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Vinod Khosla at Milken Institute: Part III

This will be the conclusion of Vinod Khosla’s (VK) recent lengthy interview at the Milken Institute 2009 Global Conference. The interview was conducted by Elizabeth Corcoran (EC) of Forbes and can be viewed here.

In Part I, VK discussed the role of government money, capital intensity of renewable projects, and some of his solar investments. In Part II, VK discussed butanol, cellulosic ethanol, nuclear power, and cap and trade. Here in Part III, VK discusses his beef with electric cars, has lots to say about Black Swans, discusses his problems with nuclear in more detail, talks about green jobs, sugarcane ethanol, and weighs in on indirect land use issues for biofuels.

EC (39:00): Let’s get to those electric cars. You don’t like the Prius.

VK: Let me be clear, and I am going to sneak in my Black Swan. I do drive a hybrid, but not a Prius. I drive a Lexus hybrid. Hybrids are an uneconomic way to reduce carbon dioxide. If you go to hybrids or electric cars, your cost of carbon reduction is about $100/ton. If you have 10 ways of reducing carbon at $50/ton, why would you spend $100? My beef is not with hybrids; we are investing in hybrid batteries; there is a good market and we can make money at it. But do I believe it’s going to solve the climate change problem? No. (RR: None of the things that have been discussed are going to significantly rein in carbon emissions.) Save yourself the five grand, and instead paint your roof white. You will save more carbon that way.

(RR: He cited this paper by Art Rosenfeld at Lawrence Berkeley Lab: “White Roofs Cool the World, Directly Offset CO2 and Delay Global Warming“).

EC (41:10): Shai Agassi – a long time entrepreneur in Silicon Valley – has a very different approach to batteries. Are you involved in the work he is doing? Does that only work in small countries?

VK: You know, Shai has a very intriguing start-up. (RR: EC interrupts to explain that Shai is developing stations where you can go and exchange batteries for electric cars; he owns the battery and you own the car. See more explanation here.) I mentioned earlier about diversity of opinion; I am glad he is trying it and I am cheering him on. If I can help him I will. It is important to try some of these experiments. He has a particularly clever way to do something that does have a shot at working.

I want to add my Black Swan theory here. Most of you have probably read the Black Swan, or heard about it. The financial crisis is a negative Black Swan. I am a true believer that technology provides positive Black Swans. (RR: VK explains the concept of the Black Swan. Here is a link to the book at Amazon, which I have read and found to be very good). We will redefine energy because of the Black Swans of technology.

(RR: VK then explains his problem with electric cars, and says lithium ion batteries are too expensive, are limited by electrochemistry, and will be for a long time. I would say that while VK seems to have a clear picture in his head on the issues with batteries, he suffers from a blind spot about similar limitations of cellulosic biomass. He then cites all of his investments into different areas, and concludes that sheer numbers mean something is going to work.)

VK: The chance that each approach will succeed is small. The chance that all of them will cumulatively fail is vanishingly small. Mark my words: Vanishingly small, and that’s why we will have unsubsidized market competitiveness with fossil fuels. And the fossil fuel guys won’t know what hit them. I don’t see how by 2030 oil can compete. That’s why I think by 2030 oil will go to $30, because it will be the alternative cost of marginal technologies.

(RR: I think he truly believes this. Yet it shows a failure to grasp issues of scale, biomass density, logistical challenges, and much more. If it were merely a numbers game, we could solve any technology problem by just throwing enough money at it. But there are fundamental issues here regarding biomass that will never – mark my words – never allow it to be produced for $30/bbl. Sugarcane ethanol, yes, can be produced for that in Brazil. But you will never turn cellulosic biomass into a liquid fuel, at scale, for $30/bbl – for the same kinds of fundamental limitations VK mentions for batteries.)

EC (47:40): So by 2030, what will be the primary fuel?

VK: I have a paper on my website that postulates about a technology race between biofuels and batteries. Whichever one makes the most rapid progress will get the larger percentage of the total passenger miles driven in the world.

EC (48:30): Does government risk factor in? There has been a cautionary tale in biodiesel, where there has been great interest, lots of money pumped in, and yet due in part to vagaries of how the environmentalists and government regulations have crashed into each other, you have got more than 100 biodiesel fuels (RR: Biodiesel plants, I presume?) around the country, none of which are producing fuel.

VK: You know, that’s true, but you also have bankrupt financial companies. Look, failure is the natural mechanism of capitalism. But you are right. There is government risk. But we fixed a lot of that last week when the Low-Carbon Fuel Standard passed. It will force the right decisions looking back.

EC (50:18): There have been many technologies – and Kleiner invested in many early on – where the technology, the marketplace, and the government were not in sync. And the technology dies.

VK: I think that’s the wrong way to look at it. Any start-up has risks. It has technology risks, market risks, it has financial risks. It has other risks; it has people risks and management risks. What you are doing as an active investor is balancing those risks. What we are tending to do is increase technology risk so we can reduce market risk. We will generally take on more market risks, have a bigger jump, and a larger probability of failing at the technology such that when we enter the market we have a larger competitive advantage.

EC (51:30): What are you hearing from the limited partners, the people who invest with you? Is there a tolerance for that sort of risk?

VK: Absolutely. My impression is venture capital has gone too far away from real technology risk. The limited partners are thirsting for more technology risk. The limited partners tell me that the earlier stage they can get in on the technology risk, the better they like it.

EC (53:25): I am going to open it up to questions in a minute, but one more question from me. Let’s go back to nuclear for a minute. Aren’t there Black Swans in the nuclear industry? (RR: I was thinking the same thing earlier; Black Swans only appear to have been considered by VK in very specific situations. A positive Black Swan is going to make some of his technologies successful, but he seems to discount any positive Black Swans from other sectors).

VK: There probably are. In fact, Bill Gates is funding one. The problem with nuclear, I think, is different. Because of the NRC it takes 20 years to build one. And I have to give them $100 million to approve every step of the process. The problem with nuclear is that the innovation cycle is very long. If I am building a nuclear plant, I think of something, 20 years later I build something and see how it performs. If I am building a solar thermal plant, six months later I change my manufacturing line. I can even do it half way through building a power plant.

EC (54:40): And if you are building an ethanol plant, two or three years later it’s ready.

VK: Yeah, though every six months people plan on changing the bug in their plant. Every six months you change the bug. Keep evolving it, improve the efficiency. The cycle of innovation – how long it takes – is a really important metric for judging how effective a technology will be in getting to market.

EC (55:20): OK, good. First question.

Q1 from audience (55:30): My question is on nuclear. You said you weren’t interested in building, but how about the services component, i.e., servicing the waste and so forth?

VK: I think it’s a limited investment opportunity. I don’t think it’s an explosive opportunity. (RR: I suppose that depends on whether critical mass is reached.)

Q2 (56:10): What about superconductivity?

VK: It’s an interesting area, I just haven’t seen the pace of innovation. Sometimes it’s self-fulfilling. If you are not interested, nobody funds it, then nothing happens. I would love to see a breakthrough in room temperature superconductivity. (RR: He then said Kleiner invested in a couple of companies in the late 80’s; he mentioned American Superconductor).

Q3 (57:20): With respect to cellulosic ethanol, this question of indirect land use that has ended up in the standards; do you think that will continue?

