Tesla Takes Big Step

It might not be the Ford Model T, but the Tesla Motors Model S might be the Model T of the electric car industry -- at least if Tesla Motors CEO Elon Musk has his way. Up till now, electric car manufacturers have dwelled on the ragged edge of the car industry. Their one-offs, conversions and sub-30-mph “city cars” have prompted derision and knowing smiles but not much in the way of sales volume. Musk, who bears the title “CEO, chairman and product architect,” has already begun to change that notion by producing the Tesla Roadster, which by all accounts is a proper motorcar. 

While not the most inventive in the product-naming department, Tesla Motors seems very inventive in the power train department. With its electric motor at full bore, the Roadster will travel from 0 mph to 60 mph in 3.9 seconds, which is supercar territory. The car will also be much more energy-efficient than the typical gasoline-powered car. Range on a charge, the bane of electric vehicles, is a claimed 244 miles. Tesla says it has already delivered 300 Roadsters to customers and that it has 1,000 orders awaiting fulfillment from its U.K. factory.

But selling 1,300 cars is not what Musk has in mind. He envisions his company becoming much more mainstream, which is why it has introduced the Model S, its try for the big time. And “big time” might describe it well since the sedan is designed to carry seven passengers. Because of the floor-mounted power train, the sedan also offers substantial cargo room. With its hatchback configuration and fold-flat rear seats, the Model S can accommodate a 50-inch television, mountain bike and surfboard simultaneously, which is not only impressive but also proves that the car hails from California. As a bonus, the area under the front hood that is typically the engine compartment becomes a second trunk.

“Model S doesn’t compromise on performance, efficiency or utility -- it’s truly the only car you need,” Musk said. “Tesla is relentlessly driving down the cost of electric-vehicle technology, and this is just the first of many mainstream cars we’re developing.”

But will its electric drive system be practical, you ask. Tesla engineers have done all they can to address that. First, the Model S carries its battery charger onboard, and it can be recharged from any 120-, 240- or 480-volt outlet. Using that rare 480-volt outlet, the recharge takes only 45 minutes -- enough time for a nice lunch. And the engineers didn’t stop there. Remarkably, the battery pack can be replaced in less time than it takes to fill a gas tank, which allows for the possibility of battery-pack swap stations. And while that seems questionable, remember that 100 years ago, having outlets selling gasoline along every major highway and byway seemed questionable, too.

In its least expensive form, the Model S is expected to cost about 2 cents per mile to drive, which makes its cost-per-mile far lower than a conventional gasoline-powered car, even in these days of inexpensive fuel. Tesla Motors says that its “anticipated base price” for the Model S will be $57,400, but the company expects it to qualify for a $7,500 federal tax credit. Want more range? The company will offer three battery pack choices with ranges of 160-, 230- or 300- miles per charge. You might also want to buy an extra battery pack and stash it halfway to your vacation home.

While the range issue is still a vexing one, the flip side is that the Model S, like the Tesla Roadster, is a zero-emission vehicle that can hold its head up in performance comparisons with conventional automobiles. We’re not saying Elon Musk is the Henry Ford of electric vehicles yet…but history might say that in the future.

EPA to Limit Carbon Dioxide, but to What End?

Carbon mania has been a way of life in Europe for years now. Automakers are critiqued for their vehicles’ “carbon footprint,” and some auto reviewers now cry out for smaller engines and slower vehicles. Now it seems that the same mania -- and we use that term advisedly -- is about to hit the United States. No, American consumers aren’t seeking a limit on carbon dioxide emissions. (If they were, sales of hybrid vehicles wouldn’t be so horribly sluggish.) But now, with the change in administrations, the federal government seems bent on making big changes, including creating a governmental program to address carbon dioxide. Frankly, this is very bad news for every global car maker that competes in North America, and it might be the equivalent of arsenic poisoning for the American-based manufacturers. 

In the same week that the president’s auto industry task force was drawing conclusions on how to save General Motors and Chrysler from oblivion, the Environmental Protection Agency said that it wants carbon dioxide, a natural byproduct of fuel combustion, to be declared a public health danger. Given the president’s campaign rhetoric, this move is not unexpected, but in light of the domestic automakers’ current difficulties, it could be characterized as ill-timed, and by some, woefully misguided. Its purported purpose is to put the brakes on global warming, but even its proponents might admit that it will have no real effect in that area if carbon emissions from other countries -- like China and India, for example -- continue to climb. And that’s assuming carbon dioxide is the culprit in the first place. The European experience with carbon footprints can be likened to a dog chasing its tail and never catching it -- and then becoming unsure if he ever wants to.

