Friday, September 19, 2008
Thursday, August 7, 2008
Cheap Mobile
Making Mobile Networks Cheap and Green
VNL of Sweden unveils a solar-powered base station for the cellular industry that is a fraction of the size and cost of conventional towers
It has taken 21 years to get mobile phones into the hands of 3 billion people around the world. Reaching the next 1.5 billion, who live in the world's poorest and most remote corners, is expected to take a lot less time but will pose much tougher challenges.
There is, for instance, the thorny question of how to justify the expense of installing transmission towers in areas where people can only afford to pay as little as $2 per month for phone service—not to mention the cost of running and servicing equipment where electricity and engineers are in short supply.
That is where VNL, a new, privately funded Swedish-Indian telecom equipment maker comes in. Co-founded by Anil Raj, a Stockholm-based mobile industry veteran who held key roles at Ericsson (ERIC) and Sony Ericsson, VNL includes a dozen of the engineers and executives who created the digital-mobile technology known as GSM. They have turned their expertise to the challenge of making mobile networks that are vastly cheaper, simpler, and less power-hungry than anything ever before devised.
The Four-Year Wait is Over
Now, after four years in stealth mode, VNL is finally pulling back the curtain. In July, the company introduced its radically new mobile transmission towers—known in industry parlance as base stations. Costing just $3,500 each (compared with prices typically ranging from $10,000 to $100,000 for conventional base stations) and roughly the size of a laser printer, VNL's base stations are powered by solar energy and use only as much energy as a 100-watt lightbulb. That's one-sixth the amount needed by the most efficient competing base stations that run on alternative energy.
Low prices and stingy energy use are only part of VNL's top-to-bottom rethink of mobile networks. The company's equipment also is designed to be transported in small pieces that can fit into oxen-drawn carts traveling over rough terrain. The components carry Ikea-type instructions that use pictures and color codes instead of text, so that nonliterate people can install the gear. Further simplifying the job: When the microwave portion of the tower is correctly aligned, the base station issues a series of rapid beeps, like the ones trucks make in reverse. Once installed, the base stations can be managed remotely, reducing maintenance costs by 90%, VNL says.
The combination of these and other breakthroughs should mean that, for the first time, operators can build profitable businesses serving the poorest people in difficult-to-reach places, says VNL chief Raj, a former head of Ericsson India and founder of Hutchison India, now the country's second-largest operator. Raj says it is in India—one of the world's hottest telecom growth markets—where the limitations of existing equipment are becoming most apparent. There are 700 million people in rural areas there who would be able to afford $2 a month for mobile service, if only operators could figure out a way to serve them economically.
Prime Target
Technology consultancy Frost & Sullivan figures the global market for rural base stations is already $15 billion annually and growing at 15% to 20% a year. According to Sharifah Amirah, a principal analyst in Frost & Sullivan's London office, mobile equipment sales in emerging markets soon will surpass those in developed markets.
Of course, that means that the opportunity VNL is pursuing is also a prime target for traditional vendors such as Ericsson, Motorola (MOT), Alcatel-Lucent (ALU), and Nokia Siemens Networks, a joint venture of Nokia (NOK) and Siemens (SI). All of them are developing base stations for developing countries, powered by wind, solar energy, or biofuel, with an eye to bringing mobile-phone service to people not currently on the network or the power grid.
The difference, says VNL's Raj, is that traditional telecom equipment vendors "are on a never-ending quest for higher and higher speeds," not making cheaper base stations. "We have just one focus, and that is to make the best and most cost-effective rural telecom system."
Fuel Consumption is a Major Challenge
Indeed, typical base stations today are about the size of a large refrigerator and require about 1,000 watts of power. Most of that energy is wasted as heat, so the base stations also require cooling equipment that uses another 1,000 watts. Backup batteries draw another 500 watts. Since most rural areas in developing countries have either intermittent electricity or none at all, expensive diesel generators are used to power them. In India alone an estimated 1.8 billion liters of diesel are used each year to fuel mobile-phone networks. Operating these networks is getting more expensive as the price of diesel rises. Fuel can account for as much as two-thirds of base station operating costs (BusinessWeek.com, 2/20/08), and then there is the expense of trucking diesel over poor roads to far-flung locations and protecting the fuel against theft.
In the search for alternatives, the GSM Assn, an industry group, said it has successfully tested wind- and solar-powered base stations in Namibia made by Motorola and base stations from Ericsson fueled by used restaurant cooking oil in India. "We expect to see real innovation in Africa and Asia, which will end up being adopted by Europe and North America," says Dawn Haig-Thomas, director of the GSM Assn.'s development fund.
Still, the most efficient of these alternative energy powered base stations use anywhere from 600 watts to 700 watts, says Godfrey Chua, an analyst at technology consultancy IDC. And only a tiny fraction of base stations are run on alternative energy today, leaving the majority of the 1.6 billion people who live off the electricity grid, and another billion living in areas in which the grid is inconsistent, without phone service.
Submarine Batteries Save Energy
Getting mobile phone service to customers in these areas has been on the agenda of traditional vendors like Ericsson for the last 10 years. The incentive is obvious. "Our future growth is in emerging markets," says Ulf Ewaldsson, a vice-president at Ericsson and head of the company's radio division. He notes that Ericsson, the world's largest telecom equipment maker, now sells one base station every 11 minutes in India.
But Ewaldsson concedes that cost has held back solar-powered solutions. Only about 200 of Ericsson's 1.3 million installed base stations around the globe use solar power. A far larger number use diesel or alternative fuels. Once companies find a way to cut the cost of solar panels and governments put their weight behind affordable renewable energy, Ericsson says it will be ready to integrate these power sources more widely. "We are extremely well prepared for this," says Ewaldsson. "We are selling base stations with software that is prepared to take in a variety of energy sources, including off-grid."
In the meantime, the company has come up with some innovative ways to ensure that base stations gulp less energy. It now uses submarine batteries in base stations that can be charged and recharged many more times. Diesel is used only to charge the batteries, reducing fuel consumption by 40%. Ericsson also has developed a sleep mode for radio transmitters so that they automatically shut down when no one is making phone calls. If all of Ericsson's installed GSM base stations had this feature, carbon dioxide emissions would be reduced by 1 million tons per year—the equivalent of 330,000 cars each traveling about 10,000 miles or 16,000 kilometers per year.
Stolen for Scrap
The company also has developed a new approach to building towers. In the past, they were constructed of steel, but the material was often stolen for scrap in developing markets. Ericsson's new Tower Tube is instead made of concrete cylinders, which have the added advantage of better protecting batteries and other equipment from extreme heat without the need for expensive cooling.