VK: It’s a fairly complex issue; the science is very uncertain. I think it is figured into the California Low Carbon Fuel Standard. The end result is a reasonable compromise. It’s also something that is fairly uncertain right now. I think the California Air Resources Board (CARB) came up with something that’s a reasonable answer on indirect land use impacts. The corn ethanol guys wanted to have zero. They didn’t get that, so they are now complaining in Washington. I think CARB could have phased it in more slowly because the numbers are so uncertain, so I would not agree 100% with CARB. But I would agree 90% with them.

Q4 (59:10): That’s corn. How about cellulosic?

VK: I think cellulosic should be measured the same way, but I think the impact will be fairly small, and over time it has the potential to be the biggest opportunity to sequester carbon in the soil. I don’t want to get into the details – there are papers on my website about this – but it is possible to change agronomy practices to raise biomass and sequester carbon at the same time. It is the annual crops, where you till up the soil ever year, that you have a problem. Perennial crops, and sugarcane is such a crop, you have a much better chance. Also, a lot of cellulosic crops can be grown without a lot of water and on marginal lands.

EC (60:20): So the amount of land we would need, if we were to truly replace gasoline, how much land would we need?

VK: Under optimistic scenarios we need zero land in this country to replace all of the gasoline in this country. (RR: He referred to this paper – Where Will Biomass Come From? – on his website for a detailed explanation). Look, this is really important. We can’t do linear extrapolation of the past. (RR: Because it doesn’t give the desired answer). If we do, we are sure to fail. We have to do things a new way. The best way to predict the future is to invent it, not extrapolate the past. (RR: Audience starts to applaud). And this is a fundamental difference.

Q5 (61:22): Is the lack of seed capital – especially in Europe – a bottleneck, and how do we reengineer this so that funds are available?

VK: Lack of seed investment in Europe may be a problem for the Europeans, but it’s an opportunity for us. Let me give you an example. I ran into a guy who was a senior director of research at Exxon, who had moved to Europe – Amsterdam – and was struggling with a new idea to make fuel from biomass. He wasn’t producing ethanol. He called me, and said “Nobody in Europe understands me. I have been looking for money for two years.” He had been begging and borrowing space at various labs and universities to do his research. He said that he thought we had it all wrong, that instead of turning biomass into ethanol you should turn it into crude oil. This is exactly the same thing nature does; all crude oil comes from biomass. He said the only problem with nature is that it takes millions of years. He said he could do it in minutes. Now that’s a seed idea. I would have guessed that there was less than a 10% chance that he was going to be able to pull this off. It didn’t take very much for me to write him a check, because if he is right it’s transformative. He moved to Houston and went to work.

I like to joke that I am the only Indian in-sourcing jobs. We have in-sourced three technology companies: One from New Zealand, one from Amsterdam, and one from Australia. The same thing happened with the solar thermal technology in Australia. We funded it and they moved to Palo Alto. Every news channel in Australia carried that story. What was the story? “Why isn’t Australia funding this?”

EC (64:40): Are you seeing more competition at the seed level from other venture capitalists?

VK: It’s starting to increase, but not that much. That’s why we love the seed opportunities. They are the most promising opportunities anywhere. (RR: He then mentioned that the company in Houston is KiOR, which I mentioned previously in Vinod Khosla Scoops Me. Incidentally, VK e-mailed me after I posted that essay and we exchanged several e-mails over KiOR and some of his other ventures.) Nobody wanted to invest in the Internet until the Netscape idea. After Netscape, everybody was interested.

EC (65:40): You have said that you like being a seed investor. Do you think there are enough investors at the 2nd and 3rd tier? These companies are going to need more than just you at that point.

VK: You don’t know for sure, but we see increasing interest. If you see one or two successful IPOs, the amount of money will increase dramatically. Wall Street bounces between fear and greed; we are in a fear cycle.

Q6 (66:40): What are those Ph.D. students looking into right now? In 2005, I did an informal survey at UC Berkeley. Nobody in the engineering department – graduate students or professors – were interested in energy. We did an informal survey in 2006 and suddenly more than 50% were interested in working in energy. That’s why I am very bullish with respect to the new crops of Ph.D. students coming out. It’s the number one choice. Number one used to be nanotechnology, genetics, computer science; it’s now material science, it’s chemical engineering, it’s all kinds of fundamental processes. What I have noticed is physics, chemistry, biology are becoming a lot more important, and that will drive transformation in energy over the next 20-25 years. (RR: I guess I was way ahead of my time since I studied biomass to energy in graduate school at Texas A&M in the early 90’s).

Q7 (68:00): I agree with your urgency about climate change, but it’s interesting to think about other countries, who already realize that we have already baked in about two degrees C in terms of the thermal momentum of the earth. Is there a technology opportunity in adaptation to climate change?

VK: I haven’t spent enough time on adaptation. It’s unfortunate that the people who have the least are the most impacted, like Bangladesh. But there is an interesting area that I have avoided, called geoengineering. I have just been asked to speak at a geoengineering conference, and I haven’t decided. It is a touchy subject; to engineer the climate of this planet. Some people think we have to do it, others think there will be too many unintended consequences. I subscribe to that view.

EC: We will take two more questions.

Q8 (70:22): Could you talk about job creation?

VK: Most of the studies say that job creation per dollar invested is higher for renewable technologies; higher than dollars invested in fossil fuel technologies. I don’t know why that is, but all of the data seem to indicate that this is in fact true.

Q9 (71:52): Do you think Brazil has a chance with sugar ethanol?

VK: Sugarcane ethanol, under the Low Carbon Fuel Standard, comes out looking reasonably good. But, having said that, I think sugar is too valuable a commodity to use. We will get to things other than sugarcane as our source of fuel. I suspect sugarcane will be more lasting than corn ethanol, but even that will be a passing phase. In the end, non-food technologies are likely to be the source of our fuels. Partly because the politics are right; more importantly because the science is right. I evaluate biofuels on one metric: How many miles can you drive per acre? With most food crops, you can get to 10,000 miles driven per acre. Cellulosic technology offers the opportunity to go 100,000 miles on an acre, and then land becomes a non-issue. (RR: Two words: Net energy). Now we promised to take one last question.

Q10 (73:30): A lot of these new technologies are going require someone to install all of this. Are there plans to look at human capital opportunties?

VK: There are clearly opportunities in services. We are not funding them because, partly because I am a techie nerd; I like the technology and everyone should do something they have fun at. But there are clearly opportunities, and others are doing it. Thank you all very much.

May 4, 2009 Posted by | batteries, biomass, Black Swan, cellulosic ethanol, electric cars, Nassim Nicholas Taleb, nuclear energy, Prius, Vinod Khosla | 48 Comments

Vinod Khosla at Milken Institute: Part III

This will be the conclusion of Vinod Khosla’s (VK) recent lengthy interview at the Milken Institute 2009 Global Conference. The interview was conducted by Elizabeth Corcoran (EC) of Forbes and can be viewed here.

In Part I, VK discussed the role of government money, capital intensity of renewable projects, and some of his solar investments. In Part II, VK discussed butanol, cellulosic ethanol, nuclear power, and cap and trade. Here in Part III, VK discusses his beef with electric cars, has lots to say about Black Swans, discusses his problems with nuclear in more detail, talks about green jobs, sugarcane ethanol, and weighs in on indirect land use issues for biofuels.

