Global Electric Car Industry

CASE: SM-175
DATE: 09/10/09
THE GLOBAL ELECTRIC CAR INDUSTRY IN 2009:

DEVELOPMENTS IN THE U.S., CHINA, AND THE REST OF
THE WORLD
I believe strongly that this country has to get off oil. The electrification of the automobile is
inevitable. If some Silicon Valley start-up (Tesla) can solve this equation, no one is going to tell
me anymore that it is unfeasible. This is like JFK and the moon shot.
General Motors Vice Chairman Bob Lutz, Newsweek, December 31, 2007
INTRODUCTION
In 2009, the U.S. had about 250 million cars on the road, 40,000 of which were electric vehicles.
Most of these had a range of 20 miles, a speed of 25 miles per hour, and were generally used for
fleet applications, checking parking meters, and transporting people and clubs across golf
courses.1
But the electric car industry was poised to take a giant leap forward. Brand new start-ups as well
as established automakers were jumping into the electric car, hybrid retrofitting, and batterymaking industries. Funding for these projects continued to come in, despite the troubled fortunes
of the car industry in general in 2008 and 2009. VC firms were investing hundreds of millions of
dollars in promising start-ups, while existing companies were spending billions of dollars
designing new cars and battery technology as well as building new battery plants. Some
companies already had electric cars on the road, while others were pushing to have electric cars
and so-called plug-in hybrid electric vehicles (PHEV) available by late 2009 or 2010. (See
Exhibit 1 for comparison chart of hybrid, plug-in hybrid and electric cars.)
1
John Addison, Electric Cars for 2010, Clean Fleet Report, June 4, 2008.
Debra Schifrin prepared this case under the supervision of Professor Robert A. Burgelman and Andy Grove as the
basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative
situation.
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The Global Electric Car Industry in 2009: Developments in the U.S., China, and the Rest of the World SM-175
p. 2
Large-scale transformation of the automotive industry from oil dependence to reliance on

electricity would require tremendous changes in manufacturing and marketing. In addition, the
success of the electric car depended on the construction of a massive infrastructure of charging
stations that would allow electric car owners to charge or swap out their batteries. These
charging stations could be simple boxes with electric outlets located in peoples garages or on
the street next to parking meters. They could also be similar to gas stations with employees and
service stations. Plugging into the electricity grid meant that utility companies had to be partners
as well, and in 2009 they were just beginning to work with car companies, exploring ways to
ensure that car owners could get enough electricity at an affordable price. Another challenge
was that many people around the world, for example in China, lived in apartments without
garages, and so would be reliant on public charging stations.
Although it was unclear exactly what role the U.S. government would play, in 2008 it had begun
talking about the energy crisis in earnest in response to both skyrocketing gasoline prices and a
national mood that favored decreasing the U.S.s dependence on foreign oil. These discussions
included debates about offshore oil drilling, but also included plans for providing subsidies and
other incentives for electric vehicle owners and manufacturers. When President Barack Obama
entered office in 2009, he made energy independence one of his core issues, and his
administration allocated billions of dollars to promote electric vehicle manufacturing and
development of advanced batteries for those vehicles.
In China the government was offering subsidies of thousands of dollars for buyers of new
energy cars, including hybrids, electric cars and fuel cell-powered cars. The subsidies varied in
amount by region, type of buyers, and type of vehicle.
Other governments were even more active partners. In Israel, for example, the government was
working with Silicon Valley start-up Project Better Place and established car companies Renault
and Nissan to bring the electric car to Israel, and had committed to offering substantial tax
incentives to consumers who would buy electric cars.2 Denmark was also working with Renault
and Nissan, and with Project Better Place, to build a country-wide electric car network with
20,000 recharging stations powered by wind turbines.3 In Japan, the government pledged to
install power outlets throughout public areas in certain cities and towns, and planned to
encourage private companies to give discounts on loans, insurance and parking to electric car
owners.4
The electric car industry, however, faced many obstacles, including the very high cost of
batteries and battery technology, which was still evolving. At the same time, designers of
internal combustion engines (ICE) were relentlessly pushing to make the ICE more efficient and
get significantly better gas mileage.
