward as quickly as possble with a new fleet of electric or hybrid fuel efficient vehicles. To further reduce our dependence on oil, one would need to remove the gas-guzzling SUV’s off the road, and this is exactly what will happen. 

With the summer months approaching, gasoline demand and therefore prices will once again skyrocket, though probably not as high as last summer.  

Financially, Wagoner was a disaster for the company. This is due to his lack of insight and leadership involving the future of America and the automobile industry as we know it. Specifically, it was his inability to forsee the growth occuring worldwide leading to more oil demands and increases in price. A simple doubling of the cost of gasoline in the U.S.  would render his entire fleet of vehicles nearly worthless. An armada of massive steel tanks with no one was willing to drive them. How out-dated, how ancient, how inefficient, how dirty! Wagoner’s complete embrace of highly inefficient petroleum-based vehicles was his ultimate downfall- and as these vehicles become less desirable wasting precious energy resources GM, will suffer until they change their ways. 

Currently, a bill being drafted in the U.S. House of Representatives, sponsored by Congresswoman Betty Sutton of Ohio would provide a $4,000 voucher good towards newer, relatively more fuel efficient vehicles if an older car is taken off the road. Unforuntately, fuel efficiency standards are still extremely modest when compared to mileage of other cars globally, coming in at a sheepish 27 mpg. 

The Consumer Assistance to Recycle and Save (CARS) Act (also known as Cash for Clunkers) will encourage consumers to purchase new American made cars with a minimum fuel efficiency level. While this is a good start, it really does not go far enough. I find it hard to beleive the government is willing to bribe us to buy new cars. Even further, that they introduced such meager stipulations which are easily acheived by most new car models. This proposal would hardly encourage steep rise in fuel efficiency standards which will only come with a burst of technology propelled by economic need. Many people are claiming this bill is a simple guise being used to encourage consumerism, by promoting the purchase of new automobiles. 

I do not think we will see the conclusion of this saga in our lifetime’s. America is too invested in the ‘road’ and the ‘highway’ to give them up, though they are ultimately pretty lousy ideas. I wonder how many square miles of our beautiful country is covered up by asphalt? Ideally, an amazing public transportation system would come about powered by sustainable energries such as wind and solar. But until that day, I hope we can drive safe, fun cars which do not wreak havoc on our atmosphere and have minimal impact on our environment. With China vying to become the leader in electric automobile technology, it is critical for America to begin commercializing these vehicles. It is my personal belief that battery powered cars fueled by renewable energies will be a great temporary solution to this grand challenge.

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Toyota Prius Used To Generate Power During Blackouts

January 11th, 2009 · No Comments

The recent snowstorms in the American Northeast have left thousands without power during the holidays. How did one man solve this problem? John Sweeney, of Harvard, MA. was able to use his hybrid electric vehicle as a highly efficient generator. The Toyota Prius can output about 3 Kilowatts of constant electrical power, enough to provide electricity for his basic home needs such as refrigerator, wood stove fan, radio and even television. Using an inverter, which are found on all home solar powered systems and can be had at Radioshack, John ran the car’s battery and fed the current into his home’s electrical grid. The battery is charged by running the gasoline engine, which the car automatically starts when the battery is low. After 3 days of running most of his essential household appliances, John used only 5 gallons of gasoline. Amazing!

Hybrid technologies have been getting a huge boost, even marketing ads on television. The Toyota Prius in particular has proven especially popular with over 1,028,000 units sold worldwide as of May 2008. Reports of hybrid cars, such as the Ford Escape in NYC, reaching 175k miles have been found in cities with hybrid taxi fleets. These cars did not even require replacement batteries. The U.S. supply of available Priuses for sale is at its lowest point in two years and retail and resale values are rising quickly. If you are interested in buying this car you better move fast.

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Tax Credits for Electric and Hybrid Cars

December 30th, 2008 · No Comments

Even with the price of gas at an all time low in recent memory, it is still prudent to contemplate investing in an electric or hybrid vehicle when purchasing your new car.