EC (39:00): Let’s get to those electric cars. You don’t like the Prius.

VK: Let me be clear, and I am going to sneak in my Black Swan. I do drive a hybrid, but not a Prius. I drive a Lexus hybrid. Hybrids are an uneconomic way to reduce carbon dioxide. If you go to hybrids or electric cars, your cost of carbon reduction is about $100/ton. If you have 10 ways of reducing carbon at $50/ton, why would you spend $100? My beef is not with hybrids; we are investing in hybrid batteries; there is a good market and we can make money at it. But do I believe it’s going to solve the climate change problem? No. (RR: None of the things that have been discussed are going to significantly rein in carbon emissions.) Save yourself the five grand, and instead paint your roof white. You will save more carbon that way.

(RR: He cited this paper by Art Rosenfeld at Lawrence Berkeley Lab: “White Roofs Cool the World, Directly Offset CO2 and Delay Global Warming“).

EC (41:10): Shai Agassi – a long time entrepreneur in Silicon Valley – has a very different approach to batteries. Are you involved in the work he is doing? Does that only work in small countries?

VK: You know, Shai has a very intriguing start-up. (RR: EC interrupts to explain that Shai is developing stations where you can go and exchange batteries for electric cars; he owns the battery and you own the car. See more explanation here.) I mentioned earlier about diversity of opinion; I am glad he is trying it and I am cheering him on. If I can help him I will. It is important to try some of these experiments. He has a particularly clever way to do something that does have a shot at working.

I want to add my Black Swan theory here. Most of you have probably read the Black Swan, or heard about it. The financial crisis is a negative Black Swan. I am a true believer that technology provides positive Black Swans. (RR: VK explains the concept of the Black Swan. Here is a link to the book at Amazon, which I have read and found to be very good). We will redefine energy because of the Black Swans of technology.

(RR: VK then explains his problem with electric cars, and says lithium ion batteries are too expensive, are limited by electrochemistry, and will be for a long time. I would say that while VK seems to have a clear picture in his head on the issues with batteries, he suffers from a blind spot about similar limitations of cellulosic biomass. He then cites all of his investments into different areas, and concludes that sheer numbers mean something is going to work.)

VK: The chance that each approach will succeed is small. The chance that all of them will cumulatively fail is vanishingly small. Mark my words: Vanishingly small, and that’s why we will have unsubsidized market competitiveness with fossil fuels. And the fossil fuel guys won’t know what hit them. I don’t see how by 2030 oil can compete. That’s why I think by 2030 oil will go to $30, because it will be the alternative cost of marginal technologies.

(RR: I think he truly believes this. Yet it shows a failure to grasp issues of scale, biomass density, logistical challenges, and much more. If it were merely a numbers game, we could solve any technology problem by just throwing enough money at it. But there are fundamental issues here regarding biomass that will never – mark my words – never allow it to be produced for $30/bbl. Sugarcane ethanol, yes, can be produced for that in Brazil. But you will never turn cellulosic biomass into a liquid fuel, at scale, for $30/bbl – for the same kinds of fundamental limitations VK mentions for batteries.)

EC (47:40): So by 2030, what will be the primary fuel?

VK: I have a paper on my website that postulates about a technology race between biofuels and batteries. Whichever one makes the most rapid progress will get the larger percentage of the total passenger miles driven in the world.

EC (48:30): Does government risk factor in? There has been a cautionary tale in biodiesel, where there has been great interest, lots of money pumped in, and yet due in part to vagaries of how the environmentalists and government regulations have crashed into each other, you have got more than 100 biodiesel fuels (RR: Biodiesel plants, I presume?) around the country, none of which are producing fuel.

VK: You know, that’s true, but you also have bankrupt financial companies. Look, failure is the natural mechanism of capitalism. But you are right. There is government risk. But we fixed a lot of that last week when the Low-Carbon Fuel Standard passed. It will force the right decisions looking back.

EC (50:18): There have been many technologies – and Kleiner invested in many early on – where the technology, the marketplace, and the government were not in sync. And the technology dies.

VK: I think that’s the wrong way to look at it. Any start-up has risks. It has technology risks, market risks, it has financial risks. It has other risks; it has people risks and management risks. What you are doing as an active investor is balancing those risks. What we are tending to do is increase technology risk so we can reduce market risk. We will generally take on more market risks, have a bigger jump, and a larger probability of failing at the technology such that when we enter the market we have a larger competitive advantage.

EC (51:30): What are you hearing from the limited partners, the people who invest with you? Is there a tolerance for that sort of risk?

VK: Absolutely. My impression is venture capital has gone too far away from real technology risk. The limited partners are thirsting for more technology risk. The limited partners tell me that the earlier stage they can get in on the technology risk, the better they like it.

EC (53:25): I am going to open it up to questions in a minute, but one more question from me. Let’s go back to nuclear for a minute. Aren’t there Black Swans in the nuclear industry? (RR: I was thinking the same thing earlier; Black Swans only appear to have been considered by VK in very specific situations. A positive Black Swan is going to make some of his technologies successful, but he seems to discount any positive Black Swans from other sectors).

VK: There probably are. In fact, Bill Gates is funding one. The problem with nuclear, I think, is different. Because of the NRC it takes 20 years to build one. And I have to give them $100 million to approve every step of the process. The problem with nuclear is that the innovation cycle is very long. If I am building a nuclear plant, I think of something, 20 years later I build something and see how it performs. If I am building a solar thermal plant, six months later I change my manufacturing line. I can even do it half way through building a power plant.

EC (54:40): And if you are building an ethanol plant, two or three years later it’s ready.

VK: Yeah, though every six months people plan on changing the bug in their plant. Every six months you change the bug. Keep evolving it, improve the efficiency. The cycle of innovation – how long it takes – is a really important metric for judging how effective a technology will be in getting to market.

EC (55:20): OK, good. First question.

Q1 from audience (55:30): My question is on nuclear. You said you weren’t interested in building, but how about the services component, i.e., servicing the waste and so forth?

VK: I think it’s a limited investment opportunity. I don’t think it’s an explosive opportunity. (RR: I suppose that depends on whether critical mass is reached.)

Q2 (56:10): What about superconductivity?

VK: It’s an interesting area, I just haven’t seen the pace of innovation. Sometimes it’s self-fulfilling. If you are not interested, nobody funds it, then nothing happens. I would love to see a breakthrough in room temperature superconductivity. (RR: He then said Kleiner invested in a couple of companies in the late 80’s; he mentioned American Superconductor).

Q3 (57:20): With respect to cellulosic ethanol, this question of indirect land use that has ended up in the standards; do you think that will continue?

VK: It’s a fairly complex issue; the science is very uncertain. I think it is figured into the California Low Carbon Fuel Standard. The end result is a reasonable compromise. It’s also something that is fairly uncertain right now. I think the California Air Resources Board (CARB) came up with something that’s a reasonable answer on indirect land use impacts. The corn ethanol guys wanted to have zero. They didn’t get that, so they are now complaining in Washington. I think CARB could have phased it in more slowly because the numbers are so uncertain, so I would not agree 100% with CARB. But I would agree 90% with them.

Q4 (59:10): That’s corn. How about cellulosic?