In late 2009, it was not yet clear how the structure of the emerging global electric car industry
would take shape. However, both established car companies and a plethora of start-ups were
jockeying for strategic position and trying to secure early-mover advantages. Similarly, many
2
Bill Vlasic, Nissan Plans Electric Car in U.S. by 10, The New York Times, May 13, 2008.
Denmarks Electric Car Network Will Use Wind Power, Environment News Service, April 1, 2008.
4
Jonathan Soble, Japan Fuels Electric Car Revolution, The Financial Times, August 25, 2008.
3
p. 3
nations had become aware of the rapidly growing strategic importance of the emerging electric
car industry, and their governments were actively pursuing policies to ensure that their own
established and new companies would be best equipped to become market leaders.
This industry note first describes the major policies of governments of the U.S., PRC and other
nations (rest of the world) in relation to the emerging global electric car industry. A discussion
of the key non-government players in the emerging global electric car industry in the U.S., China
and rest of the world follows. The note also reports some of the responses of existing
technologies (the ICE) to the competition of electric cars, and in relation to shifts in demand
toward more fuel-efficient vehicles.
THE ROLE OF GOVERNMENTS IN SHAPING THE GLOBAL ELECTRIC CAR INDUSTRY IN 2009
The U.S. Government
When he came into office, President Obama set a goal of having 1 million electric cars on the
road by 2015.5 By September 2009, there were already multiple efforts underway to make that a
reality. (See Exhibit 2 for U.S. government programs to promote the electric car.) The U.S.
Department of Energy had a $25 billion direct loan program, called the Advanced Technology
Vehicle Manufacturing Loans Program, to develop electric-powered cars and improve battery
technology. Big recipients included Ford ($5.9 billion), Tesla Motors ($465 million), and Nissan
(1.6 billion). The money for Japan-based Nissan was allotted for building batteries and electric
cars in Tennessee.
In addition, in August 2009 President Obama awarded $2.4 billion from the American Recovery
and Reinvestment Act to push forward electric car manufacturing in the United States. $1.5
billion of that went to U.S.-based manufacturers to produce batteries and battery components,
and to expand battery recycling capacity. $500 million went to U.S.-based manufacturers to
produce electric drive components for vehicles, including electric motors, power electronics, and
other drive train components. $400 million was set aside for purchasing thousands of PHEVs
and electric vehicles for test fleets, and for installing electric charging infrastructure.6 The grants
were to cover 48 projects in over 20 states.7
Recipients of this money included General Motors ($241 million) for their plug-in hybrid the
Volt; Compact Power, an affiliate of LG Chem ($151) for production of cells for the Volt; Ford
Motor Company ($30 million) and Chrysler ($70 million). The administration also committed
$11 billion to upgrade the nations power grid to prepare for introduction of electric vehicles in
the U.S., and allocated an additional $15 million to explore the purchase of alternativepowertrain vehicles such as electric vehicles for the General Services Administration fleet.8
Eric Mayne, Future Shock, Wards Autoworld, June 2009.

DOE press release, August 5, 2009. http://www.energy.gov/news2009/print2009/7749.htm
7
White House press release, President Obama Announces $2.4 Billion in Grants to Accelerate the Manufacturing
and Deployment of the Next Generation of U.S. Batteries and Electric Vehicles, August 5, 2009.
8
Eric Mayne, loc. cit.
6
p. 4
On the consumer side, government incentives existed for buying fuel-efficient cars. As part of
the American Recovery and Reinvestment Act, customers received a $7,500 consumer tax credit
for the purchase of an Electric vehicle or plug-in hybrid. There were similar incentives in place
for other alternative fuel vehicles, such as natural gas or methanol, and for fuel cell vehicles.9
The government also passed a cash for clunkers program in June 2009, which provided
government incentives of $3,500 to $4,500 to consumers who traded in older, less fuel-efficient
cars for new, more fuel-efficient ones. The program was extremely popular, with the $1 billion
allocated for the program running out within two months. Congress subsequently allocated an
additional $2 billion for the program. However, there was no mandate in the cash for clunkers
program that the new vehicles had to be conventional or plug-in hybrids or electric vehicles.
Therefore many observers felt that the program, as it was implemented in 2009, was primarily a
short-term economic stimulus measure, rather than an effort to promote the electrification of
cars.