In addition to its in-house innovations, Ericsson is keeping its eye on interesting approaches being developed by startups, says Ewaldsson. VNL is just one of some 30 young companies trying to tackle the challenge of connecting the rural poor, he says, and Ericsson is looking at all of them with a single goal in mind. "We are not just talking about serving the next 1.5 billion," says Ewaldsson. "We are aiming at the next 3 billion—we want to get a mobile phone to everyone on earth."
If VNL has its way, it will play a big role, alongside the big equipment makers, in making that dream a reality.
Monday, August 4, 2008
Thursday, July 10, 2008
GM: Live Green or Die
"It's the biggest challenge...since the start of the industry," says Wagoner Bill Cramer
In April of 2005, General Motors (GM) Chairman and Chief Executive G. Richard Wagoner Jr. convened his management team for a monthly strategy session. Held in the boardroom at GM's Detroit headquarters, these meetings can last a day as 20 or so executives mull plans for new cars and product strategies. Meetings often kick off with a roundtable format, and attendees are encouraged to pose new ideas and stray from the agenda. That's when Vice-Chairman Robert A. Lutz spoke up. Lutz, whose gravelly pronouncements routinely enliven auto shows and generate headlines, has a certain genius for challenging conventional wisdom. Maybe, he told GM's brain trust, it was time to build another electric car—one that would use a giant version of the lithium ion batteries that power cell phones and laptops.
It was a provocative suggestion—and Lutz knew it. Two years earlier, General Motors had killed its experimental EV1 electric car and set off a public relations furor. The environmental lobby was deaf to GM's assertions that the EV1, leased to a limited number of people but not sold, would never have earned its maker any money. And the greens accused GM of pulling the plug to show policymakers that such techno wonders were bad business.
By the time Lutz revisited the issue in 2005, Toyota Motor's (TM) quirky Prius hybrid had turned the Japanese automaker into a poster boy for the environmental movement and cast a greenish halo over the entire company. By contrast, GM, at least in the popular imagination, had tunnel vision; it was still making gasoline hogs like the Hummer and fighting congressional efforts to boost fuel economy. GM executives were furious Toyota was winning green cred despite making its own fuel suckers. But no one at the meeting wanted to hear about electric cars. "We lost $1 billion on the last one. Do you want to lose $1 billion on the next one?'" Lutz recalls one executive saying. "It died right there."
Myopia. Fear. Inertia. All had a seat at the table in Detroit that day. And yet 20 months after the meeting, in January, 2007, Wagoner stood on a stage at the Detroit auto show and surprised the world with a vow to start developing a newfangled electric car called the Chevrolet Volt. It would plug into a regular outlet, leapfrog the competition, and could be ready in three years.
Why did Wagoner suddenly get religion? After years of avoiding the future, he finally understood oil prices were not going to return to earth, global warming was a de facto political reality, and Washington was serious about imposing tougher fuel economy rules on his industry. GM would have to live green or die.
Now Wagoner is racing the clock. Not only has he promised to get the Volt ready by 2010, but he also must transform GM's entire fleet to meet stringent new fuel economy rules that take effect in 2017. As many as three-quarters of the company's 50 models may need to be fitted with hybrid systems that combine an electric motor with a small gasoline engine. Many other existing models will be shrunk or fitted with some other kind of fuel-saving technology.
General Motors' green strategy is akin to a moon shot. It will cost billions to get the Volt ready by 2010 and fill out the fleet with hybrids, require GM's 22,000 engineers to stretch like never before, and involve the top-to-bottom transformation of a culture wedded to big cars and horsepower. Other automakers, of course, must also hew to the new realities. Most, including GM's two crosstown rivals, Ford and Chrysler, are rolling out hybrids, too. But the Volt is controversial in automotive circles because the technology is so new and unproven. And GM, bleeding cash and losing money in North America, is at a serious disadvantage compared with well- financed Toyota.
Inside the company, meanwhile, there is debate about how to make cars planet-friendly and desirable. And there is fear that Wagoner has handicapped GM by waiting too long. Three years ago, Toyota was the main threat.
Now GM faces competition from Nissan, which announced its own electric car on May 13, and a bunch of startups, some backed by Silicon Valley money, angling to sell their own futuristic vehicles.
Does GM's CEO regret not moving faster? You bet he does. Wagoner wishes he hadn't killed the EV1. And he acknowledges underestimating how the emergence of consumer societies in China and India would help put a $100 floor under oil prices. Today all of that is beside the point. The looming question is whether Wagoner can keep his promises. "It's the biggest challenge we've seen since the start of the industry," he says. "It affects everything we think about."
"START MAKING SOME CALLS"
Rick Wagoner is not a visionary. Like many Detroit execs he's a finance guy and inherently cautious. But in 2005 rising fuel prices began hammering sales of SUVs, long GM's main source of profits. That year, GM lost $11 billion, and board members began signaling that it was O.K. to make long-shot bets to get GM out of the ditch. Lead directors George Fisher and Kent Kresa told Wagoner that, having worked at Motorola (MOT) and Northrop Grumman (NOC), respectively, they understood that new technology can take time to pay off.
That summer, Wagoner began asking his team for options. "We talk about being a technology leader," one executive recalls him saying at a strategy meeting. "But these days technology means fuel economy." Just about every fuel saver was put on the table, from ethanol, clean diesels, and hybrids to electric cars and fuel cells that run on hydrogen and emit only water vapor. With no consensus, recalls GM-North American President Troy A. Clarke, Wagoner stood up and said: "We may not get the calls right. But we have to start making some calls."
In January, 2006, Lutz began pushing the electric car harder. The 75-year-old industry veteran is an unlikely champion for such vehicles. He owns a collection of classic cars, and his fetish for horsepower is legendary in Detroit's macho Car Guy culture. He has denied the existence of global warming—so often, in fact, that Wagoner distanced himself from Lutz's comments. But Lutz is a pragmatist who believes the electrification of the car is the only way to preserve American car culture. "We were agonizing over what to do to counter the tidal wave of positive PR for Toyota," Lutz says. That month, GM came up with the Volt.
No one knew if something resembling supersize cell-phone batteries would work in a car. And GM executives confess the Volt was originally conceived as an image play (its original name: the iCar). But then Hurricane Katrina sent oil prices soaring. For Wagoner, it was a sign of how volatile the oil markets were becoming and a harbinger. Even the much maligned energy policy of the Bush Administration was changing: In his State of the Union address, the President urged Congress to impose tougher fuel economy rules. By January of this year, the Volt had become the centerpiece of GM's green strategy. Douglas Drauch, who runs GM's advanced battery lab, was surprised to learn that management had moved up the time line. His team had only three years to get the batteries ready. "For five years, I came in and played with batteries," Drauch says. "[Now] we're the ones with bull's-eyes painted on the backs of our heads."
