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Saturday, September 25, 2010

Securities Lawyer Mocks Electric Vehicle Enthusiasts--Gets Mocked Back

Photo from Wikipedia

[Update 9/29/2010] See this article by Ami Cholia on

The study says: “The single most effective way to reduce US oil demand and foreign imports would be an aggressive campaign to launch electric vehicles into the automotive fleet.”

Surprisingly, researchers also found that a carbon tax would actually end up being more costly in the long run and wouldn’t impact our oil imports in any significant way.

Original post continues below:

There's an article titled Alice In EVland: Six Impossible Things by John Petersen, ...a working securities lawyer, a humble scrivener who writes reams of deathless prose that private companies use to raise money from investors.

In it, he uses the term "EVangelists" (get it, EV?) five separate times. Remember when the Prius arrived on the scene? Out of the blue there was this strange car that doubled mileage for mid-sized hatchbacks. Curmudgeons told us this just wasn't possible. Toyota must be lying about the mileage and had to be losing a fortune on every car sold, the batteries were polluting the world and wouldn't last the life of the car, yadda, yadda. The Prius is presently the top selling car in Japan.

Well, here we go again:

"...I've never seen a study that analyzes the CO2 emissions differential between peak and off-peak power, but I'll give long odds that an EV charged with off-peak power is considerably dirtier than a Prius..."

If we are serious about limiting green house gases, coal fired power plants will soon supply much less of our power. See:

The Nuclear Enhanced Renewable Grid (NERG) and

Reframing Nuclear Power as an Ally of Renewable Energy

And if we are not serious about them, then the above argument is moot. I'd still buy one just to get rid of the water, oil, and fuel pumps, air and oil filters, coolant, transmission fluid, transmission, radiator, fan, thermostat, hoses, intake and exhaust manifolds, oxygen sensors, muffler, catalytic converter, injectors, fuel tank filled with a highly flammable liquid, and the couple of hundred parts that make up the engine in general.

Certainly, the deployment of electric cars and low carbon power plants should happen together (in parallel) instead of waiting for clean power before deploying electric cars (in series). Many people plan to offset their electric car with solar panels. The car has given them the incentive to invest in clean energy.

"...the big battery behemoths have all the long-term potential of the Edsel unless someone can find a way to repeal the law of diminishing marginal returns..."

The author compares apples to oranges (hybrid cars of different sizes to electric cars of different sizes),which makes the whole analysis somewhat nonsensical:

1) The Prius is a mid-sized, five-person, parallel-hybrid, hatchback.

2) The Volt is a small, four-person, series, "plug-in" hybrid sedan.

3) The Leaf is a small, four-person, all-electric, hatchback (click here for a cool 3-D view of this marvel).

4) The Tesla is a two-person all-electric sports car.

Electric cars will fill the niche for urban two car families and people with commutes within range, which for the Leaf will be around 30 miles one way (very conservatively), 60 miles (conservatively) if the car can charge while parked at work. Anyone with a one-way commute longer than that needs to rethink living and/or job arrangements (and get a life).

Electric cars will never have the range of an internal combustion car with a liquid fuel tank, and they don't need to. When was the last time you drove your car tank empty without stopping?

Photo from Tesla Motors website

In addition, electric cars will spur solar panel sales, improve car rental infrastructure and other entrepreneurial opportunities not yet envisioned, like a quick charger on a truck.

"..It is impossible for more than a handful of politically favored elites to use hundreds of kilograms of highly refined and processed metals .."

All cars carry about 50 pounds of toxic heavy metal (lead) around in their battery. The metals found in batteries are not like a fuel that gets burned. If regulations require it, they will get recycled to be made into more batteries. The cost of recycling will vary according to battery and that cost ends up being reflected in the battery price. Government regulations are the rules all players must play by if they want to play. Without government regulations, most of us would be slaves.

"...the Federal government is preparing to impose sweeping restrictions on the transportation of those same batteries on US cargo planes..."

He really jumps the shark here. Car manufacturers do not ship their batteries on airplanes and not all lithium-ion batteries use the same chemistry. The ones that caused the Dubai crash were likely the old design with a marginally stable chemistry. The new batteries are thermally stable.

"...EVangelists invariably assume away battery recycling issues with blithe assurances that somebody will solve the problem before used battery packs become a disposal problem..."

Well, there's theory and then there is reality. Toyota pays junkyards handsomely for used Prius batteries, which makes your above argument look kinda silly. Recycling is accomplished with adequate regulations that require they be recycled. Recycling simply alters the cost of a battery.

".... Most investors are concerned with return on investment. A business model that can't offer a return of investment is worrisome..."

Very few people buy a car to maximize return on investment. Auto parts stores, on the other hand, do want a return on investment. That's why most of them use a tiny fuel efficient car like the Chevy Aveo to deliver parts.

Note that most consumers do not buy the cheapest most fuel efficient economy car they can find. People tend to buy the highest (perceived) status car they can afford. The Leaf is a very high status car. They then tend to drive it until it loses its shine and go for the next golden ring if they can afford it.

"...Any one of these six impossible things should be enough to give a contemplative investor pause..."

Contemplative investors always pause, regardless of investment. Financial advisers in today's economic climate have about as much respect as lawyers and economists. All shaman claim they can predict the future and they always manage to find people who believe them.

I have been using an electric vehicle running on the A123 batteries for the last four years and they are still like new. Fantastic technology. This would not have been possible with the old-school lead acid technology.

"...In combination they spell disaster for investors in electric car manufacturers like Tesla (TSLA), Fisker Motors and Th!nk,..."

The Tesla is the electric version of the DeLorean, a sports car for the rich, and will go the way of the DeLorean. The Nissan Leaf is an entirely different animal.

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