The automobile industry saw government support for battery technology as crucial for American
car makers to be competitive in the electric car industry, as well as to further the countrys
energy security. In a June 2008 speech on the federal governments role in the development of
electric cars, Mark Fields, Ford Motor Companys executive vice president and president for the
Americas, noted:
Most battery supply is currently being developed in Asia. For those looking to
plug-ins to answer our energy security concerns, we must ensure a domestic
battery supply. Moving from imported oil to imported batteries clearly would not
address this growing concern. The governments of Japan, China, Korea, and India
are significantly funding the research, development and deployment of plug-in
hybrid vehicle technologies. Government should be a key partner in promoting
American manufacturing and the fight against global warmingand for energy
security. We wont be successful unless industries and governments are all
working together.10
Field advocated creating a new industry/government partnership to aggressively advance
battery research and development, injecting significant federal funds into advanced plugin vehicle technologies, and enacting one national standard for fuel economyrather
than allowing a patchwork of state and federal regulations to rise up.11
Questions also remained about whether the scale of government funding, essentially $25 billion
in loans, $2.4 billion in grants and $7,500 consumer tax credits, was sufficient to help jump-start
the electric car industry. By comparison, General Motors R&D budget for 2007 alone was $8.1
billion dollars.12
9
Joseph Smith, Energy Saving Tax Breaks for the 2006 Tax Year, Locumlife, February 2006.
Plug-In Electric Vehicles 2008: What Role for Washington? Conference speech by Mark Fields, June 11, 2008,
http://media.ford.com/article_display.cfm?article_id=28425.
11
Ibid.
12
David Welch, Live Green or Die, BusinessWeek, May 26, 2008.
10
p. 5
The PRC Government

In 2008, Chinas hybrid and all-electric vehicle production capacity was 2,100, and according to
government officials and Chinese auto executives, China wanted that number to hit half a
million, or 5 percent of the market, by the end of 2011.13 Some in the government hoped that
number would be closer to 1 million per year.14 China also wanted to turn the country into a
global leader in hybrid and electric cars within three years.15 Within that time, each of the
countrys passenger vehicle makers would be required to have a licensed new energy vehicle on
the market. China also wanted to hit battery capacity that would be equal to 1 million units of
battery-powered automobiles in operation.16
To reach these goals, municipal governments in 13 test cities were offering up to $8,800 in
subsidies to taxi fleets and local governments for hybrid and all-electric vehicles.17 Subsidies for
private purchases were to be added later in 2009. (See Exhibit 3 for PRC government programs
to promote the electric car.) The goal was to put 60,000 low-fuel-consumption vehicles on trial.
The subsidies were up to $7,300 for hybrid cars, $8,800 for pure electric cars and up to $36,000
for hydrogen cars. These vehicles had to be approved for mass market by Chinas industry
regulator.
In addition, Chinas State Council (Chinas cabinet) also enacted the Automotive Industry
Revitalization Program, which allocated $1.5 billion over three years to be spent on new energy
vehicles, technology upgrades, and dedicated parts and components.18 Other goals of the
program were to help independent vehicle brands, and push forward independent innovation and
industry consolidation.19 China felt that its automotive industry, including the electric vehicle
industry, would be more competitive with a few strong players rather than many smaller
companies. The program also mandated that 50 percent of government-owned automobiles
would have to be independent brands and trademarked as registered in China. 20 This program
was in addition to Chinas National High Technology Research and Development Program, or
863 program, which had a mandate and $285 million in funding to support electric vehicles and
battery technology development.21
China also had a program similar to the United States cash for clunkers. Older vehicles that
did not meet certain environmental standards could be traded in for newer vehicles with a
subsidy attached. For rural residents, the government gave a 10 percent subsidy to those
13
Keith Bradsher, China Vies to Be Worlds Leader in Electric Cars, The New York Times, April 2, 2009.
The Revolution Begins Now PRC to Get Electric Car Charging Stations, China Car Times, September 16,
2008.
15
China Auto, May 2009.
16
Automotive Revitalization Program to Be Chinas New Industry Policy, China Automotive Information Net,
April 4, 2009.
17
Keith Bradsher, op. cit.
18
China Offers Subsidization Alternative Fuel Vehicles on Trial Operation in 13 Cities, China Automotive
Information Net, June 6, 2009.
19
Ibid.
20
Ibid.
21
China Automotive Review, December 2008.