Wagoner finds himself on unfamiliar terrain: looking beyond return on investment and placing bets on expensive, unproven technologies. But there is no avoiding the future barreling toward him. On Feb. 4, Wagoner and his team presented to the board a plan that would allow GM to meet the tough new fuel standards. Thomas G. Stephens, chief of power train development, warned directors to expect big costs over the next decade as the company invests in the Volt and all those new hybrids—as much as $6,000 per vehicle to get GM's biggest gas hogs to comply with the new federal rules.
The first order of business was reorganizing GM to ensure that good ideas hatched in the lab make it to the dealer quickly.
It may be hard to believe, but GM didn't have one group dedicated to hybrids and electric cars. (Toyota set one up in the mid 1990s.) The team working on hybrid SUVs that hit the market in January had to get approval from people in different departments.
Now they talk to Robert A. Kruse, GM's recently named chief of hybrids and electric cars. An electrical engineer who has worked on such high-performance cars as the Pontiac Solstice, Kruse, 48, has the friendly but intense demeanor of a high school coach. The framed Hot Rod article touting a souped-up version of the Solstice in his office shows where Kruse's passions lie. But he says GM gets way too little credit for its green engineering. The company began developing hybrid buses in 2001, and he notes that they save more fuel carting people around cities like Seattle than a slew of Priuses.
NERVE-SHATTERING SCHEDULE
Kruse has real power and a decent budget. To free up resources, GM has canceled several vehicles, including a new minivan and sedan. And even though the carmaker is burning through $1 billion in cash a month, the R&D budget is the biggest in a decade: $8.1 billion in 2007, up from $6.6 billion the previous year. (On May 13, however, GM said if the economy doesn't improve, it could be forced to borrow or cut spending.)
The next step is vaulting the technological hurdles. One of Kruse's first moves was throwing a few million dollars at the battery lab. Located at GM's sprawling tech center in the working-class Detroit suburb of Warren, the lab is ground zero for GM's efforts to turn itself into a green carmaker. Douglas Drauch and his team must figure out how to fit batteries into a range of hybrid vehicles and create ones that will propel the Volt 40 miles before a small gasoline engine fires up and recharges the battery, extending the range to 600 miles. Remember the laptops that caught fire because their batteries overheated? Imagine if something like that happened while driving down the highway. And because GM is racing to catch up, Drauch must cram 10 years' worth of testing into two.
Fear of setbacks is a constant. This past Valentine's Day, Drauch got a call at 1:58 a.m. His cherished lithium ion battery was running a temperature. Heat had spiked in the stainless steel chamber where computers run tests 24-7 on the 6-ft. tall, 400-lb. test battery. The temperature spike prompted an automated call to Drauch's house. He pulled on his clothes and raced to work. False alarm. Someone had left on a 150-watt light bulb, heating the vault enough to trip the system.
Despite the tight schedule, Kruse says the batteries will be ready by 2010. "We're making history," he says. "Fifty years from now, people will remember [the] Volt—like they remember a '53 Corvette." There are plenty of doubters, however. Toyota engineers wonder privately whether the battery industry, which currently isn't producing many lithium ion batteries for cars, will be able to make enough by 2010 for GM to sell the Volt in any real volume. One executive at Tesla, a California upstart working on an electric sports car, also questions whether the technology will be able to pass a 100,000-mile warranty test.
Even as the engineers toil to get the science right, Wagoner and Lutz are pushing to change GM's culture. That's a daunting prospect. Had Dr. Seuss depicted the company, he might have drawn a skyscraper in which the CEO hands out an edict from the top floor and a pastel-colored arm reaches out each window, passing the note 40 floors below to the rank and file. Wagoner is not given to cheerleading or, as one executive puts it, "Vince Lombardi-like speeches." But he has been making the rounds to show he means business. In mid-April, the CEO dropped by GM's test track, where the Volt team is putting the prototype through its paces. Wagoner didn't issue a fiery proclamation; he just asked if the engineers had what they needed. One likened the encounter to "the Pope visiting."
Lutz, meanwhile, is trying to make himself heard over the din of company traditionalists.
He says his marketing staff is still showing him research that consumers want the gas-guzzling horsepower of a V-8 engine, or at least a powerful V-6. In late February, Lutz and his marketing people met to discuss a new Cadillac sedan due out in 2011. The marketers, Lutz says, insisted the car needed to be bigger and more powerful. "They said: That's what those buyers want.' I said: It is now, but it won't be in 2011.'" Lutz ordered the team to make the car smaller and demanded 37 miles per gallon. "You people don't understand," Lutz said. "Everything has changed."
Not all of Lutz's staff agree with his thinking. He wants to shrink cars like the midsize Cadillac, but some engineers and designers say doing so will make the cars less appealing to luxury buyers and families. A better strategy, says one senior product developer, is to keep those cars roomy while developing better subcompacts to compete with hot sellers like the Honda (HMC) Fit and Nissan (NSANY) Versa. "Bob thinks the world is being turned upside-down," says a product developer. "He wants to shrink everything. That Cadillac is so small he can't even get out of the back seat." (Lutz is 6 foot 3, but you get the idea.)
Getting the product mix right isn't the only worry weighing on Wagoner and Lutz. GM also has a long way to go before it can make its new technology cheaply enough. Toyota has cut the cost of its hybrid system to nearly $4,000 a car, says consulting firm 2953 Analytics. Lutz figures GM will be lucky to get the cost down to $10,000 per vehicle by 2010. Translation: GM will have to charge consumers a lot more for hybrids. "GM, like everyone else, is serious about this because they have to be," says a Honda executive. "But how many of their hybrids and how many Volts will they sell? Their technology is very expensive." Then there is the marketing challenge. Even Ford has been selling a hybrid SUV for several years. GM, best known for the Hummer, will have a hard time persuading consumers its cars are green.
On a more prosaic level, there is the execution issue. GM insiders fear they could repeat the mistakes of the 1980s, when new fuel-economy rules and a spike in oil prices forced Detroit to switch to cars with smaller engines. That was a wrenching departure for a company used to big V-8s. And the fumbling results helped precipitate GM's descent in the quality rankings, which only recently have begun to recover. "When those '80s cars stalled out, no one blamed the legislators," says a GM engineer. "We won't let that happen. But there's a fear that as we're racing with new technology, it won't work right." It's instructive that when GM launched two hybrid SUVs in January, it sent dealers just one of each. GM wanted to make sure there were no quality issues before ramping up production.