VK: I think cellulosic should be measured the same way, but I think the impact will be fairly small, and over time it has the potential to be the biggest opportunity to sequester carbon in the soil. I don’t want to get into the details – there are papers on my website about this – but it is possible to change agronomy practices to raise biomass and sequester carbon at the same time. It is the annual crops, where you till up the soil ever year, that you have a problem. Perennial crops, and sugarcane is such a crop, you have a much better chance. Also, a lot of cellulosic crops can be grown without a lot of water and on marginal lands.

EC (60:20): So the amount of land we would need, if we were to truly replace gasoline, how much land would we need?

VK: Under optimistic scenarios we need zero land in this country to replace all of the gasoline in this country. (RR: He referred to this paper – Where Will Biomass Come From? – on his website for a detailed explanation). Look, this is really important. We can’t do linear extrapolation of the past. (RR: Because it doesn’t give the desired answer). If we do, we are sure to fail. We have to do things a new way. The best way to predict the future is to invent it, not extrapolate the past. (RR: Audience starts to applaud). And this is a fundamental difference.

Q5 (61:22): Is the lack of seed capital – especially in Europe – a bottleneck, and how do we reengineer this so that funds are available?

VK: Lack of seed investment in Europe may be a problem for the Europeans, but it’s an opportunity for us. Let me give you an example. I ran into a guy who was a senior director of research at Exxon, who had moved to Europe – Amsterdam – and was struggling with a new idea to make fuel from biomass. He wasn’t producing ethanol. He called me, and said “Nobody in Europe understands me. I have been looking for money for two years.” He had been begging and borrowing space at various labs and universities to do his research. He said that he thought we had it all wrong, that instead of turning biomass into ethanol you should turn it into crude oil. This is exactly the same thing nature does; all crude oil comes from biomass. He said the only problem with nature is that it takes millions of years. He said he could do it in minutes. Now that’s a seed idea. I would have guessed that there was less than a 10% chance that he was going to be able to pull this off. It didn’t take very much for me to write him a check, because if he is right it’s transformative. He moved to Houston and went to work.

I like to joke that I am the only Indian in-sourcing jobs. We have in-sourced three technology companies: One from New Zealand, one from Amsterdam, and one from Australia. The same thing happened with the solar thermal technology in Australia. We funded it and they moved to Palo Alto. Every news channel in Australia carried that story. What was the story? “Why isn’t Australia funding this?”

EC (64:40): Are you seeing more competition at the seed level from other venture capitalists?

VK: It’s starting to increase, but not that much. That’s why we love the seed opportunities. They are the most promising opportunities anywhere. (RR: He then mentioned that the company in Houston is KiOR, which I mentioned previously in Vinod Khosla Scoops Me. Incidentally, VK e-mailed me after I posted that essay and we exchanged several e-mails over KiOR and some of his other ventures.) Nobody wanted to invest in the Internet until the Netscape idea. After Netscape, everybody was interested.

EC (65:40): You have said that you like being a seed investor. Do you think there are enough investors at the 2nd and 3rd tier? These companies are going to need more than just you at that point.

VK: You don’t know for sure, but we see increasing interest. If you see one or two successful IPOs, the amount of money will increase dramatically. Wall Street bounces between fear and greed; we are in a fear cycle.

Q6 (66:40): What are those Ph.D. students looking into right now? In 2005, I did an informal survey at UC Berkeley. Nobody in the engineering department – graduate students or professors – were interested in energy. We did an informal survey in 2006 and suddenly more than 50% were interested in working in energy. That’s why I am very bullish with respect to the new crops of Ph.D. students coming out. It’s the number one choice. Number one used to be nanotechnology, genetics, computer science; it’s now material science, it’s chemical engineering, it’s all kinds of fundamental processes. What I have noticed is physics, chemistry, biology are becoming a lot more important, and that will drive transformation in energy over the next 20-25 years. (RR: I guess I was way ahead of my time since I studied biomass to energy in graduate school at Texas A&M in the early 90’s).

Q7 (68:00): I agree with your urgency about climate change, but it’s interesting to think about other countries, who already realize that we have already baked in about two degrees C in terms of the thermal momentum of the earth. Is there a technology opportunity in adaptation to climate change?

VK: I haven’t spent enough time on adaptation. It’s unfortunate that the people who have the least are the most impacted, like Bangladesh. But there is an interesting area that I have avoided, called geoengineering. I have just been asked to speak at a geoengineering conference, and I haven’t decided. It is a touchy subject; to engineer the climate of this planet. Some people think we have to do it, others think there will be too many unintended consequences. I subscribe to that view.

EC: We will take two more questions.

Q8 (70:22): Could you talk about job creation?

VK: Most of the studies say that job creation per dollar invested is higher for renewable technologies; higher than dollars invested in fossil fuel technologies. I don’t know why that is, but all of the data seem to indicate that this is in fact true.

Q9 (71:52): Do you think Brazil has a chance with sugar ethanol?

VK: Sugarcane ethanol, under the Low Carbon Fuel Standard, comes out looking reasonably good. But, having said that, I think sugar is too valuable a commodity to use. We will get to things other than sugarcane as our source of fuel. I suspect sugarcane will be more lasting than corn ethanol, but even that will be a passing phase. In the end, non-food technologies are likely to be the source of our fuels. Partly because the politics are right; more importantly because the science is right. I evaluate biofuels on one metric: How many miles can you drive per acre? With most food crops, you can get to 10,000 miles driven per acre. Cellulosic technology offers the opportunity to go 100,000 miles on an acre, and then land becomes a non-issue. (RR: Two words: Net energy). Now we promised to take one last question.

Q10 (73:30): A lot of these new technologies are going require someone to install all of this. Are there plans to look at human capital opportunties?

VK: There are clearly opportunities in services. We are not funding them because, partly because I am a techie nerd; I like the technology and everyone should do something they have fun at. But there are clearly opportunities, and others are doing it. Thank you all very much.

May 4, 2009 Posted by | batteries, biomass, Black Swan, cellulosic ethanol, electric cars, Nassim Nicholas Taleb, nuclear energy, Prius, Vinod Khosla | 28 Comments

Electric Vehicle Update

In 2009 and 2010 we should see a lot of hybrids and fully electric cars hitting the roads. I spent a little time this weekend reviewing the potential offerings. Here is where some of the more frequently-mentioned offerings stand.

1. The Aptera 2e

The Aptera 2e

This is probably the most unusual offering. I first mentioned the Aptera in a story last year, and the roll-out is still on target for Q4 of this year. It is a 3-wheeled vehicle, made of light-weight composites. The shape is very aerodynamic to minimize wind resistance. The batteries recharge in 8 hours, and the car reportedly has a range of 100 miles. The cost is going to be in the range of $30,000, and the company reports that they already have deposits down for 4,000 vehicles.

The company has put together a veteran team, and by all appearances they are building an impressive car. Road and Track recently got an exclusive look:

Exclusive: Aptera 2e

Some excerpts:

The business model looks sound; nearly 4000 deposits have been placed (Robin Williams among the clientele), enthusiastic investors are locked in, and co-founders Steve Fambro and Chris Anthony have assembled a team that balances Detroit low-volume niche-production experience with California “anything is possible” attitude. Chief engineer Tom Reichenbach was formerly vehicle engineering manager for both Ford GT and Shelby GT500 programs; and CEO Paul Wilbur has a storied history at Ford, Chrysler and ASC. And Fambro, a biotech engineer and private pilot intrigued by his aircraft’s composite construction, and Anthony, a composites specialist with a background in boat design and fluid dynamics, seemed predestined for this partnership.