14
p. 6
replacing aged cars or three-wheeled vehicles with vehicles that had engines of 1.3 liters or less,
or small trucks.22 In early 2009, the government increased the budget for these subsidies from
$150 million to $900 million. As with the United States, there was no mandate that these new
vehicles be conventional or plug-in hybrids or electric vehicles.
Chinas efforts in the electric car space were carried out in conjunction with its overall goal to
build up its domestic auto industry. China saw the opportunity to capture its own growing
market as well as to export cars, which it believed it could make more cheaply, to the rest of the
world. As with the United States, questions remained about whether the PRC government was
making a significant enough contribution to the electric car industry specifically to effectively
jump-start the industry.
Rest of the World
Many governments around the world were taking steps to bring electric cars to their countries. In
Germany, for example, the government was providing about $700 million dollars to build an
electric car charging infrastructure and support research and development of battery technology.
Germany had a goal of putting 1 million electric cars on the road by 2020, growing to 5 million
by 2030. Five million cars was the equivalent of about 10 percent of the existing car fleet.23
The British Government was offering $3,250 to $8,000 to each consumer who bought an
alternative fuel vehicle. In addition, the government was giving $160 million to manufacturers
for R&D and building production capacity. Another $33 million was to be allocated to select
cities for building charging stations.24
Israel, Denmark, Japan, and Portugal were working closely with start-up Better Place to build a
nationwide infrastructure for electric cars and to promote electric cars through tax rebates and
lower car taxes. (See more on Better Place later in this note.) In addition, Japan was looking to
turn its postal fleet of 22,000 vehicles into electric vehicles. In South Korea the government
created a consortium of government officials, auto executives and battery makers to work
together to speed up the development of electric vehicles.25 There were many more examples
such as this all across the globe.
ELECTRIC CAR INDUSTRY IN THE U.S.
Start-Ups
There were several start-up electric car companies that had a head start on bringing electric cars
to market. (See Exhibit 4 for chart of Electric Car and PHEV companies.)
22
China Auto, May 2009.

Peter Wells, Can Germany Dominate the Electric Vehicle Industry? Automotive World, August 24, 2009.
24
James Murray, Government to Offer 5,000 Incentives to Jump-start Electric Car Market, BusinessGreen, April
16, 2009.
25
Eric Loveday, South Korea Establishes Consortium for Electric Vehicle development, All Cars Electric, June
21, 2009.
23
p. 7
Tesla Motors
U.S.-based Tesla Motors, founded in 2003, already had an all-electric high-end sports car on the
road. The Tesla Roadster got 220 miles per charge, could go from 0 to 60 miles per hour in 3.9
seconds, and cost $109,000. As of August 2009, Tesla had delivered about 700 Roadsters, and
had orders for hundreds more. In July 2009, Tesla announced it achieved its first month of
profitability.26
In 2011, Tesla was scheduled to come out with the Model S, a sedan with the same miles per
charge as the Roadster, for an anticipated base price of about $57,500 ($50,000 after a $7,500
U.S. federal tax rebate). The company planned to ramp up to produce 20,000 of these sedans a
year and hoped that by 2012 it could produce an all-electric car for under $30,000.27
The company was also conducting research and development focused on providing lithium-ion
battery technology and manufacturing engine components for Daimlers new all electric two-seat
Smart City car. Daimler acquired about a 10 percent stake in Tesla in May 2009.28 Daimler then
turned around and sold 40 percent of its stake to an investment firm in Abu Dhabi-based Aabar
Investments in July 2009.
Tesla had raised almost $200 million in investment dollars.29 Investors included Valor Equity
Partners, Vantage Point Venture Partners, Technology Partners, Jeff Skoll, Sergey Brin, Larry
Page,30 and JP Morgan Bay Area.31 Tesla also got a boost when Bank of America decided to
finance the Roadster in the U.S., making buyers eligible for a loan of up to 75 percent of the
value of the car, with five years to pay it off. 32
In addition, Tesla received approval for $465 million dollars in low income loans from the
Department of Energys (DOE) Advanced Technology Vehicles Manufacturing program. It
planned to use $365 million of that for production engineering and assembly of the Model S. 33 It
planned to use the other $100 million to move its headquarters and build a new 35,000 squarefoot powertrain production facility at Stanford Research Park in Palo Alto.
Regarding its role in the electric car industry, Telsas founders believed that they had helped
stimulate a new market by proving the feasibility and technological readiness of the industry.