Alternative Motor Vehicle Credit

The federal government continues to encourage the purchase of alternatively fueled vehicles in a limited way. Qualified electric and hybrid cars owners receive federal tax credit depending on the year, model, and date of purchase. The credit amounts can be found here, provided by the IRS. These credits are for a limited time and only apply to new cars bought after January 2006.

This is both logical and inevitable, since the price of gasoline is highly variable. There is no guarantee of a steady supply of oil into the US, and fluctuations in demand cause prices to oscillate. Fierce competition for resources world wide lead to wars and enviromental wastes. Whatever the reasons, the econimic data speaks for itself. Below is the average costs for one gallon of regular gasoline in the Northeast United States (New England). An increasing trend is clearly evident.

Regular gas prices in the Northeast United States show a strong increase over the last 15 years. The trend is expected to remain positive over the coming century.

This data is publicly available and can be downloaded from the Energy Information Administration whose goal is to provide official statistics regarding petroleum, natural gas, electricity, coal, and renewable energy usage. Data on crude oil prices and refinement can readily be found. The information regarding historical gasoline prices can be accessed here and was compiled by me into the previous diagram.

Interestingly, the above data was downloaded in October 2008, and is already reflecting a strong decline in gas prices. The current meteoric drop in price is not shown here, and there is no downfall on the graph quite like the drop we are currently experiencing.

Considering this data, one should intuitively think of how to strategically plan for long term stability regarding their vehicle costs. This includes a source of energy for your vehicle, like gasoline. However, many other forms of energy are available – most notable electricity.  Tax credits for electric cars range from $2,500 to $7,500. However, this is only available for a limited time: only for the first 250,000 vehicles sold domestically. In general, the most popular cars, such as the Toyota Prius have little tax credits. However, it is expected that the newer domestic hybrid vehicles, such as the Chevy Volt will see a significant tax advantage.

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Chevy Volt Lays Groundwork for Future EVs

December 9th, 2008 · No Comments

General Motors, where art thou? The once premier American motors company is now lying in ruins, begging for money. What happened? What is going on??

What happened was the SUV. The sale, retail, and resale value of all sport utility vehicles has plummeted south. For SUV owners, I am very sorry. For some SUV owners it is even necessary to have these cars, for work related transportation. But for the vast majority of drivers, large off-road vehicles are completely unnecessary. The vast majority of owners never (or perhaps once) take their SUV off-road for its intended use, instead using it to scare people on the highway while tailgating. This is not a practical use of our Earth’s natural resources. These trucks require roughly 50% more fuel than the average mid-size sedan to travel the same distance, and roughly 100% more fuel (or double the amount) than their compact, light weight, economy, or hybrid counterparts.

In addition, the cost of fuel in the United States is somehow subsidized. I do not pretend to understand how this happened or why, but gallon-for-gallon gasoline is roughly half the price in the United States than in Europe or even the Middle East. The worldwide market for these commodities is so extremely volatile, relying on gasoline alone for our nation’s transportation needs is a very risky proposition.

Finally, American automakers have seen the light. And as they lie in their deathbed, I ask why? Why has Chevy, GM, and Ford waited until just now to introduce these technologies into the mainstream markets? Why are you just beginning to engineer and mass produce electric vehicle technologies? Is it because hybrid or electric cars are stigmatized? The 2004 Honda Insight. The 2006 Toyota Prius. Not the most beautiful pieces of automotive engineering I have ever witnessed. Yet the insight can get an incredible 66mpg on the highway and 57 in the city!! I find it unusual that when the 2008 the Honda Insight was finally redesigned, it looks identical to the Prius. These cars are acceptable, but certainly not works of refined beauty.

And in 2009, we have the Chevy Volt. From its long awaited announcement at this year’s LA Auto Show, the Volt is the first ‘cool’ looking mainstream hybrid car. I could sit here and criticize the technology under the hood, but I will not. Instead, I will compliment Chevy on taking its vision, our vision, one step further and creating the first beautiful electric vehicle. Thank you!!

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