Can Rick Wagoner, after ceding the technology lead to Toyota, redeem his company? Multibillion-dollar losses have a way of focusing the mind. Insiders also say Wagoner may retire before he turns 60 five years hence. In other words, the man has a legacy to consider. "We believe we can be, and must be, a leader in this transformation of our industry," says Wagoner. "It's critical for our future."
In April of 2005, General Motors (GM) Chairman and Chief Executive G. Richard Wagoner Jr. convened his management team for a monthly strategy session. Held in the boardroom at GM's Detroit headquarters, these meetings can last a day as 20 or so executives mull plans for new cars and product strategies. Meetings often kick off with a roundtable format, and attendees are encouraged to pose new ideas and stray from the agenda. That's when Vice-Chairman Robert A. Lutz spoke up. Lutz, whose gravelly pronouncements routinely enliven auto shows and generate headlines, has a certain genius for challenging conventional wisdom. Maybe, he told GM's brain trust, it was time to build another electric car—one that would use a giant version of the lithium ion batteries that power cell phones and laptops.
It was a provocative suggestion—and Lutz knew it. Two years earlier, General Motors had killed its experimental EV1 electric car and set off a public relations furor. The environmental lobby was deaf to GM's assertions that the EV1, leased to a limited number of people but not sold, would never have earned its maker any money. And the greens accused GM of pulling the plug to show policymakers that such techno wonders were bad business.
By the time Lutz revisited the issue in 2005, Toyota Motor's (TM) quirky Prius hybrid had turned the Japanese automaker into a poster boy for the environmental movement and cast a greenish halo over the entire company. By contrast, GM, at least in the popular imagination, had tunnel vision; it was still making gasoline hogs like the Hummer and fighting congressional efforts to boost fuel economy. GM executives were furious Toyota was winning green cred despite making its own fuel suckers. But no one at the meeting wanted to hear about electric cars. "We lost $1 billion on the last one. Do you want to lose $1 billion on the next one?'" Lutz recalls one executive saying. "It died right there."
Myopia. Fear. Inertia. All had a seat at the table in Detroit that day. And yet 20 months after the meeting, in January, 2007, Wagoner stood on a stage at the Detroit auto show and surprised the world with a vow to start developing a newfangled electric car called the Chevrolet Volt. It would plug into a regular outlet, leapfrog the competition, and could be ready in three years.
Why did Wagoner suddenly get religion? After years of avoiding the future, he finally understood oil prices were not going to return to earth, global warming was a de facto political reality, and Washington was serious about imposing tougher fuel economy rules on his industry. GM would have to live green or die.
Now Wagoner is racing the clock. Not only has he promised to get the Volt ready by 2010, but he also must transform GM's entire fleet to meet stringent new fuel economy rules that take effect in 2017. As many as three-quarters of the company's 50 models may need to be fitted with hybrid systems that combine an electric motor with a small gasoline engine. Many other existing models will be shrunk or fitted with some other kind of fuel-saving technology.
General Motors' green strategy is akin to a moon shot. It will cost billions to get the Volt ready by 2010 and fill out the fleet with hybrids, require GM's 22,000 engineers to stretch like never before, and involve the top-to-bottom transformation of a culture wedded to big cars and horsepower. Other automakers, of course, must also hew to the new realities. Most, including GM's two crosstown rivals, Ford and Chrysler, are rolling out hybrids, too. But the Volt is controversial in automotive circles because the technology is so new and unproven. And GM, bleeding cash and losing money in North America, is at a serious disadvantage compared with well- financed Toyota.
Inside the company, meanwhile, there is debate about how to make cars planet-friendly and desirable. And there is fear that Wagoner has handicapped GM by waiting too long. Three years ago, Toyota was the main threat.
Now GM faces competition from Nissan, which announced its own electric car on May 13, and a bunch of startups, some backed by Silicon Valley money, angling to sell their own futuristic vehicles.
Does GM's CEO regret not moving faster? You bet he does. Wagoner wishes he hadn't killed the EV1. And he acknowledges underestimating how the emergence of consumer societies in China and India would help put a $100 floor under oil prices. Today all of that is beside the point. The looming question is whether Wagoner can keep his promises. "It's the biggest challenge we've seen since the start of the industry," he says. "It affects everything we think about."
"START MAKING SOME CALLS"
Rick Wagoner is not a visionary. Like many Detroit execs he's a finance guy and inherently cautious. But in 2005 rising fuel prices began hammering sales of SUVs, long GM's main source of profits. That year, GM lost $11 billion, and board members began signaling that it was O.K. to make long-shot bets to get GM out of the ditch. Lead directors George Fisher and Kent Kresa told Wagoner that, having worked at Motorola (MOT) and Northrop Grumman (NOC), respectively, they understood that new technology can take time to pay off.
That summer, Wagoner began asking his team for options. "We talk about being a technology leader," one executive recalls him saying at a strategy meeting. "But these days technology means fuel economy." Just about every fuel saver was put on the table, from ethanol, clean diesels, and hybrids to electric cars and fuel cells that run on hydrogen and emit only water vapor. With no consensus, recalls GM-North American President Troy A. Clarke, Wagoner stood up and said: "We may not get the calls right. But we have to start making some calls."
In January, 2006, Lutz began pushing the electric car harder. The 75-year-old industry veteran is an unlikely champion for such vehicles. He owns a collection of classic cars, and his fetish for horsepower is legendary in Detroit's macho Car Guy culture. He has denied the existence of global warming—so often, in fact, that Wagoner distanced himself from Lutz's comments. But Lutz is a pragmatist who believes the electrification of the car is the only way to preserve American car culture. "We were agonizing over what to do to counter the tidal wave of positive PR for Toyota," Lutz says. That month, GM came up with the Volt.
No one knew if something resembling supersize cell-phone batteries would work in a car. And GM executives confess the Volt was originally conceived as an image play (its original name: the iCar). But then Hurricane Katrina sent oil prices soaring. For Wagoner, it was a sign of how volatile the oil markets were becoming and a harbinger. Even the much maligned energy policy of the Bush Administration was changing: In his State of the Union address, the President urged Congress to impose tougher fuel economy rules. By January of this year, the Volt had become the centerpiece of GM's green strategy. Douglas Drauch, who runs GM's advanced battery lab, was surprised to learn that management had moved up the time line. His team had only three years to get the batteries ready. "For five years, I came in and played with batteries," Drauch says. "[Now] we're the ones with bull's-eyes painted on the backs of our heads."