But the question remained as to whether Tesla would be a niche player, given the high price of
its electric cars, or whether it would be able to mass-market its cars.
26
Scott Duke Harris and Tracy Seipel, Tesla Moving Headquarters and Powertrain Operations to Palo Alto, San
Jose Mercury News, August 18, 2009.
27
Fareed Zakaria, A Tesla in Your Future? PayPals Cofounder Hopes to Produce a Practical $30,000 All-electric
Car in Four Years, Newsweek, July 12, 2008.
28
Scott Duke Harris and Tracy Seipel, op. cit.
29
Michael V. Copeland, Tesla's Wild Ride, Fortune, July 9, 2008.
30
Tesla Motors website
http://www.teslamotors.com/media/investors.php
31
Red Herring, October 7, 2007.
32
Ken Bensinger, Bank of America Takes Some Sting off of Tesla Price Tag, The Los Angeles Times, July 14,
2009.
33
Dan Strumpf, Tesla Investors Bank on Mass Produced Electric Cars, Associated Press, July 14, 2009.
p. 8
Aptera
U.S.-based Aptera was producing a vehicle with two front wheels and one rear wheel, which
could fit two adults and one child. The vehicle was classified as a motorcycle and was available
in both all-electric (the 2e) and PHEV (2h) versions. The cars would range in price from $25,000
to $40,000, depending on options and power train.34 The electric car was to go on the market in
late 2009, and the PHEV was to come out in 2010. Aptera investors included Idealab, Esenjay
Investments, the Simons Family, the Beall Family Trust, and Google.35 However, the
government considered Aptera ineligible for part of the $25 billion dollars slated for energyefficient vehicles because the vehicle had three wheels. Some observers wondered whether
Aptera would be able to compete without government funding, which was proving so important
to other electric car start-ups.
Fisker Automotive
In May 2008, American start-up Fisker began testing the Karma, a plug-in hybrid that could go
from 0 to 60 mph in less than 6 seconds. The Karma could drive 50 miles per charge, and had a
top speed of 95 miles per hour in all-electric mode, and 125 miles per hour in sports mode.
Sports mode utilized a small internal combustion engine to charge the batteries. Consumers had
the option of buying a solar panel for the roof that would help charge the car and cool the inside
cabin. The car contained a small gasoline internal combustion engine that charged the lithiumion battery pack, which in turn powered the electric motor. Fisker planned to bring the Karma to
market in the second half of 2010,36 and grow production to 15,000 cars a year. The car would
cost $88,000.37
In total, Fisker had raised $176 million dollars. Much of that came from Qatar Investment
Authority, an investment firm based in oil-rich Qatar. 38 Kleiner Perkins Caufield and Byers was
also a major investor. 39
Miles Electric Vehicles
Miles Electric Vehicles was founded in 2004 and produced low-speed all-electric vehicles
mostly for university and government fleets. Its low-speed car, the ZX40S Advanced Design Car
cost $19,900 plus $895 for inland freight and delivery. It had a maximum speed of 25 miles per
hour and a range of 40-50 mph. Its low-speed truck, the ZX40ST Work Truck, also cost $19,900
with a $795 inland freight and delivery charge. The truck had a maximum speed of 25 miles per
hour and an estimated range of 30 to 40 miles.40 The company was based in Los Angeles, and
the cars were made in China.
34
Aptera website FAQ http://aptera.com/faqs.php.

Aptera Moves One Step Closer to Production of Its Ultra-Efficient Type-1 Vehicle; Aptera Motors Raises More
than $24 million in Series C Funding from Idealab, Google Inc, and Others, BusinessWire, July 24, 2008.
36
Fisker website, http://www.fiskerautomotive.com/technology.
37
Kristen Schott, Irvine-based Fiskers Karma Makes Public Driving Debut, OCMetro, August 19, 2009.
38
Fisker Secures $65 Million in Funding, Left Lane, September 9, 2008.
39
Fisker Automotive Receives Major Investment from Kleiner Perkins Caufield & Byers, The Auto Channel,
January 14, 2008.
40
Miles Electric Vehicle website, http://www.milesev.com.
