Sobering Notes on the Transportation Sector
I had lunch today at the annual ACTExpo (alternative fuel vehicles) conference with Steven Johnston, an extremely senior consultant to the transportation industry, based in Michigan. I thought I’d simply list a few of his viewpoints that I found most important:
• The enormous amount of money and power that resides in Detroit has no interest in change. Internal combustion engines and petroleum have been an unbeatable combination for wealth creation for the last 100 years, and the industry is doing everything in its power to keep that in place as long as possible.
• Very little of the interest in alternative fuel vehicles is based on environmental concerns; it’s almost exclusively rooted in cost reduction. Thus the appeal of compressed/ liquefied natural gas has been flagging recently due to the low diesel prices.
• Accordingly, we’re a very long way from putting a price on carbon via pressure from environmentalists.
• If progress in the direction of environmentally friendly transportation is to occur at all, it will come through government regulation, e.g., fuel economy standards.
• But government in the U.S. plays a relatively minor role in determining the path by which our industries will go forward, and that’s especially true in transportation, due to the extreme level of control exerted on Congress by the lobbyists retained by Big Oil and the top automakers.
• The reason that Europe is making progress in this space is due to the fact that Europeans generally have a much higher level of respect for government than we here in the U.S. The people there actively encourage government to lead the way and set tough environmental standards that will guide civilization onto a path towards sustainability. By contrast, we regard government and environmental standards as diseases.
• If there ever were any doubt about the claims made above, it was dispelled over the past nine months as Donald Trump rose to power and the Republican Party fell asunder.
Not exactly cheery news, but hey, I’m just a reporter.
Craig,
I’ve been in the electric vehicle industry longer than most Americans. Advocates like Steven Johnston are part of the problem, not part of the solution !
EV technology is not exclusive to Americans, and advocates like Steven Johnston who refuse to accept reality are counter-productive to EV adoption.
Naturally, every business and industry would like to benefit from a government mandate compelling people to buy their products ! It beats the hell out of all the R&D necessary solving drawbacks and technical deficiencies. It also solves the problems of competition, marketing and consumer choice.
Governments often impose such mandates citing “the public good” However, as we have all witnessed from the Ethanol debacle, mandates seldom work out well.
Governments do have a role in assisting necessary transitions to better technologies, but government incentives should be limited.
In reality, sales of Bev’s are slowly climbing, but only in locations with heavy government incentives. The only exception to this rule is Tesla Motors. Tesla’s formula has proven successful by establishing a prestige presence with a high priced, quality product, backed by a supercharger network, and a long range vehicle.
Tesla recognized a new market had arisen, completely over looked by traditional car makers. This new demographic consisted of highly paid, tech savvy, environmentally concerned, people working in new industries that didn’t exist 30-40 years ago .
Elon Musk built a car for himself, and people like him. This was clever marketing as he understood that people want cars to reflect their image and lifestyle philosophies.
Tesla’s success may be based on new technology, but Alfred P Sloan would have applauded Elon Musk’s shrewd adherence to his marketing concepts.
The mistake made by Carlos Ghosn and other makers (Ghosn is a particular hero of mine) is the assumption that consumers would accept EV’s as commuter vehicles.
Advocates like Steven Johnston, can either;
1) Accept that they read the market wrong, and recognize that consumers are not ready for technically deficient, low range jigh priced, EV’s, lacking convenience. (especially with competition from hybrids and cheap ICE models). Very few consumers are willing to change their lifestyles or aspirations to suit some ideological demands they neither understand or accept.
2) Accept that the average consumer was never sufficiently interested in the environment, and all EV development was based on two premises (a) “peak oil” (b) increasing prices.
It’s only natural that when neither of these two events occurred, the public would lose interest.
3) Accept that EV development and progress is better served by allowing free competition, and concentrating on introducing Electric technology in every day life thus increasing public awareness and acceptance for the benefits.
The alternative, is to refuse to accept reality and consumer opinion, instead invent the fantasy where only a conspiracy between Car makers/ Oil companies and “corrupt” politicians conspire to defeat the consumer from buying EV’s.
Acceptance in Europe is no better than in the US. The main difference is massive government incentives and subsidies. (Also energy production and small distances). Even then sales remain relatively marginal.