Wagoner finds himself on unfamiliar terrain: looking beyond return on investment and placing bets on expensive, unproven technologies. But there is no avoiding the future barreling toward him. On Feb. 4, Wagoner and his team presented to the board a plan that would allow GM to meet the tough new fuel standards. Thomas G. Stephens, chief of power train development, warned directors to expect big costs over the next decade as the company invests in the Volt and all those new hybrids—as much as $6,000 per vehicle to get GM's biggest gas hogs to comply with the new federal rules.
The first order of business was reorganizing GM to ensure that good ideas hatched in the lab make it to the dealer quickly.
It may be hard to believe, but GM didn't have one group dedicated to hybrids and electric cars. (Toyota set one up in the mid 1990s.) The team working on hybrid SUVs that hit the market in January had to get approval from people in different departments.
Now they talk to Robert A. Kruse, GM's recently named chief of hybrids and electric cars. An electrical engineer who has worked on such high-performance cars as the Pontiac Solstice, Kruse, 48, has the friendly but intense demeanor of a high school coach. The framed Hot Rod article touting a souped-up version of the Solstice in his office shows where Kruse's passions lie. But he says GM gets way too little credit for its green engineering. The company began developing hybrid buses in 2001, and he notes that they save more fuel carting people around cities like Seattle than a slew of Priuses.
NERVE-SHATTERING SCHEDULE
Kruse has real power and a decent budget. To free up resources, GM has canceled several vehicles, including a new minivan and sedan. And even though the carmaker is burning through $1 billion in cash a month, the R&D budget is the biggest in a decade: $8.1 billion in 2007, up from $6.6 billion the previous year. (On May 13, however, GM said if the economy doesn't improve, it could be forced to borrow or cut spending.)
The next step is vaulting the technological hurdles. One of Kruse's first moves was throwing a few million dollars at the battery lab. Located at GM's sprawling tech center in the working-class Detroit suburb of Warren, the lab is ground zero for GM's efforts to turn itself into a green carmaker. Douglas Drauch and his team must figure out how to fit batteries into a range of hybrid vehicles and create ones that will propel the Volt 40 miles before a small gasoline engine fires up and recharges the battery, extending the range to 600 miles. Remember the laptops that caught fire because their batteries overheated? Imagine if something like that happened while driving down the highway. And because GM is racing to catch up, Drauch must cram 10 years' worth of testing into two.
Fear of setbacks is a constant. This past Valentine's Day, Drauch got a call at 1:58 a.m. His cherished lithium ion battery was running a temperature. Heat had spiked in the stainless steel chamber where computers run tests 24-7 on the 6-ft. tall, 400-lb. test battery. The temperature spike prompted an automated call to Drauch's house. He pulled on his clothes and raced to work. False alarm. Someone had left on a 150-watt light bulb, heating the vault enough to trip the system.
Despite the tight schedule, Kruse says the batteries will be ready by 2010. "We're making history," he says. "Fifty years from now, people will remember [the] Volt—like they remember a '53 Corvette." There are plenty of doubters, however. Toyota engineers wonder privately whether the battery industry, which currently isn't producing many lithium ion batteries for cars, will be able to make enough by 2010 for GM to sell the Volt in any real volume. One executive at Tesla, a California upstart working on an electric sports car, also questions whether the technology will be able to pass a 100,000-mile warranty test.
Even as the engineers toil to get the science right, Wagoner and Lutz are pushing to change GM's culture. That's a daunting prospect. Had Dr. Seuss depicted the company, he might have drawn a skyscraper in which the CEO hands out an edict from the top floor and a pastel-colored arm reaches out each window, passing the note 40 floors below to the rank and file. Wagoner is not given to cheerleading or, as one executive puts it, "Vince Lombardi-like speeches." But he has been making the rounds to show he means business. In mid-April, the CEO dropped by GM's test track, where the Volt team is putting the prototype through its paces. Wagoner didn't issue a fiery proclamation; he just asked if the engineers had what they needed. One likened the encounter to "the Pope visiting."
Lutz, meanwhile, is trying to make himself heard over the din of company traditionalists.
He says his marketing staff is still showing him research that consumers want the gas-guzzling horsepower of a V-8 engine, or at least a powerful V-6. In late February, Lutz and his marketing people met to discuss a new Cadillac sedan due out in 2011. The marketers, Lutz says, insisted the car needed to be bigger and more powerful. "They said: That's what those buyers want.' I said: It is now, but it won't be in 2011.'" Lutz ordered the team to make the car smaller and demanded 37 miles per gallon. "You people don't understand," Lutz said. "Everything has changed."
Not all of Lutz's staff agree with his thinking. He wants to shrink cars like the midsize Cadillac, but some engineers and designers say doing so will make the cars less appealing to luxury buyers and families. A better strategy, says one senior product developer, is to keep those cars roomy while developing better subcompacts to compete with hot sellers like the Honda (HMC) Fit and Nissan (NSANY) Versa. "Bob thinks the world is being turned upside-down," says a product developer. "He wants to shrink everything. That Cadillac is so small he can't even get out of the back seat." (Lutz is 6 foot 3, but you get the idea.)
Getting the product mix right isn't the only worry weighing on Wagoner and Lutz. GM also has a long way to go before it can make its new technology cheaply enough. Toyota has cut the cost of its hybrid system to nearly $4,000 a car, says consulting firm 2953 Analytics. Lutz figures GM will be lucky to get the cost down to $10,000 per vehicle by 2010. Translation: GM will have to charge consumers a lot more for hybrids. "GM, like everyone else, is serious about this because they have to be," says a Honda executive. "But how many of their hybrids and how many Volts will they sell? Their technology is very expensive." Then there is the marketing challenge. Even Ford has been selling a hybrid SUV for several years. GM, best known for the Hummer, will have a hard time persuading consumers its cars are green.
On a more prosaic level, there is the execution issue. GM insiders fear they could repeat the mistakes of the 1980s, when new fuel-economy rules and a spike in oil prices forced Detroit to switch to cars with smaller engines. That was a wrenching departure for a company used to big V-8s. And the fumbling results helped precipitate GM's descent in the quality rankings, which only recently have begun to recover. "When those '80s cars stalled out, no one blamed the legislators," says a GM engineer. "We won't let that happen. But there's a fear that as we're racing with new technology, it won't work right." It's instructive that when GM launched two hybrid SUVs in January, it sent dealers just one of each. GM wanted to make sure there were no quality issues before ramping up production.