There’s a large hooded digital speedometer and bar-graph battery state-of-charge indicator, along with a central infotainment screen that offers mind-boggling possibilities. Leg- and head room were surprisingly generous for even my 6-foot-3 frame. And safety is preeminent in the Aptera’s design — the final version will have both frontal and side airbags. And if there was any doubt about the strength of the composite construction, it was quelled as eight Aptera employees stood on the roof of a development shell. And that was after the shell had gone through government roof-crush testing!

The car will initially be available only in California, but I will be watching closely to see how well it sells. Will it be accepted by the public? I have given thought to how I would feel about driving one around. I think the police would pull you over a lot, thinking the car isn’t street legal. Regardless, I am certainly rooting for it to be a success.

2. The Ford Fusion

The big news over the past week is that the Ford Fusion has been put to the test, and three major publications concluded that it was the best hybrid yet built. Yes, better than the Toyota Prius, which has been the most popular hybrid for many years. USA Today writes:

The 2010 Ford Fusion hybrid is the best gasoline-electric hybrid yet. What makes it best is a top-drawer blend of an already very good midsize sedan with the industry’s smoothest, best-integrated gas-electric power system. It’s so well-done that you have to look to the $107,000 Lexus LS 600h hybrid to come close.

U.S. News and World Reports says:

If you’re in the market for an ultra fuel-efficient hybrid that makes a convincing family sedan, your best choice has always been a Toyota — until now. Toyota’s Camry Hybrid and Prius have been the only realistic alternatives for many. Most American-built hybrids simply haven’t matched their fuel economy, and the Nissan Altima Hybrid remains rare and hard to find.

The Fusion Hybrid qualifies for a federal tax credit of $3,400 until the end of March, but few of the cars will reach dealerships by then – if you’re in the market, you might want to consider ordering yours before the credit disappears. If any Ford product has your eye, you should be aware that Ford is offering some of the deepest discounts we’ve seen in years this month.

Finally, Car and Driver had this to say:

Ford has pulled off a game changer with this 2010 model, creating a high-mpg family hauler that’s fun to drive. That achievement has two components: First, the machinery is unexpectedly refined—call it Toyota slickness expressed with car-guy soul. Second, the electronic instrument cluster involves the driver, invites you into the hybrid game, and gives you the feedback needed to keep increasing your personal-best mpg number.

I have to say this is quite an exciting development. I am now in my 12th month without a car, but it may be time to go ahead and purchase one. Given that I could get the tax credit if I order by the end of March, I may go ahead and pull the trigger.

3. The Chevy Volt

GM’s Chevy Volt

First announced in 2007, the Chevy Volt looks to finally make an appearance in late 2010 (although 2011 won’t be a surprise). Per GM’s website:

The Extended-Range Electric Vehicle that is redefining the automotive world is no longer just a rumor. In fact, its propulsion system is so revolutionary, it’s unlike any other vehicle or electric car that’s ever been introduced. And we’re making this remarkable vision a reality, so that one day you’ll have the freedom to drive gas-free.

Chevy Volt is designed to move more than 75 percent of America’s daily commuters without a single drop of gas.(2) That means for someone who drives less than 40 miles a day, Chevy Volt will use zero gasoline and produce zero emissions.(1)

Unlike traditional electric cars, Chevy Volt has a revolutionary propulsion system that takes you beyond the power of the battery. It will use a lithium-ion battery with a gasoline-powered, range-extending engine that drives a generator to provide electric power when you drive beyond the 40-mile battery range.

So it isn’t a purely electric car, but does have a pretty good battery range for a full-sized car. Plus, there are apparently provisions in the auto bailout that make the Volt eligible for a $7,500 tax credit. But there are certainly skeptics that the Volt will ever live up to the hype.

4. The Tesla Roadster

Speaking of hype, the all-electric Tesla Roadster reminds me of some of the more exotic and overhyped biofuels. We have heard about it forever, but the costs keep going up and the roll-out date for mass production keeps getting pushed out. The price is now up to $109,000, and even though performance reports of the handful that have been built are very impressive, there are serious questions as to whether this experiment will ultimately be successful.

Based on a Lotus platform, and assembled at the Lotus factory in Hethel, England, the Tesla has been mired in controversy throughout its short history. The latest setback was that Tesla lost a legal ruling to up and coming competitor Fisker Automotive, themselves creating a worthy competitor to the Roadster in the Fisker Karma. The Karma is an extended range hybrid that can go 50 miles before the gasoline engine has to kick in. (The Karma is expected to hit the road in 2010).

By all accounts Tesla is building a car with impressive specifications, and they plan to follow the Roadster up with the Tesla Model S that will be quite a bit cheaper than the Roadster. But Tesla has had cash flow problems and has been forced to lay off people. From the various accounts I have read, I don’t expect the Tesla to be in the race in the long run. One website got so tired of the hype that they turned their ‘Tesla birth watch’ into a ‘Tesla death watch.’ Still, I think the company is to be commended for their innovation, and I hope they get the problems worked out. (On an amusing personal note, former CEO Martin Eberhard has reportedly read this blog, and got a kick out of my tangles with Vinod Khosla).

5. Plug-in Toyota Prius

I wanted to limit this list to 5 cars, and there were a number of contenders worth a mention. But I would be remiss not to include the next generation Prius among the list of offerings. While at least one private company has already been modifying the Prius to be a plug-in hybrid, Toyota is working furiously to be the first to put large numbers of plug-in hybrids on U.S. roads. Initially announced for 2010, Toyota has moved up the schedule for the plug-in Prius and plans to have the first 500 on the road by the end of 2009 (150 in the U.S.). The downside is that the first prototypes can only go about 7 miles on battery power alone, which is well-short of the average person’s commute. So you can expect the plug-in Prius to run on gasoline most of the time.

Other Contenders

There are a number of other electric offerings worth a mention. Nissan has announced plans to put electric cars on U.S. roads by 2010. BMW has begun producing all-electric versions of their popular Mini Cooper, and so far can’t keep up with demand. ZAP is putting a sporty 3-wheeled electric car out (the Alias), along with offerings such as an electric truck and sedan. The Alias can reportedly go 100 miles on a charge.

Finally, Toronto-based Zenn Motor Company says they will put an electric car on the roads in 2009. This one is particularly noteworthy because of their intention to use EEStor’s ultracapacitor to power the vehicle. EEStor claims that their ultracapacitor is 1/10th the weight and volume of conventional battery technology. While potentially a game-changer, many feel that EEStor is a classic case of vaporware, and many capacitor experts say that it will never see the light of day. In response, Zenn says that their electric vehicles are not contingent upon the success of the ultracapacitor. And in fact, according to their website I can buy an all-electric Zenn vehicle here in the Dallas area right now. There are two dealers to choose from in the Dallas-Fort Worth area, and one of the dealers claims a 260 mile range on a single charge. I think I will try to make a trip down to see if they really have something in stock.