I firmly believe EV’s are the future. But the key to wider acceptance is ESD capacity, and competitive pricing. I’m not alone in this view,the CEO’s of all the major oil companies agree as does nearly every major Auto-maker.
(I’m not a fan of hydrogen vehicles, but I can see why governments and oil companies would be attracted to the potential of this technology.)
The point I’ m trying to make, is it’s counter-productive for EV advocates to continually whine on about the evils of governments, oil companies and car makers.
Such comments only associate EV’s with leftist ideology, and as a result is rejected by the vast majority of the populace. Worse, it may start a counter-reaction resulting in the cancellation of the current incentives.
Elon Musk’s method is right, sell EV’s on the basis of an exciting new “cool” technology, and the image will ‘trickle down’ to the consumer market, just as Automatic transmission , electric windows etc. Like Hybrids, the environmental image is a bonus.
In the meantime, Steven Johnston would be more useful advocating for the adoption of smaller EV technology. (such as garden, horticultural and agricultural machinery). The public is more sympathetic, the products more competitive and the environmental benefits greater.
Craig,
Thank you for the opportunity to present these views. It gets very frustrating trying to persuade fellow environmentalists, to not forsake the merely good, in a quest for unattainable perfection.
Over the many years you’ve been posting comments here, it’s become quite clear that we disagree on the proper role of government, and I don’t have a problem with that.
I’d like to see government lead us away from petroleum, for the same reason that it’s moving us away from cancer.
Not everyone agrees with me, and that’s fine.
Craig,
I don’t think we are so far apart. I’m not opposed to governments providing leadership for social change, or indeed using taxpayer funds and incentives to stimulate the adoption of new technology.
My objection is when governments try to force change and interfere in the proper competitive function of commerce, to suit political or ideological agendas. When this happens, not only is new technology stifled by government end up creating huge white elephants that are later very difficult and painful to demolish.
I think our difference is simply the degree which governments should exert influence. (I would be the first to agree that’s a a very difficult judgement call for any government).
One of the big problems for governments is a reliance on revenue from gasoline and diesel taxation. This isn’t he ‘fault’ of anyone, it’s just the way the economy has grown over the past 100 years.
The reliance has become especially crucial when it’s obvious that new high tech industries are very adept at paying very little tax !
The move away from gas and diesel will be made more difficult for governments as they will be forced to increase spending on social services with less and less revenue.
One thing I’m sure we both agree on and that’s there are big challenges ahead .a Solutions will need to be very well planned to cope with the diverse complexities new energy sources will create.
I don’t find this “news” a bit surprising, rather it seems confirming. But it is that confirming aspect alone that adds credibility to your source.
Being cloaked in any industry, environmentalism, or government will slant a perspective. Media sources slant the story toward economics and government and industry. The internet and selected sources, unless carefully read, will give us a bias toward environmental perspectives. The truth is somewhere in between … (or all of this may only be a shadow of a much bigger presence.)
But your particular perspective starts at the beginning of the article with the description of a meeting with “Steven Johnston” and your characterizing him as “an extremely senior consultant to the transportation industry” This description left me a bit perplexed. Were you trying to say that he is very aged and a consultant? You didn’t mention a firm with which he was associated and may have risen through the ranks to a “senior” position so I might be left with the conclusion that he works as an independent consultant. It would be hard to understand independent consultants as “senior” without contemplating age as a factor.
Perhaps you would have added clarity by saying he was “widely respected and employed by the transportation industry.” Or perhaps he had a history of working for one sector and was now acting as a consultant to industry. All these also represent a perspective and a potential bias that may color the balance of the article and the “News.” And perhaps a bit more than a description of him as “senior.”
I’ve always heard/used the phrase “extremely senior” to describe a person who is quite advanced in skill, perhaps honed by years of experience–not necessary quite old. I.e., “senior” refers to his skill level, not his age, as in senior vice president.
First please understand I am not critical of you but the general use of a term suggesting an existing “superior rank” when applied to an independent contractor. The term “senior” certainly has an application when a person is part of an organization where a ranking is possible.
However without the organization how is it possible for someone like an independent contractor to be “senior” as there is no way to “rank” independent consultants. The very nature of being an independent consultant is to be independent of the structure of an organization. The position has advantages. A possible disadvantage might be an equal playing field with all other “independent consultants.