Two years ago the U.S. Supreme Court rendered a decision allowing EPA to regulate CO2 and other so-called “greenhouse gases.” Though the science behind the theory that carbon dioxide and other gases contribute to global climate change is controversial, top EPA officials are steadfast in their belief that CO2 must be regulated. Climatologists of all stripes acknowledge that over the Earth’s history, its climate has changed repeatedly without the influence of the motorcar or factory chimneys. Volcanic eruptions, asteroid strikes and variations in the sun’s intensity have been theorized to be the root causes, but the current thinking (fad?) asserts that “man,” epitomized by his factories and automobiles, is the problem.

The EPA’s effort to seek regulation of CO2 is the latest in a continuing saga surrounding carbon dioxide emissions that began some 10 years ago when the state of California, spooked by global warming theory, petitioned EPA to regulate carbon dioxide emissions under the Clean Air Act. EPA declined to do so, because carbon dioxide was not deemed to be a pollutant, but this failed to satisfy the anti-car, anti-industry zealots, so Massachusetts, California and about a dozen other states sued the organization. The Supreme Court said EPA should regulate carbon dioxide emissions or come up with a good excuse for deciding not to.

EPA’s policy change has to be regarded as another blow to the already beleaguered auto manufacturers who have seen the vital North American market tank in recent months. Car makers are no fans of carbon dioxide limits, because they don’t believe the cause-effect relationship between tailpipe carbon dioxide and climate change has been proven. Since carbon dioxide limits have the potential to cost them -- and cost consumers, too -- billions of dollars, they have suggested that a better understanding of the ramifications of carbon dioxide limits be gained before they are implemented.

While all auto manufacturers are sure to suffer under carbon dioxide regulation, ailing companies General Motors and Chrysler, which have already reached into the public trough, are most vulnerable. What little hope GM and Chrysler have seen from 2009 sales results has come from larger vehicles, not fuel sippers that are indicated by carbon dioxide limitations. Even relatively loose regulation of carbon dioxide levels would force manufacturers to promote smaller, more fuel-efficient cars and trucks, and that plays right into the import manufacturers’ sweet spot. So while one part of the federal government is out to save the U.S. car industry, another is set to trip it up. Does anyone see the Mad Hatter’s hand in all of this?

Is Your Next Car a Streetcar?

Hopping on a streetcar to get to work has a 1930s vibe to it. While streetcars continue to ride the rails in many European cities, they have largely vanished from American cities, and they have a nostalgic aura. But in spite of this, and spurred by the current economic downturn, Americans continue to use public transportation at record levels. More than 2.8 billion trips were taken on public transportation in the third quarter of 2008 -- a surge of 6.5 percent over the third quarter of 2007 and the largest year-to-year increase in 25 years. Light rail had the highest increase among all modes of public transport, posting a jump of 8.5 percent in the third quarter and a cumulative year-to-date gain of more than 10 percent. The trend is expected to intensify as fuel prices rebound, concern for the environment and energy independence increases, and urban city center revitalization continues.

These days, with roller-coaster fuel prices sending consumers into a tizzy, public transportation is receiving grassroots support even from people who would never dream of riding public transport themselves. For instance, U.S. voters, many frustrated by horrendous traffic in their communities, approved more than 20 transportation initiatives in the November election. Even with a historic economic downturn gripping the U.S. economy, more than half of these just-approved initiatives will raise taxes to help finance the new transportation systems. While gasoline prices in the United States have dipped, some predict that they will soon return to near-record levels, even as auto sales have plummeted to their lowest levels in decades. Planning and feasibility studies for passenger rail transit systems are under way in nearly 100 U.S. cities in response.

While traffic and fuel costs are prime movers in the quest for public transportation, environmentalism is also at work. Citing the impact of the automobile on climate change, some believe that reducing vehicle miles traveled is a critical component of what could be a climate-change solution. With increasing congestion and a decline in quality of life, cities of all sizes face urgent imperatives to reduce vehicle miles traveled. But rail transit initiatives often face complex planning, financing and deployment challenges that take years and even decades to overcome.

So what's the answer to the desire for light rail systems in light of the difficulty in deploying them? One solution might be using technology designed for the Third World and adapting it for major urban areas in the United States. Since 1973, John Parry, the founder and chairman of United Kingdom-based JPM Parry & Associates, has focused on devising and deploying appropriate technology for developing nations in Africa and beyond. The Parry "trolley" -- ultralight, ultralow-carbon, low-cost, rapidly deployable rail transit -- is the culmination of his life's work.

One of the key benefits of the Parry trolley system is that it can be put into service quickly without electric rail or overhead catenary. Instead of drawing power from these conventional sources, the trolley's propulsion is achieved via patented, self-contained hybrid kinetic energy, which is adaptable to a wide variety of fuel sources, including hydrogen fuel cell technology.

