Wednesday, June 24, 2009

DOE Money Heading Towards Electric Vehicles!

According To Paul

We've been waiting for several months to hear this good news. Three EV pioneers, Tesla, Nissan and Ford, are receiving loans from the Department of Energy’s Advanced Technology Vehicles Manufacturing program. Totaling $8 billion, the funds will be used to manufacture efficient vehicles and electric drive components.

In Tesla's case, they'll receive a total of $465 million to set up their factory in Southern California for the production of their hot Model S. This car has generated a lot of interest given its superb styling, performance and efficiency. The price point of $57K makes it affordable for a large segment of the population. Part of the money will be used to set up a production line for their battery packs and electric drive trains to be sold to other manufacturers such as their new partner, Daimler.

Nissan will receive $1.6 billion to build EV and battery factories in Tennessee. Having experienced the drive train for their new EV, I am very pleased that this will enable them to ramp up quickly to 150,000 EVs annually. This car will appeal to a larger segment of the population given its price of around $30K.

Ford is the big surprise for me. They're getting the lion's share of the money at $5.9 billion. They'll use it to increase the efficiency of several of their cars and trucks. I assume some will go toward building their new EV with the help of Canadian parts supplier, Magna.

This announcement assures that large numbers of electric vehicles will be available to U.S. customers starting late next year and growing rapidly soon after. Additionally, tens of thousands of jobs will be created.

There will more announcements to come. I'm betting that Bright Automotive in Indiana will be on the next list of recipients. They sure deserve to be.



Unknown said...

That's great news, but allow me to get petty for a moment.

"The price point of $57K makes it affordable for a large segment of the population."

Wha?! According to the FTC, the average price paid for cars sold in the US is $28,400, exactly half that of the Tesla S. That's hardly an everyman price and I'd be shocked if even 5 percent of all car buyers could afford this, recession or no recession. Kudos to Tesla for forging ahead with the technology and proving it can be done. What they do can only benefit the industry at large and hopefully there's enough of a market to pay these prices and fund what they do (and repay those government loans). But as a boutique manufacturer (at this point), they're not ready to make an affordable EV. Honestly, $57K (base) is anything but affordable for the vast majority of consumers. What's this talk of large segments? Maybe living in LA distorts one's view of what an affordable ride is?!

I will agree that good technology/development can and will trickle down to those better equipped to manufacture on a larger scale. Maybe that will be Tesla at some point. And I am completely willing to display patience while they get to affordable. But you can't refer to a $57K car as affordable to any significant portion of the market. Perhaps more affordable than others, but that's a different point. And even after promised government rebates that may bring the price down to $50K, no, not affordable. If this is a consistent price point, they're going to have to do better.

With any luck, half a billion dollar infusion will give them some room to efficiently produce an affordable car and/or refine technology they can license to those who can mass market. But until then, they're only solving half of the problem. Really, I'm not taking issue with Tesla, just someone else's notion of affordable. If it's not affordable, it's not creating a revolution.

Just my two watts.

Dave said...

Well said. I actually overlooked that line (perhaps on purpose) due to my excitement about the money heading towards EVs. 50K isn't affordable by most means, but it's a step in the right direction from 100K.

I met the Tesla people way back when and they told me that their stated objective was to have a 100K, 50K, 35K, and 18K car, so hopefully they will get there in time.