You could however say that a person was a formerly “senior management” or “senior technical advisor” in some company or organization where ranking would be based upon time with the company, pay scale, or the company organization chart.
But you never made it clear in the article if he was an employee or an independent contractor. So this just may be a way of saying that the point lacks some clarity.
There is a sliding scale. On one end are those who use terms with exact definitions like lawyers, doctors, scientists. At the other end of the scale are those who use terms for their effect of which Trump would be a good example. Both can have value but as a reader trying to ascertain the value behind the words it can be good to understand how they are being used. I have faith in your overall intent but also understand very well how it is possible with enthusiasm to overstate a case.
He’s an independent contractor. Since he seems to have achieved a great deal in his life’s work in this space and is highly respected in his field, I referred to him as “senior.” Having said that, I DO have a tendency to over-aggrandize people and organizations I admire. I need to cut that out. Thanks.
Marco,
I don’t even know if I need to “agree” or “disagree” with your perspective. You raise many interesting points. Tesla certainly seems to have it “right” in many aspects. I wonder though at how successful the company will be at marketing a lower economic scaled EV. Can Tesla successfully cut costs for an affordable EV? Quality compromises are sure to occur. With that employee satisfaction and safe vehicle standards will be risked.
Or will it take someone like Ghosn and his collection of companies (including Nissan) to understand how to supply a quality affordable EV. The fact that Nissan is moving so slowly in introducing electric vehicles into their line of cars suggests an extremely careful approach.
Many car manufacturers are making an Electric Vehicle. But when the day comes and I open up the newspaper to see electric cars being advertised at least among all the petrol models … that is the day when I will see that they are serious. Perhaps that day has already come in other parts of the world. But that is the day when electric vehicles will truly begin to compete with petrol models, not when environmental standards become important enough or when incentives become high enough. Presently auto dealers don’t really want to sell electric cars.
I think it is a little strong to say that Stephen Johnson is part of the problem. He is a defacto advocate for government handouts. In the US it is socialism for the rich and capitalism for everyone else. But I have to agree with his assessment that economics is a more powerful sales point for the EV than the environment. But this is only because people have to eat before they can dream and for most “the environment” is a hope rather than a bread and butter issue.
A good environmental sale for an EV would be to “take a drive in the country pollution free” While some may quibble with the promise, the idea of using a vehicle for fun without worries (of exhaust pollution) is far more appealing than getting a cheap commuter car. But for that the EV needs to have a “care free range.” A Tesla presently seems to have the edge in this department.
A appeal for the EV that has yet to be used is its strategic value. In catastrophic disasters we have power failures. Unless you have gasoline stored above ground, (a safety issue) electric pumps means all vehicles will initially be stopped by power failures. In both Japan and the storm on the East coast US, it was electric vehicles that were first to return to damaged areas “care free” of limited fuel supplies. The military is especially interested in the diversification (and thus security) that the EV promises. And because so many of there other personal devices require batteries and too many people are dying just supplying fuel they are also investigating portable electric generation (one idea uses tethered wind turbines: an excellent overview of AWES: http://www.sciencedirect.com/science/article/pii/S1364032115007005 ) The advert that goes with this view should be something like “at least your second car should always be an EV.”
Presently owning an EV could be a sometimes challenge. But I have repeatedly stressed that the essential technological block to wider adoption is not primarily the vehicle but the infrastructure. Transmitting power to the EV is the cheapest way to go socially, but unlikely in the US political environment. Encouraging charging infrastructure and battery development would be a good choice for subsidies and grants. But perhaps an unnoticed and little understood is the possibility to create a sometimes series hybrid out of every EV by creating an infrastructure for renting genset trailers. If you have to go long distance and don’t want to stop for charging then plug in a genset trailer that charges the vehicle while it is driving and you will only have to stop for fuel. Return it at the new location and continue on as an EV only vehicle.
There would have to be a charging port at the rear of the vehicle. This is also not new technology as the concept has already been developed and created. Here is one of the early versions developed by AC propulsion of California: http://www.evnut.com/rav_longranger.htm and here is a more recent version: http://www.gizmag.com/ev-charging-trailer/28513/
@ Breath on the Wind
The reason Tesla is so successful is Elon Musk built a vehicle for a target audience, not the other way around. As an industrialist, he also carefully developed a fanatically loyal and idealistic shareholders/investors, unlike anything seen in the industrial sector before.