35
p. 9
Next up for Miles Electric was their highway-capable electric vehicle, the XS500 (under the
brand name Coda Automotive). The car would be able to go 80 mph and had a range of 120
miles per charge. The exact U.S. price had not been determined, but the company said the base
price would probably be around $45,000. The XS500 was based on the Hafei Siabao, made by
Hafei in China (see later section on Hafei). A few hundred of the XS500s would be test marketed
in the first half of 2010 and available to the public in the fall of 2010. Miles Electric planned to
build 3,000 cars in 2010 and had the capacity to reach 20,000 vehicles a year.41
Incumbents Big Automakers
Start-up companies may have had cars that were already on the road or in production, but
incumbent automakers were not far behind, and they were putting a lot of muscle into the effort
to catch up. Many giant automakers from the U.S., China, Japan, France, Germany and India
were making large investments in the electric car, with hopes of getting their all-electric cars or
PHEVs to major markets within a few years.
General Motors
In September 2008, General Motors unveiled the much-anticipated Chevy Volt. The plug-in
hybrid (PHEV) drove 40 miles on electric power, after which an internal combustion engine,
which GM called a range-extending power source, kicked in to recharge the lithium-ion battery
pack. The Volt had a top speed of about 100 miles per hour. In 2009, GM said that the Volt
could reach a fuel efficiency of 230 miles per gallon, assuming one charge per day42 (although
the method of calculation was still being debated). GM planned to produce the Volt for
customers in November 2010,43 delivering 10,000 cars the first year. (In 2008, 13.2 million new
cars and trucks were sold in the United States, of which about 3 million were GM brands.44)
Over a year before its planned release, the Volt had an unofficial waiting list of over 50,000
people.45
GM had been frantically working to get the Chevy Volt out in time.46 The companys 2007
Research and Development budget was its largest in a decade, $8.1 billion up from $6.6 billion
the year before47 (although R&D was cut by an undisclosed amount when GM went into
bankruptcy negotiations). In 2008, GM had 200 engineers and 50 designers working on the Volt,
with 400 more working on related components.48
In the summer of 2009, GM had not released the sticker price for the Volt, but was estimating
that it would be between $35,000 and $40,000 (before the $7,500 consumer tax rebate).49 This
41
Martin LaMonica, Miles Electric Readies All-Electric Family Sedan, Cnet, May 5, 2009.
Based on new EPA federal fuel economy methodology. Chevrolet website, www.chevrolet.com/electriccar.
43
Charlie Rose, A Look at the New GM Volt with Designer Bob Lutz, The Charlie Rose Show, August 19, 2008.
44
GM press release, GM Announces 2008 Global Sales of 8.35 Million Vehicles, January 21, 2009.
45
GM Volt website, http://gm-volt.com/wait-list-data.
46
Jonathan Rauch, Electro-shock Therapy, The Atlantic Monthly, July/August 2008.
47
David Welch, Live Green or Die, BusinessWeek, May 26, 2008.
48
Chevrolet website, www.chevrolet.com/electriccar.
49
Chuck Squatriglia, Bob Lutz: Volt Is U.S. Car Industrys Moon Shot, Wired, January 15, 2008.
42
p. 10
was higher than GM had hoped, as the average price of a new car in the United States in 2006
was about $28,000.50 Much of the Volts price came from the cost of the battery, which was
estimated to be about $10,000.51 (See more about automotive batteries in a later section of this
note.) GM also had a second PHEV in the works, the Saturn Vue.52
The Volt was a large beneficiary of the $2 billion the U.S. government handed out for electric
car and battery makers. Of the $241 million that GM received, $106 million was for production
of batteries for the Chevy Volt. GM was designing the Volts battery pack with battery cells
made by South Koreas LG Chem. Another $30 million was for building 125 Chevy Volts for
electric utilities and 500 for other buyers to use as part of a test fleet. $105 million more was to
build factories in Maryland and Michigan to produce a second generation of electric cars. In
addition to other advancements, one key change would be that these new cars would have rearwheel drive, while the Volt had front-wheel drive.53
GM had a checkered history with electric cars. The company received negative publicity when it
introduced and then quickly stopped producing its first electric car, the EV1, in the 1990s. A
2006 movie about the EV1, called Who killed the Electric Car?,54 showed GM crushing
relatively new EV1s rather than sell or lease them to customers who wanted them. In total, GM
leased only 800 EV1s,55 and lost a billion dollars on the car.56
However, GM appeared to be committed to the Volt. In late 2008, a high-level GM executive
commented, Well burn the furniture before we stop working on the Chevy Volt. Soon
afterwards, GM went through some high-profile economic woes, which included bankruptcy and
a change in leadership. The question remained as to what effect those things would have on the
Volt. Some analysts felt that a leaner, post-bankruptcy GM would be better situated to launch a
brand new type of product. However, others felt that the company was under heightened pressure
to show profitability, and the Chevy Volt was unlikely to find a mass market until the $40,000
price came down.