Can Rick Wagoner, after ceding the technology lead to Toyota, redeem his company? Multibillion-dollar losses have a way of focusing the mind. Insiders also say Wagoner may retire before he turns 60 five years hence. In other words, the man has a legacy to consider. "We believe we can be, and must be, a leader in this transformation of our industry," says Wagoner. "It's critical for our future."
Think Technology AS
Company Overview
Think Technology AS engages in the manufacture and sale of electric cars. The company was founded in 1973 and is based in Aurskog, Norway. Think Technology AS is a prior subsidiary of Kamkorp Microelectronics.
Bogstad Industrifelt
Aurskog, 1930
Norway
Founded in 1973
Phone:
47 63 85 45 00
Fax:
47 63 85 45 01
www.think.no
Key Executives
Jan-Olaf Willums
Chief Executive Officer and Managing Director
Compensation as of Fiscal Year 2007.
Key developments
Think Technology AS to Sell Sub-$25,000 Electric Car in U.S
04/22/2008
Think Technology AS plans to sell in the United States an electric car that goes 110 miles without a charge and costs less than $25,000.
Think Technology Launches Joint Venture with Kleiner Perkins and RockPort Capital
04/21/2008
Think Technology AS has reached across the Atlantic and established TH!NK North America in partnership with RockPort Capital Partners and Kleiner Perkins Caulfield & Byers. The new venture was announced at the 2008 FORTUNE Brainstorm Green Conference held in Pasadena, California, that brought chief executives from all over North America together to talk about the business opportunities of going green. TH!NK city is an environmental vehicle that is emission free and 95% recyclable. It reaches a top speed of 100 km (65 miles) per hour and can drive up to 180 km (110 miles) on a single charge. TH!NK city meets all European and U.S. federal motor vehicle safety requirements.
Think Global To Launch Series B Fund Raising
01/10/2007
Think Global AS has secured a $15 million funding commitment from existing investor InSpire Ventures. "We are very happy now that GM and others have announced that they believe in the electric car," said InSpire Ventures Chairman, and Think Global Chief Executive, Jan-Olaf Willums. For InSpire, which made its latest infusion in Think in late December, the $15 million capital commitment will precede a Series B financing that Think will launch in the coming weeks, according to Willums.
Similar Private Companies By Industry
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Vest Buss Gruppen AS Europe
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Think Technology AS Europe
Vest Buss AS Europe
Umoe Schat-Harding AS Europe
Recent Private Companies Transactions
Type
Date Target
Private Placement
March 5, 2008 --
Think Technology AS engages in the manufacture and sale of electric cars. The company was founded in 1973 and is based in Aurskog, Norway. Think Technology AS is a prior subsidiary of Kamkorp Microelectronics.
Bogstad Industrifelt
Aurskog, 1930
Norway
Founded in 1973
Phone:
47 63 85 45 00
Fax:
47 63 85 45 01
www.think.no
Key Executives
Jan-Olaf Willums
Chief Executive Officer and Managing Director
Compensation as of Fiscal Year 2007.
Key developments
Think Technology AS to Sell Sub-$25,000 Electric Car in U.S
04/22/2008
Think Technology AS plans to sell in the United States an electric car that goes 110 miles without a charge and costs less than $25,000.
Think Technology Launches Joint Venture with Kleiner Perkins and RockPort Capital
04/21/2008
Think Technology AS has reached across the Atlantic and established TH!NK North America in partnership with RockPort Capital Partners and Kleiner Perkins Caulfield & Byers. The new venture was announced at the 2008 FORTUNE Brainstorm Green Conference held in Pasadena, California, that brought chief executives from all over North America together to talk about the business opportunities of going green. TH!NK city is an environmental vehicle that is emission free and 95% recyclable. It reaches a top speed of 100 km (65 miles) per hour and can drive up to 180 km (110 miles) on a single charge. TH!NK city meets all European and U.S. federal motor vehicle safety requirements.
Think Global To Launch Series B Fund Raising
01/10/2007
Think Global AS has secured a $15 million funding commitment from existing investor InSpire Ventures. "We are very happy now that GM and others have announced that they believe in the electric car," said InSpire Ventures Chairman, and Think Global Chief Executive, Jan-Olaf Willums. For InSpire, which made its latest infusion in Think in late December, the $15 million capital commitment will precede a Series B financing that Think will launch in the coming weeks, according to Willums.
Similar Private Companies By Industry
Company Name Region
Vest Buss Gruppen AS Europe
ElBil Norge AS Europe
Think Technology AS Europe
Vest Buss AS Europe
Umoe Schat-Harding AS Europe
Recent Private Companies Transactions
Type
Date Target
Private Placement
March 5, 2008 --
Duracar Delivers with Eco-Trucking
Duracar Delivers with Eco-Trucking
A Dutch startup has found a promising niche: fleets of battery-powered light commercial vehicles for short-range city deliveries
by Mark Scott
Related Items
* The Electric Car Lives
Story Tools
* post a comment
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* print this story
* order a reprint
* digg this
* save to del.icio.us
Click here to find out more!
http://images.businessweek.com/story/08/370/0616_duracar_shrunk.jpg
Soaring gas prices have focused attention as never before on electric cars. From Nissan's (NSANY) plan to sell zero-carbon vehicles in Japan and the U.S. to General Motors' (GM) efforts to develop a battery-powered hybrid, the world's top automakers are scrambling to introduce greener vehicles.
Some of the most interesting developments aren't coming from industry giants, though. Former SAP (SAP) executive Shai Agassi has made waves with his bold plan to introduce electric cars in Israel (BusinessWeek.com, 1/25/08). And a Dutch startup called Duracar is pursuing an ingenious plan to sell an eco-friendly light commercial vehicle roughly the size of a Mini (BMWG.DE) that could be used for deliveries and other short-range travel in Europe's bustling city centers.
Riding the Eco-Wave
This niche may lack the sex appeal of sports cars or SUVs, but it's a big business opportunity. Analysts figure that 330,000 new light commercial vehicles (defined as those weighing less than 3,850 pounds) are sold each year in Europe—a market worth hundreds of millions of dollars annually. Replacing even some of the gas-powered vehicles with electric models would cut noise, pollution, and carbon emissions in cities. And with oil topping $140 per barrel, it also would save money for fleet operators—whether government agencies, field service operations, or delivery firms such as FedEx (FDX).
"We're riding the wave of growing interest in eco-friendly cars," says Duracar Chief Executive Officer Wim Steenbakkers. "For this to work, the vehicle must be economically competitive [with gas-powered vehicles], and we think we've done that."