Conclusion

Based on the large number of electric offerings to be rolled out over the next two years, I would be surprised if some don’t stick around for the long run. A return to $4.00 gasoline should accelerate public acceptance of electric vehicles. The Aptera looks like a winner, provided buyers embrace the futuristic design. The Ford Fusion hybrid also looks like it is ready to make major inroads into the market share of the Toyota Prius. And don’t be surprised to see lots of electric Mini Coopers showing up on the roads soon. Now I just need to figure out if I am ready to be a part of the experiment and buy one of these vehicles.

February 16, 2009 Posted by | Aptera, Chevy Volt, Ford, General Motors, Nissan, Prius, Tesla Motors | 36 Comments

Electric Vehicle Update

In 2009 and 2010 we should see a lot of hybrids and fully electric cars hitting the roads. I spent a little time this weekend reviewing the potential offerings. Here is where some of the more frequently-mentioned offerings stand.

1. The Aptera 2e

The Aptera 2e

This is probably the most unusual offering. I first mentioned the Aptera in a story last year, and the roll-out is still on target for Q4 of this year. It is a 3-wheeled vehicle, made of light-weight composites. The shape is very aerodynamic to minimize wind resistance. The batteries recharge in 8 hours, and the car reportedly has a range of 100 miles. The cost is going to be in the range of $30,000, and the company reports that they already have deposits down for 4,000 vehicles.

The company has put together a veteran team, and by all appearances they are building an impressive car. Road and Track recently got an exclusive look:

Exclusive: Aptera 2e

Some excerpts:

The business model looks sound; nearly 4000 deposits have been placed (Robin Williams among the clientele), enthusiastic investors are locked in, and co-founders Steve Fambro and Chris Anthony have assembled a team that balances Detroit low-volume niche-production experience with California “anything is possible” attitude. Chief engineer Tom Reichenbach was formerly vehicle engineering manager for both Ford GT and Shelby GT500 programs; and CEO Paul Wilbur has a storied history at Ford, Chrysler and ASC. And Fambro, a biotech engineer and private pilot intrigued by his aircraft’s composite construction, and Anthony, a composites specialist with a background in boat design and fluid dynamics, seemed predestined for this partnership.

There’s a large hooded digital speedometer and bar-graph battery state-of-charge indicator, along with a central infotainment screen that offers mind-boggling possibilities. Leg- and head room were surprisingly generous for even my 6-foot-3 frame. And safety is preeminent in the Aptera’s design — the final version will have both frontal and side airbags. And if there was any doubt about the strength of the composite construction, it was quelled as eight Aptera employees stood on the roof of a development shell. And that was after the shell had gone through government roof-crush testing!

The car will initially be available only in California, but I will be watching closely to see how well it sells. Will it be accepted by the public? I have given thought to how I would feel about driving one around. I think the police would pull you over a lot, thinking the car isn’t street legal. Regardless, I am certainly rooting for it to be a success.

2. The Ford Fusion

The big news over the past week is that the Ford Fusion has been put to the test, and three major publications concluded that it was the best hybrid yet built. Yes, better than the Toyota Prius, which has been the most popular hybrid for many years. USA Today writes:

The 2010 Ford Fusion hybrid is the best gasoline-electric hybrid yet. What makes it best is a top-drawer blend of an already very good midsize sedan with the industry’s smoothest, best-integrated gas-electric power system. It’s so well-done that you have to look to the $107,000 Lexus LS 600h hybrid to come close.

U.S. News and World Reports says:

If you’re in the market for an ultra fuel-efficient hybrid that makes a convincing family sedan, your best choice has always been a Toyota — until now. Toyota’s Camry Hybrid and Prius have been the only realistic alternatives for many. Most American-built hybrids simply haven’t matched their fuel economy, and the Nissan Altima Hybrid remains rare and hard to find.

The Fusion Hybrid qualifies for a federal tax credit of $3,400 until the end of March, but few of the cars will reach dealerships by then – if you’re in the market, you might want to consider ordering yours before the credit disappears. If any Ford product has your eye, you should be aware that Ford is offering some of the deepest discounts we’ve seen in years this month.

Finally, Car and Driver had this to say:

Ford has pulled off a game changer with this 2010 model, creating a high-mpg family hauler that’s fun to drive. That achievement has two components: First, the machinery is unexpectedly refined—call it Toyota slickness expressed with car-guy soul. Second, the electronic instrument cluster involves the driver, invites you into the hybrid game, and gives you the feedback needed to keep increasing your personal-best mpg number.

I have to say this is quite an exciting development. I am now in my 12th month without a car, but it may be time to go ahead and purchase one. Given that I could get the tax credit if I order by the end of March, I may go ahead and pull the trigger.

3. The Chevy Volt

GM’s Chevy Volt

First announced in 2007, the Chevy Volt looks to finally make an appearance in late 2010 (although 2011 won’t be a surprise). Per GM’s website:

The Extended-Range Electric Vehicle that is redefining the automotive world is no longer just a rumor. In fact, its propulsion system is so revolutionary, it’s unlike any other vehicle or electric car that’s ever been introduced. And we’re making this remarkable vision a reality, so that one day you’ll have the freedom to drive gas-free.

Chevy Volt is designed to move more than 75 percent of America’s daily commuters without a single drop of gas.(2) That means for someone who drives less than 40 miles a day, Chevy Volt will use zero gasoline and produce zero emissions.(1)

Unlike traditional electric cars, Chevy Volt has a revolutionary propulsion system that takes you beyond the power of the battery. It will use a lithium-ion battery with a gasoline-powered, range-extending engine that drives a generator to provide electric power when you drive beyond the 40-mile battery range.

So it isn’t a purely electric car, but does have a pretty good battery range for a full-sized car. Plus, there are apparently provisions in the auto bailout that make the Volt eligible for a $7,500 tax credit. But there are certainly skeptics that the Volt will ever live up to the hype.

4. The Tesla Roadster

Speaking of hype, the all-electric Tesla Roadster reminds me of some of the more exotic and overhyped biofuels. We have heard about it forever, but the costs keep going up and the roll-out date for mass production keeps getting pushed out. The price is now up to $109,000, and even though performance reports of the handful that have been built are very impressive, there are serious questions as to whether this experiment will ultimately be successful.

Based on a Lotus platform, and assembled at the Lotus factory in Hethel, England, the Tesla has been mired in controversy throughout its short history. The latest setback was that Tesla lost a legal ruling to up and coming competitor Fisker Automotive, themselves creating a worthy competitor to the Roadster in the Fisker Karma. The Karma is an extended range hybrid that can go 50 miles before the gasoline engine has to kick in. (The Karma is expected to hit the road in 2010).

By all accounts Tesla is building a car with impressive specifications, and they plan to follow the Roadster up with the Tesla Model S that will be quite a bit cheaper than the Roadster. But Tesla has had cash flow problems and has been forced to lay off people. From the various accounts I have read, I don’t expect the Tesla to be in the race in the long run. One website got so tired of the hype that they turned their ‘Tesla birth watch’ into a ‘Tesla death watch.’ Still, I think the company is to be commended for their innovation, and I hope they get the problems worked out. (On an amusing personal note, former CEO Martin Eberhard has reportedly read this blog, and got a kick out of my tangles with Vinod Khosla).