"The Parry streetcar is the green alternative many communities are seeking in their quest for low-carbon transit strategies," said Barry Seifer, Parry Transit CEO. "We're receiving validation of this perspective from all quarters, from the Obama administration to a number of states with whom we are in early discussions regarding location of headquarters, production engineering, supply chain coordination, streetcar manufacturing, and customer service and support. More imminently, we are entering negotiations on several pilot installations."

Some say transportation's tipping point has arrived, and the American transit market is undergoing a structural shift to light rail. Demand for increased mobility and more non-auto transportation options is surging, yet half of Americans have no access to public transit. Maybe an old-fashioned idea like streetcars can pave the way.

After One Year, Still Smarting

The junkyards are littered with import automotive brands that didn't make it in the United States: Peugeot, Renault, Daihatsu, Sterling, Rover, MG, Austin-Healey. That's not a complete list, but it tells you of the proud overseas names that have foundered on the shoals of the demanding American market.

Into this potential abyss came Smart USA, the distributor of a foreign brand that had a chequered history. With its genesis as the Swatch mobile, the Smart brand was the brainchild of Swatch CEO Nicolas Hayek, who sought to bring to the automotive world what his company had brought to timekeeping -- an inexpensive, stylish product designed for the sensibilities of the youth market. Mercedes-Benz signed on to co-design and market the line of vehicles, and the Smartville factory was established in France in 1994. Smart launched in Europe in 1997 and had a respectable opening run, but after the initial glow, its sales began to peter out. A couple of models -- the Smart Forfour and Roadster -- were dropped, and development was halted on the promising compact SUV, the Formore. By 2006, Swatch had long since bailed out, and the dwindling fortunes of Smart forced liquidation, with Mercedes-Benz absorbing what was left -- essentially the production of the mini Fortwo model. As the saga unfolded, it looked, at times, as if a U.S. introduction of the car was imminent, but each time, efforts were halted before the vehicle could be sold in America.

If any launch was preceded by inauspicious signs, it was the U.S. launch of the Smart, which finally came to fruition just one year ago. Yet despite all the nay-saying and gloom surrounding it, the Smart Fortwo experienced a robust first year of sales in the United States, crossing the landmark 20,000 sales milestone in October -- just nine months after going on sale. Seemingly against all odds, the United States has become the third largest sales market for the Smart Fortwo, trailing only Germany and Italy.

“The key to Smart USA's success has been entering the market with the right car at the right time,” said Dave Schembri, president of Smart USA. “Consumers throughout the United States have enthusiastically embraced the Smart Fortwo as well as the concept of the microcar. The Fortwo now has become part of the landscape of America's highways.”

The effort has been far from easy, but Smart has taken a new approach to national distribution. As part of mega-retailer Penske Automotive Group, it opened over 70 Smart center retail outlets in 35 states across the country this year. The strategy was placing retail outlets in major cities to reach consumers desiring urban mobility, a strong suit of the tiny Fortwo, but the company also located Smart centers in cities like Omaha, Neb., and Jackson, Miss., due to high customer demand and acceptance in areas not normally known as hotbeds of the urban lifestyle.

Of course, timing couldn't have been better for the Fortwo launch, since this year was marked by a fuel price spike that sent consumers scurrying for small, fuel-efficient cars. The Fortwo was recently ranked the most fuel-efficient, non-hybrid vehicle in the United States by the U.S. Environmental Protection Agency's 2009 Fuel Economy Guide, and the guide cites the Smart Fortwo as fifth overall in the rankings for fuel efficiency. The vehicle is also classified as an “Ultra-Low Emission Vehicle” by the California Air Resources Board (CARB).

On the marketing front, Smart USA challenged conventional wisdom of how cars are marketed and sold in the United States. Nearly a year before the sales launch of the Smart Fortwo, an online reservation system was created for interested consumers to take the first step in the ownership process by reserving a production model for a fee of $99. This system allowed Smart USA to gauge preliminary vehicle demand, the ratio of trim and color preferences, and the location of the customer base. It proved so useful that the reservation system continues to help the company manage vehicle demand. Placing a reservation is only way a customer can guarantee an opportunity to purchase a vehicle, although drop-ins to Smart centers also help to find a vehicle ready for purchase. Instead of using traditional (and very expensive) advertising, Smart has relied on grassroots efforts like cross-country road shows and word of mouth to communicate the brand's attributes and ultimately register sales.

What the future holds for Smart in the U.S. is anybody's guess, but no one can deny the impressive achievement the brand has made in selling more than 20,000 minuscule two-seaters to a largely skeptical American public.