Duracar will officially unveil its electric car, dubbed the Quicc, at the Paris Motor Show this fall, but the Dutch company already has big plans for the pint-sized vehicle. Steenbakkers aims to book $7.6 million in pretax profits next year on revenues of $83 million, and hopes to sell more than 13,000 units over the next three years.
Innovative Modular Plant
The startup has recruited an impressive lineup of managers, investors, and partners to help hit its targets. It has raised about $37 million from backers including Dutch venture capitalists Ecoventures—a subsidiary of leading green investment firm Econcern—and is finalizing an additional $20 million in funding to expand production capacity.
CEO Steenbakkers worked previously at Dutch life sciences and materials company Royal DSM (DSMN.AS), some of whose technology is being used in the car. He's joined by Chief Technology Officer John Lodge, an auto industry veteran of 25 years who worked previously for Mitsubishi (MMTOF) and Volvo (F), and Johann Tomforde, the developer behind Mercedes Benz's (DAI) miniature Smart car, who consults eight days a month for Duracar.
A Dutch startup has found a promising niche: fleets of battery-powered light commercial vehicles for short-range city deliveries
by Mark Scott
Related Items
* The Electric Car Lives
Story Tools
* post a comment
* e-mail this story
* print this story
* order a reprint
* digg this
* save to del.icio.us
Click here to find out more!
http://images.businessweek.com/story/08/370/0616_duracar_shrunk.jpg
Soaring gas prices have focused attention as never before on electric cars. From Nissan's (NSANY) plan to sell zero-carbon vehicles in Japan and the U.S. to General Motors' (GM) efforts to develop a battery-powered hybrid, the world's top automakers are scrambling to introduce greener vehicles.
Some of the most interesting developments aren't coming from industry giants, though. Former SAP (SAP) executive Shai Agassi has made waves with his bold plan to introduce electric cars in Israel (BusinessWeek.com, 1/25/08). And a Dutch startup called Duracar is pursuing an ingenious plan to sell an eco-friendly light commercial vehicle roughly the size of a Mini (BMWG.DE) that could be used for deliveries and other short-range travel in Europe's bustling city centers.
Riding the Eco-Wave
This niche may lack the sex appeal of sports cars or SUVs, but it's a big business opportunity. Analysts figure that 330,000 new light commercial vehicles (defined as those weighing less than 3,850 pounds) are sold each year in Europe—a market worth hundreds of millions of dollars annually. Replacing even some of the gas-powered vehicles with electric models would cut noise, pollution, and carbon emissions in cities. And with oil topping $140 per barrel, it also would save money for fleet operators—whether government agencies, field service operations, or delivery firms such as FedEx (FDX).
"We're riding the wave of growing interest in eco-friendly cars," says Duracar Chief Executive Officer Wim Steenbakkers. "For this to work, the vehicle must be economically competitive [with gas-powered vehicles], and we think we've done that."
Duracar will officially unveil its electric car, dubbed the Quicc, at the Paris Motor Show this fall, but the Dutch company already has big plans for the pint-sized vehicle. Steenbakkers aims to book $7.6 million in pretax profits next year on revenues of $83 million, and hopes to sell more than 13,000 units over the next three years.
Innovative Modular Plant
The startup has recruited an impressive lineup of managers, investors, and partners to help hit its targets. It has raised about $37 million from backers including Dutch venture capitalists Ecoventures—a subsidiary of leading green investment firm Econcern—and is finalizing an additional $20 million in funding to expand production capacity.
CEO Steenbakkers worked previously at Dutch life sciences and materials company Royal DSM (DSMN.AS), some of whose technology is being used in the car. He's joined by Chief Technology Officer John Lodge, an auto industry veteran of 25 years who worked previously for Mitsubishi (MMTOF) and Volvo (F), and Johann Tomforde, the developer behind Mercedes Benz's (DAI) miniature Smart car, who consults eight days a month for Duracar.
The Electric Car Lives
The Electric Car Lives
Backed by U.S. venture capital, Norwegian company Think is betting its Ox concept vehicle can prove the electric car's time has finally arrived
Roughly the size of a Prius, the Ox can travel between 125 and 155 miles before needing a recharge. Think
by Matt Vella
Clean, quiet, and relatively profitable to produce, electric vehicles have had a rough start in the U.S.: Five years after General Motors (GM) nixed its innovative EV1 electric car program, just a handful of automakers have committed to making and selling electric vehicles on a mass scale any time soon.
Enter Think Global, a Norwegian upstart plotting a U.S. invasion via pint-size, affordable electric cars. Think has been selling gas-free, Lilliputian city cars in Europe and will start peddling them to fuel-crunched Americans in 2009. The company's newly formed North American division has high hopes for Think's existing models—and even higher ones for the upcoming Th!nk Ox, a concept unveiled at the Geneva International Motor Show earlier this year.
An electrified people's car for the 21st century, the Ox is a preview of Think's next-generation production vehicle, due out in 2011. Roughly the size of a Toyota (TM) Prius, the Ox can travel between 125 and 155 miles before needing a recharge, and zips from zero to 60 miles per hour in about 8.5 seconds. Its lithium-ion batteries can be charged to 80% capacity in less than an hour, and slender solar panels integrated into the roof power the onboard electronics. Inside, the hatchback includes a bevy of high-tech gizmos such as GPS navigation, a mobile Internet connection, and a key fob that lets drivers customize the car's all-digital dashboard. Pricing has yet to be announced, but the company's current vehicles cost less than $25,000.
Although little-known, Think North America is backed by an undisclosed amount from Silicon Valley venture capital firms RockPort Capital Partners and Kleiner Perkins Caufield & Byers, which famously invested early in companies such as Amazon.com (AMZN) and Google (GOOG). General Electric (GE) made an unrelated $4 million investment in March to support the company's battery research and development operations.
Distinguished Design
Even more than its well-funded sponsors or cutting-edge technology, the Ox's killer app could be its design. To date, most electric cars available in the U.S.—small, unsafe, and underpowered—have been intended strictly for the earliest early adopters and the most faithful green believers. In contrast, Think's senior vice-president for design, Katinka von der Lippe, says the Ox is a "real car, a big step away from the cuteness of [other] electric vehicles." All that distinguishes the Ox from name-brand, fuel-sipping compact cars, in fact, is its silent hum and zero emissions.
The Ox also embodies the characteristic simplicity of Scandinavian design, featuring uncomplicated lines and clean, uncluttered surfaces. A band of unpainted metal stretches from the front of the vehicle to its rear, revealing the Ox's interior architecture, an aluminum frame. An unassuming grille is tucked between sophisticated sloping headlamps. "The Ox is a leap forward for the design of electric cars," says von der Lippe, "and, we think, the product of a mature company."
