Plug-in Vehicles

John Petersen Industrial subsidies have been an important feature of the American economic landscape since the late 19th century for one simple reason – they work. After the steam locomotive proved its ability to quickly and cheaply move people and cargo long distances, the government launched a massive effort to span the country with steel rails and bring the benefits of a rapid, safe and reliable national transportation system to all its citizens. After electric lighting proved its merit, the rush was on to build a national infrastructure and bring the benefits to all. After the internal combustion...

John Petersen Hardly a day passes without some talking head breathlessly describing electric vehicles as the opportunity of the decade. The fine point most investors miss, however, is that the decade they're describing won't begin until 2020 and for the next seven to ten years electric vehicle manufacturers like Tesla Motors (TSLA) and lithium-ion battery manufacturers like Ener1 (HEV) and A123 Systems (AONE) will hemorrhage cash as they try to traverse the trough of disillusionment that runs through the cruel black heart of the valley of death. The following graph is a stylized view of the...

Clean Energy Intel BYD at the Central China High-Tech Fair, Shenzhen, November 2009.  Source: Wikipedia / Brucke-Osteuropa. Over the course of the past few weeks we have seen a couple of noteworthy developments at Chinese auto maker BYD (BYDDF.PK). I have previously discussed the troubles at BYD, which by mid-September had taken the stock down 72% year to date. However, a couple of developments suggest that the Warren Buffet-backed automaker is at least worth keeping an eye on in the period ahead. In late October, the company opened its US ...

Doug Young  Speed bump photo via BigStock After a year of relative calm in which its shares have surged, electric vehicle (EV) aspirant BYD (OTC: BYDDF; HKEx: 1211; Shenzhen: 002594) is once embroiled in a couple of mini-scandals involving its labor practices and technology in California. While I doubt that either of these problems will have a long-term impact on the company, they do highlight the many speed bumps that BYD and other Chinese automakers will face as they move into the global marketplace. The risks are...

Doug Young Bottom line: Strong response to Tesla’s latest EV in China and a major new solar plant plan from SolarReserve reflect Beijing’s strong promotion of new energy, which is also creating big waste by attracting unqualified companies to the sector. A series of new reports is showing how Beijing’s strong support for new energy technologies is benefiting both domestic and foreign companies, as China tries to become a global leader in this emerging area. But the reports also spotlight the dangers that come with such aggressive support, which often leads to abuse of subsidies and other...

John Petersen The hardest part of blogging on subjects like energy storage and vehicle electrification is synthesizing the mass of data that's generated every year. While I'm not an engineer and don't have any special technical expertise beyond the lessons I learned as a director and officer of a small battery technology developer, my training as a lawyer and accountant stand me in pretty good stead when it comes to reviewing statistical forecasts and comparing the current version of a forecast with earlier versions of the same forecast. Every year the US Energy Information Administration, a unit...

By Jeff Siegel The car world is obsessed with Tesla (NASDAQ: TSLA)... And for good reason. After all, in the world of vehicle design and alternative fuels, no one has taken this disruptive technology further than Elon Musk and Tesla Motors. The days of glorified golf carts are long gone. And although few can actually afford an $80,000 Model S, Tesla isn’t the only game in town. In fact, Nissan (OTCBB: NSANY), which makes the all-electric LEAF, recently announced that after four years, its alliance with Renault has officially sold 250,000 electric cars. That may not sound like...

John Petersen In my second quarter update I deleted China Ritar Power (CRTP.PK) from my energy storage tracking list because of its decision to terminate its SEC registration during a period when China-based companies with US listings were bogged down in a dense fog of suspicion. Since then the carnage in the energy storage sector has been far worse than I expected and it's time to permanently remove the companies highlighted in pink from my energy storage and vehicle electrification tracking list for the reasons described below. Current Culls In March of this year...

John Petersen The first thing every securities lawyer learns is that technology is a two edged sword. On the leading edge, developers of cheap innovations that ramp rapidly over a few years build thriving businesses that deliver market beating returns for investors. On the bleeding edge, developers of expensive technologies that can't be implemented at relevant scale for years morph into financial black holes that suck the lifeblood out of portfolios and teach a new generation of investors about an insidious market phenomenon the Gartner Group refers to as the hype cycle. The second thing...

John Petersen We all know that you can't have a cost-effective electric car without a cost-effective battery. We also know that a small but vocal hodgepodge of ideologues, activists, politicians and dreamers wants everyone to believe that rapid and stunning advances in lithium-ion batteries will finally make the dream a reality after a century of one abject failure after another. I frequently caution readers that it won't be anywhere near as easy as the proponents claim. In a new report titled "Searching for Innovations to Cut Li-ion Battery Costs" Lux Research did a yeoman's...

John Petersen Over the last few months I've had a running debate with some die-hard EVangelicals who insist that plug-in cars will be cleaner than simple, reliable and relatively inexpensive Prius class HEVs. Since most of my readers have enough to do without slogging through the comments section, it's high time we lay the cards on the table and show why the myth of zero emissions vehicles is one of the most outrageous lies ever foisted on the American public. The following graph comparing the life-cycle CO2 emissions of conventional, hybrid and plug-in vehicles comes from a...

By Jeff Siegel On the 30th of April, everything is going to change... Why? Because Elon Musk says so. OK, maybe he didn't actually say that, but he did recently reveal that on April 30th, he'll be making a major announcement about a new product that is NOT an electric car. Most analysts have suggested that the announcement is regarding the release of what could ultimately be a game-changer for the solar industry  a game-changer that, if it delivers the way the Tesla Model S has delivered on performance, design, and efficiency, could catapult Tesla (NASD:TSLA) into one of...

John Petersen In late June I wrote a forward looking article that identified several companies in my energy storage and vehicle electrification group that I expected to perform well or perform poorly during the third quarter. Since short-term market changes are notoriously hard to predict, it’s worthwhile to look back and see where I got things right and where I got them wrong. So I’ll start today with a quick summary table and assess the relative accuracy of my Q3 calls, and then turn my attention to Q4, which is shaping up as a time of bright opportunity...

John Petersen Last Friday I received my copy of the presentations from September's European Lead Battery Conference in Istanbul. Most of the presentations were written for a technically astute audience and don't offer much in the way of concrete guidance for investors, but an overview presentation from Ricardo PLC, a global leader in engineering solutions for low carbon, fuel-efficient transportation, included three slides that merit serious investor consideration and show why I'm convinced cheap will beat cool for the next decade of vehicle electrification. I've posted a copy of the Ricardo presentation here. Technology Timeline The...

Doug Young Bottom line: Beijing should take a more holistic approach to developing green cars in China, which should include education of owners and creation of owner communities in addition to financial incentives and infrastructure building. China made the latest new move to boost its sputtering electric vehicle (EV) program over the holiday, disclosing an ambitious plan to sharply accelerate installation of charging stations across the country. The plan was aimed at countering one of the biggest obstacles to EV development, namely concerns from potential owners about difficulties they might face recharging their vehicles. The new move...

by Sean Kidney Tesla issues $600m, 5yr EV convertible bond Tesla Motors’ inaugural bond issue has been, as you’d expect, electrifying (just had to say that). The US electric sports car manufacturer has just issued a 5 year, $600m convertible bond in a fundraising program which has seen it raise approximately $1bn through shares and convertible bonds. Coupon is 1.5-2%; conversion premium is 35%; bookrunners were JPMorgan, Goldman Sachs, Morgan Stanley. Tesla had planned to raise $450m through convertible bonds, but this was raised to $600m after strong demand from investors. That demand allowed Tesla to drop what was going to be a 2-2.5% coupon down to...