Tesla & Toyota: going steady?

Announced Thursday, the hooking up of Tesla with Toyota took everybody by surprise. As part of the deal, Tesla is buying the giant NUMMI plant in Fremont, CA. This facility has an interesting history as told in this excellent piece from This American Life. Tesla's CEO, Elon Musk, lusted after this plant early in the search for a manufacturing plant for their Model S, but the size of the plant at 5.3 million sq ft was too much for his needs. With Toyota's desire to build a low-cost EV using a Tesla designed drivetrain, all of a sudden, the numbers started to work.

According to GreenBeat, "Again, this is a pretty radical change of pace for Tesla — and it’s apparently come about very quickly. The company had been interested in the NUMMI facility for a while. It met with the plant’s representatives about three months ago with no results. About a month ago, Akio Toyoda, president and CEO of Toyota, approached Musk about a potential strategic partnership, and the two executives hit it off, Musk says".

Also from GreenBeat:

1. The joint development of a brand new,sub- $30,000 electric car, that will contain Tesla’s unique powertrain design, with everything else built by Toyota;
2. The purchase of the NUMMI plant, where Tesla plans to manufacture both its Model S sedan due out in 2012, a new $30,000 Tesla-designed vehicle, and the more affordable jointly designed “third-generation” vehicle;
3. A $50 million investment from Toyota into Tesla when the company goes public, probably later this year.

All in all, this is great news! We'll have more choices in the EV world in a few years. The Volts and Leafs will prime the market for late entries, and if we get a decent energy bill that assigns a price to carbon, then the cost of gas will rise making more and more people make the switch.

Nissan Announces Affordable Price for the Leaf

Well, the gauntlet is down.

This morning, Nissan announced a price of $32,780 for the Leaf, a price that no doubt sent shivers down the spines of Toyota and Honda, not to mention GM execs. They now have to compete at a much lower price point if they want to play the game in which Nissan is writing the rules.

Keeping in mind the federal tax credit of $7,500, the price drops to a very affordable $25,280. Then, to top it off, several states throw in inducements of their own with CA providing an additional $5,000 rebate. We now have a base price of a mere $20,280, and the damn thing runs on sunlight!

It surprised me that Nissan was willing to divulge the price so early, but given the storm of interest the announcement has created, it was clearly a good idea.

Nissan won't be able to keep up with demand for at least the first two years. Word-of-mouth will be unlike any consumer product since the iPod. When each happy customer brings a Leaf home to display in their driveway, all their neighbors, family and friends will be clamoring for rides, and once given, they'll be sold that electric drive is the way to go.

This is not to say other plug-in vehicles won't sell just as well (we want you ALL to succeed), but Nissan will certainly grab the low hanging fruit that's been ripening for a long time. I imagine the Volt will do well, too, but we need to see their price before predicting much.

The federal tax credits are good for the first 200,000 units from each manufacturer. California's rebates only total $4.1 million, so they'll go fast, although there's a decent chance we'll add more to the kitty next year.

Other states offer incentives, too. See Plug In America's compilation here.

To get in line for a Leaf, you need to go to their website starting 4/20 through 5/15 and register by putting down a $99 fully refundable deposit. That gets you in line. Some time in August, you'll actually get to tell Nissan what goodies you want on the car and place your order. Deliveries to selected markets start in December and roll out across the country in 2011 and globally in 2012.

It is confirmed that you'll have the choice of buying the car or leasing, although the trial balloon of buying the car and leasing the battery is no longer on the table.

A $2,200 charging station will be installed and 50% of that is returned as an additional federal tax credit.

Nissan's willingness to lock in the price at such an early date has made the wait for the car easier in a way. With the benchmark made real, we can all plan for the day when the Leaf, or some other plug-in car, is ours to keep.

Old Walt here has turned into a grumpy puppy waiting for his owner to get an EV. Pretty soon, I hope to see him smile again:~)

Toyota's Gamble

The New York Times reported today that Toyota could be falling behind its rivals in the race to go electric. They specifically mentioned rivals Mitsubishi, Nissan, Tesla and GM, but could have listed a dozen others (see Plug In America's EV Tracker for a complete list).

“The time is not here,” Masatami Takimoto, Toyota’s executive vice president, said during a factory tour this year. Electric cars “face many challenges,” he said, adding that “to commercialize pure E.V.’s, we need a battery that far exceeds the current technology.”

Coming from a VP of Toyota, this is an absurd comment. I'm still driving a Toyota-made EV that was designed over a decade ago. Hundreds of these RAV4 EVs continue running perfectly, and I can assure you these are not secondary vehicles but the primary vehicle for the families that own them. To make a comment like this doesn't show ignorance, there's something else behind it.

“In a world where vehicles run on electrons rather than hydrocarbons, the automakers will have to reinvent their businesses,” Russell Hensley, an analyst at the consulting company McKinsey, told clients in a recent report.

True statement.

"Toyota executives rattle off reasons to be skeptical of electric cars: They do not travel far enough on a charge; their batteries are expensive and not reliable; the electrical infrastructure is not in place to recharge them."

How far is far enough? Over 80% of American drivers don't exceed 40 miles a day. Tens of millions never drive long distances, and of those who do, a plug-in hybrid would suffice.

The batteries are costly, I'll give him that, but the prices are getting lower every day. As for not reliable, of all the RAVs Toyota has put on the road, virtually none have had battery failures. The batteries are exceptionally reliable.

This last bit about the infrastructure is laughable. The electric grid is everywhere. The cost and effort to install a charge station in a garage or driveway is minimal. The public charging will be built out as the cars are delivered. I recently attended a stakeholder's meeting at Plug In 2009 in Long Beach, CA where utilities, automakers and city planners were all discussing how they were going to build out home, workplace and public charge stations over the coming years. Toyota wasn't in the room. Maybe they should attend these conferences. They'd learn a lot and maybe stop making such boneheaded statements.

"Even when electric cars are sold widely, the company says, they will be suitable only for short trips and serve a decidedly niche market."

Short trips constitute the vast majority of all trips. A car suited for short trips of less than 100-200 miles per day does not serve a niche market, it serves the majority market.

"Meanwhile, Toyota’s new president, Akio Toyoda, has become a big promoter of the company’s fuel cells, which he calls the “ultimate” technology."

A huge mistake!

“You don’t see many competing technologies survive in a key market for very long,” said Mr. Shimizu, the Keio University professor.

And more often than not in the history of innovation, a change in the dominant technology means a change in the market leader.

“Electric cars are a disruptive technology, and Toyota knows that,” Mr. Shimizu said. “I wouldn’t say Toyota is killing the electric vehicle. Perhaps Toyota is scared.”

Here's what I think. Toyota is working feverishly on an EV to compete with Nissan's Leaf. They are going to release the plug-in Prius late next year to compete with the Volt. In the meantime, they'll make public statements about how the batteries and the infrastructure aren't ready to try and damp enthusiasm for plug-ins so they can continue to sell their hybrid models to the very demographic who are likely plug-in buyers. Then watch what they say when they hit the market with their own EVs.

Paul
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