Consumers Key "Green" Attributes Into Value

Traditionally, drivers covet vehicles that look great, function flawlessly and say nice things about their owners…and these days you can add another series of attributes, too, all revolving around the environment. Today’s American consumer is more environmentally oriented than ever, and, in an effort to reflect that, Strategic Vision, a California-based market research firm has unveiled the new SmartGreen Index (SGI.) The index points out the relationships between perceived quality plus overall value (the “smart” part of the equation) and green issues, such as fuel economy and environmental friendliness.

Frankly, there are a number of surprises on the list. Vehicles such as the Land Rover LR2, Corvette, Kia Amanti and Chrysler 300C are not usually thought of as green. In fact, some are considered to be the antithesis of eco-conscious, but they still scored higher than others in their respective segments when it comes to the SmartGreen Index. An important aspect of the index is the reflection of emotional attachment between owner and vehicle. According to the research firm, the vehicles that rank high on the SmartGreen Index are the ones that customers love, and are emotionally connected to,  and that provide the best green-related issues in class.

“When customers do not have to compromise their desired vehicle styling, roominess, power and price to obtain the best fuel economy and environmentally friendliness in class, they have made the SmartGreen choice,” said Alexander Edwards, president of Strategic Vision’s automotive division.

So which brands and models score well on the SGI? Since customers are increasingly seeking the attributes that combine to constitute the index, it is no surprise that the brands with the highest number of segment leaders on the index are Toyota and Honda (with five and four leaders, respectively). Toyota’s leaders are the Yaris Hatchback, Prius, Highlander Hybrid (tie), 4Runner and Tundra (tie), while Honda’s leaders are the Accord Coupe, Odyssey, CR-V and Ridgeline. Toyota’s Lexus luxury division also has two segment leaders: the IS 250/350 and the RX400 Hybrid.

While you might guess that having a hybrid power train would give a vehicle a strong leg up on the index, being a hybrid vehicle alone is not enough to guarantee top SmartGreen marks. Interestingly, some hybrids place at or below segment average in SGI when factors such as interior quality or overall perceived value are rated below their competition. While the Toyota Prius may be the obvious SGI leader because of its fuel economy, one shouldn’t forget that the Prius also offers innovative interior styling that adds to making it the SmartGreen choice.

“Even when fuel prices are highest, people will want more than a little box with good fuel economy,” said Chris Chaney, vice president of special projects at Strategic Vision. “For example, the Mazda3 leads in its segment ahead of the hybrids, offering superior styling, innovation, performance and affordability coupled with good fuel economy, offering more than competitive hybrids.”

Among the domestic brands, Chevrolet had the most segment leaders with the Tahoe, Avalanche (tie) and Corvette Convertible leading their respective segments. The Tahoe scored high in perceived quality, as did its competition. However, the Tahoe was rated exceptionally higher than the competition in eco-friendliness and fuel efficiency. The MINI Cooper Clubman and Convertible were leaders in their segments due to terrific performance, overall value and green-related issues. The MINI Cooper Hatchback scored just below the MINI Cooper Clubman, with both vehicles taking the top places in Specialty Coupes. The BMW 3 Series Coupe was also a leader in its segment. Other best-in-class SGI leaders were the Kia Amanti, Nissan Murano (tie), Audi Q7 and Mercedes S-Class for their excellence in quality, styling, performance and greenness.

Buyers rated the following vehicles as tops in their segments:

Small Car

 

Mazda3 Sedan

 

697

Small Multi-Function (MFV)

Toyota Yaris Hatchback

725

Mid-Size Car

Toyota Prius

749

Large Car

Kia Amanti

707

Near-Luxury Car

Lexus IS 250/350

765

Luxury Car

Mercedes S-Class

771

Specialty Coupe

MINI Cooper Clubman

751

Premium Coupe

BMW 3-Series Coupe

729

Mid-Specialty Coupe

Honda Accord Coupe

686

Convertible

MINI Cooper Convertible

719

Premium Convertible

Chevrolet Corvette Convertible

782

Minivan

Honda Odyssey

688

Small SUV

Honda CR-V

644

Medium Crossover

Nissan Murano / Toyota Highlander Hybrid

649 / 649

Medium SUV

Toyota 4Runner

664

Large SUV

Chevrolet Tahoe

641

Near-Luxury SUV

Lexus RX 400 Hybrid

742

Luxury SUV

Audi Q7

711

Standard Pickup

Honda Ridgeline

602

Large Pickup

Chevrolet Avalanche/Toyota Tundra

630 / 628

SGI is calculated from responses of 44,320 buyers who bought 2008/9 models from September 2007 to March 2008.