Mygreenwheels

Fuel Prices heading for $200 a barrel? Have we hit the tipping point for HEVs and BEVs? Yes, I think we just have!

I have kept my silence for some time. I have been watching the emerging Plug-in and Hybrid vehicle sector and noting that every day for many months now there is real commercial evidence of an acceleration of activity across the spectrum in the sustainable auto sector. From Lithium Polymer battery technology to new battery JV capacity being set up from the USA to Japan, like today’s Bosch-Samsung 50:50 joint venture in South Korea named SB LiMotive which will be launched in September and start production in 2010 with initial capital of $20 million.

Right now, almost every major auto manufacturer has announced product to address the mounting market led demand for more efficient fuels consumption with a lower carbon footprint. We all expect Honda, Toyota, Mitsubishi and Nissan to be in the vanguard of change, and every one of these auto makers is – even Hyundai is readying Korea’s first Hybrid.

But when Mercedes, BMW, Land Rover and even Renault reveal forward plans to join the revolution then you know the penny has dropped and the game is moving from the niche innovators like Tesla, Think, Tanfield and Modec to a more familiar commercial battle ground where the Prius, despite having sold over 1 million units, will fast become old technology.

This week Honda has entered the Hydrogen Fuel Cell drive-train club with the Honda FCX Clarity, the first of three new products aimed to wrestle the zero emission high ground from Toyota.

Project Better Place will make cars like these easier to use, and with Denmark and Israel added to the project, Shai Agassi is sure that he will be able to spread to include some 30 countries with the help of Carlos Ghosn, CEO of both Nissan and Renault. They plan to take on GM’s Volt on its home turf in 2010. That’s war, nothing less!

So now the electric genie is out in the wild and this becomes a subject for the mainstream. When Forbes, the Wall Street Journal and Business Week all focus on EV news, the tipping point is here. And why is it here? Simply because Americans react more speedily than any other market to fuel price sensitivity. Last week GM announced they would shut four Hummer plants and may be selling the brand.

This week the US Government DOE announced $30 million in new grants to assist the Big 3 in Detroit to develop BEV and HEV product. “These projects will help provide the perspective and expertise necessary to get plug-in hybrid electric vehicles out of the laboratory and into the showroom, a key part of the President’s plan to reduce our reliance on oil by increasing the use of clean energy technologies,” Assistant Secretary Kolevar said.

At last governments have the message and realise that the auto industry is inherently reluctant to change due to its huge sunk costs in current plant and technology and it needs to be incentivised. Maybe it’s time for a wake up call for commerce and governments to hold hands and do what Airbus Industries have done for the aviation sector. By focusing a massive international resource on the problem we might just get a result.

Meanwhile there are riots over the impact of fuel costs on the livelihood of farmers, fishermen, the transport industry, to name a few, disrupting normally calm cities like Madrid, Paris and London. Just think what’s yet to come.

Many of you who are regulars to Mygreenwheels already get the BEV message and know that we could have cracked all this some time back. Right now the big stumbling block is battery capacity. If the big boys ramp up, who will supply the niche players? The commercial reality of supply and demand is going to change the current cosy scene for the EV missionaries.

I have been involved with the Think program either directly or indirectly in various ways since 2000. I happen to think that the is just a wonderful product design and concept. I can offer this opinion with authority, having been part of the core team that made the world’s fastest selling small car, the Ford Fiesta.

But now that the tipping point is here and the big players need hundreds of thousands of batteries to satisfy the market demand, what will happen to Think Global and another niche player, like Zap who announced the Alias this month?

The combination of the rising cost of fuel and the mandatory need for cities and manufacturers to hit regulatory emission and carbon targets has tipped the whole auto sector into the EV and Hybrid wake-up zone. I have been given the opportunity to meet some of the world’s most powerful regulators over recent weeks and we are all singing off the same song sheet now. If you are into BEVs, guys, your dreams are shortly to become reality. But for the old auto world now comes considerable pain and in due course a whole new future.

I have driven fly-by-wire, all wheel drive BEVs. They exist. The future is cleaner, quieter and now it's not as far away as some might think.

Ash Gupta