5. Plug-in Toyota Prius

I wanted to limit this list to 5 cars, and there were a number of contenders worth a mention. But I would be remiss not to include the next generation Prius among the list of offerings. While at least one private company has already been modifying the Prius to be a plug-in hybrid, Toyota is working furiously to be the first to put large numbers of plug-in hybrids on U.S. roads. Initially announced for 2010, Toyota has moved up the schedule for the plug-in Prius and plans to have the first 500 on the road by the end of 2009 (150 in the U.S.). The downside is that the first prototypes can only go about 7 miles on battery power alone, which is well-short of the average person’s commute. So you can expect the plug-in Prius to run on gasoline most of the time.

Other Contenders

There are a number of other electric offerings worth a mention. Nissan has announced plans to put electric cars on U.S. roads by 2010. BMW has begun producing all-electric versions of their popular Mini Cooper, and so far can’t keep up with demand. ZAP is putting a sporty 3-wheeled electric car out (the Alias), along with offerings such as an electric truck and sedan. The Alias can reportedly go 100 miles on a charge.

Finally, Toronto-based Zenn Motor Company says they will put an electric car on the roads in 2009. This one is particularly noteworthy because of their intention to use EEStor’s ultracapacitor to power the vehicle. EEStor claims that their ultracapacitor is 1/10th the weight and volume of conventional battery technology. While potentially a game-changer, many feel that EEStor is a classic case of vaporware, and many capacitor experts say that it will never see the light of day. In response, Zenn says that their electric vehicles are not contingent upon the success of the ultracapacitor. And in fact, according to their website I can buy an all-electric Zenn vehicle here in the Dallas area right now. There are two dealers to choose from in the Dallas-Fort Worth area, and one of the dealers claims a 260 mile range on a single charge. I think I will try to make a trip down to see if they really have something in stock.

Conclusion

Based on the large number of electric offerings to be rolled out over the next two years, I would be surprised if some don’t stick around for the long run. A return to $4.00 gasoline should accelerate public acceptance of electric vehicles. The Aptera looks like a winner, provided buyers embrace the futuristic design. The Ford Fusion hybrid also looks like it is ready to make major inroads into the market share of the Toyota Prius. And don’t be surprised to see lots of electric Mini Coopers showing up on the roads soon. Now I just need to figure out if I am ready to be a part of the experiment and buy one of these vehicles.

February 16, 2009 Posted by | Aptera, Chevy Volt, Ford, General Motors, Nissan, Prius, Tesla Motors | 36 Comments

How Quickly We Forget

Retail gasoline prices in the U.S. peaked back in July at $4.17 a gallon. (Source: EIA). At the end of 2008, gasoline had fallen to $1.67. We typically use about 140 billion gallons of gasoline each year, so that $2.50 drop amounts to an annualized difference of $350 billion in the pockets of consumers – and into the U.S. economy instead of the economies of Saudi Arabia and Venezuela. Add in the drop in diesel, home heating oil, and jet fuel and you are looking at half a trillion dollars. And while I am strongly in favor of raising gasoline taxes to reduce our fossil fuel consumption (and demand has been sharply down as a result of high prices), the economy can certainly use this sort of stimulus right now.

But in the long run it is very important how people use that money. And we seem to be reverting to bad habits. How quickly we forget $4 gasoline:

Big is back: As pump prices plunge, SUV sales surge

NEWPORT NEWS – It looks like the Highlander is in and the Prius is out — for now at least.

Trucks and sport utility vehicles will outsell cars for the first time since February, according to a December report by Edmunds.com, which tracks industry statistics.

“Despite all the public discussion of fuel efficiency, SUVs and trucks are the industry’s biggest sellers right now as a remarkable number of buyers seem to be compelled by three factors: great deals, low gas prices and winter weather,” said Michelle Krebs of AutoObserver.com, a division of Edmunds.com, in a prepared statement.

And the punch line:

The surge in SUV and truck sales suggests that the issue of fuel efficiency has faded in the minds of many consumers.

Toyota has already slowed production of the industry’s flagship hybrid vehicle, the Prius, due to lack of interest and a growing inventory of the once best-selling model, Edmunds.com reported.

All this might mean a setback for fuel-efficient models that were heralded as a remedy for the country’s addiction to oil.

If people are going to flock back to gas guzzlers instead of using their extra pocket money to pay down their debt, then I would rather gas prices go ahead and recover. Based on the trends in vehicle sales, I am sure I will see that wish fulfilled before too long.

January 4, 2009 Posted by | fuel efficiency, gas prices, Prius | 56 Comments

Diesel or Gasoline?

I hear a lot of questions about the economics of a diesel engine versus a gasoline engine, given the fact that diesel prices are now much higher than gasoline (and likely to remain that way).

Diesels have two things going for them. First, a gallon of diesel contains more energy than a gallon of gasoline. Second, a diesel engine achieves a higher compression ratio, and gets more useful work out of the engine. Diesels are estimated to be around 30% more efficient than combustion engines.

I checked the EPA’s site on fuel efficiency – http://www.fueleconomy.gov – and compared a 2009 Volkswagen Jetta on diesel versus gasoline. Comparing identical cars – 2-L, 4-cylinder, 6-speed manual transmission shows that the diesel version gets 36% better fuel efficiency.

If I factor in diesel’s higher price – the EPA assumed $4.65 for diesel and $4.33 for premium gasoline – it costs $3.42 to drive 25 miles on diesel and $4.33 to drive 25 miles on gasoline. The annual fuel costs, assuming 15,000 miles of driving, was $2051 on diesel and $2598 on gasoline.

The diesel engine will set you back a few more thousand dollars than the gasoline engine. It is hard to get a direct comparison, but a search of Edmunds indicates that Volkswagen’s diesel models are at least $2,000 more expensive than comparable gasoline models. If we assume no time value for money, you are going to have to drive about 55,000 miles before you save $2,000 in fuel costs (based on today’s prices).

It just wouldn’t pay off for someone like me who doesn’t drive more than 5,000 miles a year. I am not even sure I drive enough miles to justify paying the extra cash for a Prius. I need to run those numbers next.

July 10, 2008 Posted by | fuel efficiency, Prius, Volkswagen | 41 Comments

SUV for Sale: Cheap!

Some of the consequences of very high oil prices are pretty predictable. Homes way out in the suburbs are likely to lose value. Prices will rise across the board for goods and services. Airlines will struggle. And gas guzzlers will be much less attractive:

Gas costs deflate prices on used SUVs

High fuel prices are causing the value of used SUVs to plummet, often below what’s listed in the buying guides many shoppers use to negotiate with dealers. “The dealer is going to offer a price, and the customer is going to be ticked off,” says Tom Webb, chief economist for Manheim, operators of auctions where car dealers buy their used-vehicle inventories. “The guidebooks have not caught up to the market,” he says.

Webb’s figures show wholesale prices on big SUVs such as Chevrolet Tahoes, Ford Expeditions and Toyota Sequoias are down 17% from a year ago. Full-size pickups have fallen as much as 15%, Webb says.

Even though plunging values should make used SUVs bargains for buyers less concerned about fuel prices, that doesn’t seem to be happening. Used SUVs languished unsold an average 66.4 days last month, up from 48.6 days the year before, says CNW Marketing Research. “There are far more truck-based SUVs being traded in than customers to buy them,” says Mike Jackson, CEO of AutoNation, the largest new-car dealer chain.