Still, the American market for electric vehicles "is virtually nonexistent," says John O'Dell, a senior editor specializing in green vehicles for car-buying site Edmunds.com. Even well-established gas-electric hybrids such as the Prius and Honda's (HMC) Civic account for barely 3% of U.S. auto sales. "Until you've got a compelling product, you won't have a market," adds O'Dell. Aside from the sleek Tesla Motors Roadster, which carries a price tag of nearly $100,000, there are almost no fully functional electric vehicles that meet average drivers' requirements. The Ox could fill that gap.
"It'll take a lot of time," Wilber James, RockPort's managing general partner and acting president of Think North America, says of the challenge of selling electric vehicles to American drivers, who still overwhelmingly prefer trucks to thriftier small cars. "We're going to focus at first on niche markets—cities, universities, and fleets."
Innovative Manufacturing
The company's business model, says James, is similar to that of PC maker Dell (DELL), which fueled its rise by ruthlessly optimizing its manufacturing and supply chain. Think's ultralean manufacturing system lets it build production facilities for about $10 million, compared with the billions invested in new plants by old-line manufacturers. That means more factories closer to customers, further cutting costs.
In addition, factories "could also be the retailers," says James, which would add a unique element to Think's branding. The company, he says, will be profitable if it can sell 10,000 vehicles a year. At 20,000 to 30,000 units in annual sales, Think can cut its component costs in half.
That focus on innovative manufacturing, in addition to the high-tech Ox itself, may ultimately set the company apart from previous attempts—and, Think is betting, finally help jump-start the U.S. market for electric cars.
For a look at an alternative approach to electric vehicles aimed at commercial city fleet-cars, see Duracar Delivers with Eco-Trucking (BusinessWeek.com, 6/16/08).
Vella is a writer for BusinessWeek.com in New York.
Backed by U.S. venture capital, Norwegian company Think is betting its Ox concept vehicle can prove the electric car's time has finally arrived
Roughly the size of a Prius, the Ox can travel between 125 and 155 miles before needing a recharge. Think
by Matt Vella
Clean, quiet, and relatively profitable to produce, electric vehicles have had a rough start in the U.S.: Five years after General Motors (GM) nixed its innovative EV1 electric car program, just a handful of automakers have committed to making and selling electric vehicles on a mass scale any time soon.
Enter Think Global, a Norwegian upstart plotting a U.S. invasion via pint-size, affordable electric cars. Think has been selling gas-free, Lilliputian city cars in Europe and will start peddling them to fuel-crunched Americans in 2009. The company's newly formed North American division has high hopes for Think's existing models—and even higher ones for the upcoming Th!nk Ox, a concept unveiled at the Geneva International Motor Show earlier this year.
An electrified people's car for the 21st century, the Ox is a preview of Think's next-generation production vehicle, due out in 2011. Roughly the size of a Toyota (TM) Prius, the Ox can travel between 125 and 155 miles before needing a recharge, and zips from zero to 60 miles per hour in about 8.5 seconds. Its lithium-ion batteries can be charged to 80% capacity in less than an hour, and slender solar panels integrated into the roof power the onboard electronics. Inside, the hatchback includes a bevy of high-tech gizmos such as GPS navigation, a mobile Internet connection, and a key fob that lets drivers customize the car's all-digital dashboard. Pricing has yet to be announced, but the company's current vehicles cost less than $25,000.
Although little-known, Think North America is backed by an undisclosed amount from Silicon Valley venture capital firms RockPort Capital Partners and Kleiner Perkins Caufield & Byers, which famously invested early in companies such as Amazon.com (AMZN) and Google (GOOG). General Electric (GE) made an unrelated $4 million investment in March to support the company's battery research and development operations.
Distinguished Design
Even more than its well-funded sponsors or cutting-edge technology, the Ox's killer app could be its design. To date, most electric cars available in the U.S.—small, unsafe, and underpowered—have been intended strictly for the earliest early adopters and the most faithful green believers. In contrast, Think's senior vice-president for design, Katinka von der Lippe, says the Ox is a "real car, a big step away from the cuteness of [other] electric vehicles." All that distinguishes the Ox from name-brand, fuel-sipping compact cars, in fact, is its silent hum and zero emissions.
The Ox also embodies the characteristic simplicity of Scandinavian design, featuring uncomplicated lines and clean, uncluttered surfaces. A band of unpainted metal stretches from the front of the vehicle to its rear, revealing the Ox's interior architecture, an aluminum frame. An unassuming grille is tucked between sophisticated sloping headlamps. "The Ox is a leap forward for the design of electric cars," says von der Lippe, "and, we think, the product of a mature company."
Still, the American market for electric vehicles "is virtually nonexistent," says John O'Dell, a senior editor specializing in green vehicles for car-buying site Edmunds.com. Even well-established gas-electric hybrids such as the Prius and Honda's (HMC) Civic account for barely 3% of U.S. auto sales. "Until you've got a compelling product, you won't have a market," adds O'Dell. Aside from the sleek Tesla Motors Roadster, which carries a price tag of nearly $100,000, there are almost no fully functional electric vehicles that meet average drivers' requirements. The Ox could fill that gap.
"It'll take a lot of time," Wilber James, RockPort's managing general partner and acting president of Think North America, says of the challenge of selling electric vehicles to American drivers, who still overwhelmingly prefer trucks to thriftier small cars. "We're going to focus at first on niche markets—cities, universities, and fleets."
Innovative Manufacturing
The company's business model, says James, is similar to that of PC maker Dell (DELL), which fueled its rise by ruthlessly optimizing its manufacturing and supply chain. Think's ultralean manufacturing system lets it build production facilities for about $10 million, compared with the billions invested in new plants by old-line manufacturers. That means more factories closer to customers, further cutting costs.
In addition, factories "could also be the retailers," says James, which would add a unique element to Think's branding. The company, he says, will be profitable if it can sell 10,000 vehicles a year. At 20,000 to 30,000 units in annual sales, Think can cut its component costs in half.
That focus on innovative manufacturing, in addition to the high-tech Ox itself, may ultimately set the company apart from previous attempts—and, Think is betting, finally help jump-start the U.S. market for electric cars.
For a look at an alternative approach to electric vehicles aimed at commercial city fleet-cars, see Duracar Delivers with Eco-Trucking (BusinessWeek.com, 6/16/08).
Vella is a writer for BusinessWeek.com in New York.
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