With very few high priced exceptions, motor vehicle models rely on volume sales to amortize development costs and generate a profit.
Motor vehicle purchasing decisions are motivated by convenience, reliability, affordability and a desire for the vehicle to reflect the image,status and philosophy of the purchaser.
Secondary factors are things like running costs, resale value, brand loyalty, environmental issues etc. ( Fuel economy has an effect during periods of high gasoline prices, but in recent years the public has grown used to “spikes” and the effect has lessened).
Auto-manufacture is a high risk, capital intensive, low profit industry. Renault-Nissan has invested more than $14 billion into it’s electrification program. In the last 5 years, Renault-Nissan has managed to sell just over 300,000 EV’s out of a total of 92 million vehicles produced world wide.
Renault-Nissan has received considerable support in the form of tax concessions, loans, grants, guarantees, subsidies etc from the French and Japanese governments. Other governments, including the Europeans and American governments have rendered considerable financial aid to both Renault-Nissan and subsidizing zero emission vehicle sales. (France offers $11,000 additional to other incentives for buyers trading in a diesel).
EV’s have failed to produce mass sales. ( Tesla may become a “volume manufacturer” but not yet) The problem has always been the technology lacks the versatility to satisfy consumer expectations.
Take Craig for example. Craig is a well educated, passionately committed environmentalist, yet he bought a VW diesel powered vehicle, instead of an EV (or even a hybrid).
Why? My guess is that he was deterred by the low range of a Leaf, and equally deterred the relatively high purchase cost of a Tesla. At a guess, I would also say he unconsciously associates VW with the sort of image he had as a student. (For some strange reason VW seems more anti-capitalist than Toyota, or maybe because the Beetle and Kombie were just so different back in the sixties 🙂
But whatever the reason, it wasn’t for a lack of trying be Toyota, Nissan or Tesla. I’m not criticizing Craig’s choice, merely using his choice to illustrate that it not the manufacturers of EV’s or the fault of an evil oil cabal, just simply buyer resistance to an inadequate technology.
For most consumers, the advantages of EV ownership don’t offset the disadvantages. Improving charging infrastructure only helps those who really are already committed EV enthusiasts, but as studies have shown it’s not enough unless it’s in the form of really convenient fast charging like Tesla’s super charging network. (that requires a vehicle with sufficient ESD capacity).
The idea of towing a charging trailer, like battery swapping, etc, is a very, very niche solution, and of no appeal to the average motorist.!
But it does illustrate the principle problem for EV manufacturers, and mass EV adoption. That problem is ESD (Electric Storage Device) development.
There’s no reluctance on the part of auto-companies. All over the world thousands of scientists are working hard researching a way to improve ESD capacity.
It’s a daunting task involving complex aspects of technology and science. Investment cost are equally daunting, but the reward would be spectacular !
It’s interesting to note that the lithium battery that made Tesla possible, was invented and developed in an Exxon laboratory ! Chevron’s research into Nano-polymer capacitors is showing promise, while other unconventional ESD projects are constantly being announced.
When the R&D for these projects seems slow, there’s always a temptation for ill-informed to rant on with conspiracy theories.
The documentary “Who killed the Electric Car” is a good example. Highly emotional, but just are mixture of erroneous facts and inaccuracies, it unintentionally illustrated the gap between an idealistic concept, and reality.
To succeed with mass volume sales, EV’s need to be able to complete by comparing favorably with consumer requirements. ( not what someone decrees consumers need, but what consumers really want).
The key is ESD development. I have faith this will occur over the next two decades. (I hope I live long enough to see EV’s replace The majority of ICE vehicles :).
In the meantime, we can still help the environment by promoting EV technology on a smaller scale, (but just as important) with the replacement of Lawn, horticultural and agricultural 2-4 stroke technology with electric.
This would not only reduce fossil fuel pollution, but noise pollution ! The technology is already fully developed and just need a “cash for clunkers” type program, or stricter enforcement of noise pollution to succeed.
These more humble uses of technology are often overlooked in the grand battle waged by “green” advocates, eager to prevent pipelines etc. But the benefits to the environment of such humble (and achievable) measures are arguably far greater, less disruptive and economically beneficial.
I may be wrong, but it seems to me such small but practical measures, attract less support because they have no other political agenda than environmental benefit.