Your Prius or Jetta TDI on the other hand? I may start buying up some of those as speculative investments. If people are trading in their SUVs, there is going to be a run on more fuel efficient cars – and they should hold their value, if not trade at a premium.

People have asked me for several years what I thought was going to happen with gas prices. I always tell them that the long-term trend is much higher, and you should plan accordingly. I have warned friends and family to embrace fuel efficiency, and I have tried to preach that message here. Now that gas prices are really hitting people in the pocketbook, looks like they are finally getting the message. But like many caught in the housing bubble, they waited a little too long and lost a lot of money. The lesson here? Pay attention to what I am telling you. Do you hear that, Mom? 🙂

May 10, 2008 Posted by | auto industry, Ford, fuel efficiency, General Motors, Prius | 14 Comments

My Next Car?

I was talking to my wife on the phone yesterday, and she asked what I knew about the 2009 Prius. I asked what she was talking about, and she started telling me about some of the features. She said that Toyota has been keeping the details pretty quiet, but details are available. Actually, I think it has come up here a couple of times, but here’s a picture:

There have been some pretty big claims about fuel efficiency:

2009 Prius May Reach 94 MPG

Auto Observer reports that the next generation of Toyota’s wildly successful Prius hybrid “is coming soon and will launch at the Detroit auto show in January 2009.” The car will be “a touch bigger so offering more space. It will come with stronger 1.8-liter hybrid performance yet at the same time boast even better economy and class leading emissions, if early word is correct.” The Prius will feature “a bigger 1797 cc four cylinder gas engine to cope with the bigger body and counter criticism in some quarters of the weedy performance of the current 1.5,” boosting the total output of the car to 160 horsepower (up from the current 110). Sources say Toyota rates the new configuration for 94 mpg.

The New York Times also had some recent coverage:

2009 Prius: Not So Fast

A third generation of the Toyota Prius gas-electric hybrid car has been eagerly anticipated. Though Toyota has not officially announced when the redesigned Prius would appear, unofficially, automotive journalists had been tipped to expect it sometime in 2008, as a 2009 model.

However, news reports from Japan last week said the car has been delayed by at least six months, to early 2009.

Whether the delay is real or not, it appears that the battery problems are plenty real. Previously, Toyota set a goal of reducing the size of the battery pack in the next Prius by 50 percent, while also increasing its efficiency.

The delay is apparently to give Toyota engineers time to retro-fit the new Prius design with the old-style nickel metal hydride batteries they’d hoped to be rid of. At least initially, the new Prius will still have nickel metal hydride batteries, Nikkan Kogyo reported. Lithium ion power is not ready for prime time (remember all the exploding laptop batteries made of the same substance?). Lithium ion gets unstable under extreme pressure – apparently too unstable for automotive use at this stage of its development.

I am going to try to hold out until the 2009s come out before I get another car. I think I can manage that, and I am really intent on getting one of these new, ultra-high mileage vehicles.

May 9, 2008 Posted by | fuel efficiency, Prius | Comments Off on My Next Car?

My Next Car?

I was talking to my wife on the phone yesterday, and she asked what I knew about the 2009 Prius. I asked what she was talking about, and she started telling me about some of the features. She said that Toyota has been keeping the details pretty quiet, but details are available. Actually, I think it has come up here a couple of times, but here’s a picture:

There have been some pretty big claims about fuel efficiency:

2009 Prius May Reach 94 MPG

Auto Observer reports that the next generation of Toyota’s wildly successful Prius hybrid “is coming soon and will launch at the Detroit auto show in January 2009.” The car will be “a touch bigger so offering more space. It will come with stronger 1.8-liter hybrid performance yet at the same time boast even better economy and class leading emissions, if early word is correct.” The Prius will feature “a bigger 1797 cc four cylinder gas engine to cope with the bigger body and counter criticism in some quarters of the weedy performance of the current 1.5,” boosting the total output of the car to 160 horsepower (up from the current 110). Sources say Toyota rates the new configuration for 94 mpg.

The New York Times also had some recent coverage:

2009 Prius: Not So Fast

A third generation of the Toyota Prius gas-electric hybrid car has been eagerly anticipated. Though Toyota has not officially announced when the redesigned Prius would appear, unofficially, automotive journalists had been tipped to expect it sometime in 2008, as a 2009 model.

However, news reports from Japan last week said the car has been delayed by at least six months, to early 2009.

Whether the delay is real or not, it appears that the battery problems are plenty real. Previously, Toyota set a goal of reducing the size of the battery pack in the next Prius by 50 percent, while also increasing its efficiency.

The delay is apparently to give Toyota engineers time to retro-fit the new Prius design with the old-style nickel metal hydride batteries they’d hoped to be rid of. At least initially, the new Prius will still have nickel metal hydride batteries, Nikkan Kogyo reported. Lithium ion power is not ready for prime time (remember all the exploding laptop batteries made of the same substance?). Lithium ion gets unstable under extreme pressure – apparently too unstable for automotive use at this stage of its development.

I am going to try to hold out until the 2009s come out before I get another car. I think I can manage that, and I am really intent on getting one of these new, ultra-high mileage vehicles.

May 9, 2008 Posted by | fuel efficiency, Prius | 25 Comments

My Next Car?

I was talking to my wife on the phone yesterday, and she asked what I knew about the 2009 Prius. I asked what she was talking about, and she started telling me about some of the features. She said that Toyota has been keeping the details pretty quiet, but details are available. Actually, I think it has come up here a couple of times, but here’s a picture:

There have been some pretty big claims about fuel efficiency:

2009 Prius May Reach 94 MPG

Auto Observer reports that the next generation of Toyota’s wildly successful Prius hybrid “is coming soon and will launch at the Detroit auto show in January 2009.” The car will be “a touch bigger so offering more space. It will come with stronger 1.8-liter hybrid performance yet at the same time boast even better economy and class leading emissions, if early word is correct.” The Prius will feature “a bigger 1797 cc four cylinder gas engine to cope with the bigger body and counter criticism in some quarters of the weedy performance of the current 1.5,” boosting the total output of the car to 160 horsepower (up from the current 110). Sources say Toyota rates the new configuration for 94 mpg.

The New York Times also had some recent coverage:

2009 Prius: Not So Fast

A third generation of the Toyota Prius gas-electric hybrid car has been eagerly anticipated. Though Toyota has not officially announced when the redesigned Prius would appear, unofficially, automotive journalists had been tipped to expect it sometime in 2008, as a 2009 model.

However, news reports from Japan last week said the car has been delayed by at least six months, to early 2009.

Whether the delay is real or not, it appears that the battery problems are plenty real. Previously, Toyota set a goal of reducing the size of the battery pack in the next Prius by 50 percent, while also increasing its efficiency.

The delay is apparently to give Toyota engineers time to retro-fit the new Prius design with the old-style nickel metal hydride batteries they’d hoped to be rid of. At least initially, the new Prius will still have nickel metal hydride batteries, Nikkan Kogyo reported. Lithium ion power is not ready for prime time (remember all the exploding laptop batteries made of the same substance?). Lithium ion gets unstable under extreme pressure – apparently too unstable for automotive use at this stage of its development.

I am going to try to hold out until the 2009s come out before I get another car. I think I can manage that, and I am really intent on getting one of these new, ultra-high mileage vehicles.

May 9, 2008 Posted by | fuel efficiency, Prius | 25 Comments