Ford
Fords first electrified vehicle was slated to hit the market in 2010, and would be an all-electric
commercial van called Transit Connect. The Transit Connect had a top speed of 70 miles per
hour and could travel 100 miles on a single charge.57 That would be followed by an all-electric
Focus compact car in 2011 and a plug-in hybrid in 2012.58 Ford had an experimental SUV fleet
of 21 Escape plug-in hybrids.
50
Philip Reed, How to Get a Used Car Bargain, Edmunds.com.

Justin Hyde, Hybrid Batteries: One more way we are dependent on foreign energy, Detroit Free Press, August
15, 2008.
52
Michelle Maynard, Toyota Will Offer a Plug-in Hybrid by 2010, The New York Times, January 14, 2008.
53
Matthew Wald, $2 Billion in Grants to Bolster U.S. Manufacturing of Parts for Electric Cars, The New York
Times, August 6, 2009.
54
Movie: Who Killed the Electric Car? Sony Pictures, 2006.
55
Anita Lienert, Chevrolet Volt Takes a Giant Leap Forward, Edmunds Inside Line, June 3, 2008.
56
Don Sherman, G.M. at 100: Is Its Future Electric? The New York Times, September 14, 2008.
57
Evan McCausland, 2009 Geneva: Ford Transit Connect, Automobile, March 4, 2009.
58
Matthew Dolan, Ford Plans Vehicles to Tap Power Grid, The Wall Street Journal, August 21, 2009.
51
p. 11
Ford received $5.9 billion in Energy Department loans to use toward retooling its plants in
Illinois, Kentucky, Michigan, Missouri and Ohio in order to produce 13 fuel-efficient models. By
2011, Ford planned to produce 5,000 to 10,000 electrified vehicles a year.59 Ford also received
about $90 million in grants from the Recovery Act to accelerate the launch and
commercialization of PHEVs and EVs.
Ford had also developed an on-board communications system to be used in its plug-in hybrids
that allowed the car to talk with the electric grid. In doing so, drivers would be able to program
the timing and length of their battery charges. As utility rates change based on time of day, this
made it possible for drivers to control what utility rate they paid. This communication to the
electric grid was made possible by wirelessly networking, using smart meters installed by utility
companies. Ford was planning to equip its 21 experimental SUVs with this technology.
Chrysler LCC-Fiat Auto Group
Chrysler was working on five models of electric cars as part of its ENVI range of vehicles; the
Dodge Circuit EV, Jeep(R) Wrangler EV, Jeep Patriot EV, Chrysler Town & Country EV, and
the Chrysler 200C EV concept car.60 ENVI was a new group within Chrysler, formed in 2007 to
work on electric vehicles. First to hit the market would probably be the Dodge Circuit, a two-seat
roadster, to be released in 2010. The sports car would go from 0 to 60 miles per hour in under 5
seconds and would have a top speed of 120 miles per hour.61 It had a range of 150 to 200 miles
before needing a charge. Chrysler was also supplying a small test fleet of battery-powered
minivans to the U.S. Postal Service.62 Chryslers goal was to have four electric vehicle models
on the market by 2013, and to sell half a million of those vehicles by the same year.63
In April 2009, Chrysler partnered with U.S. battery maker A123Systems. The battery maker was
planning a new production facility in Michigan where it would build battery cells, modules and
packs for Chrysler.64 Chrysler received $70 million in grants from the Recovery Act to develop
and deploy 220 advanced PHEVs pickups and minivans.
However, Chrysler faced similar challenges to GM in that it had recently gone through
bankruptcy and had merged with Italian automaker Fiat in order to stay alive. If its electric cars
were not good sellers out of the gate, would Chrysler be able to continue to make them?
59
Mathew Dolan and John Murphy, Nissan, Ford Plan Electric Push Aided by U.S.; Demand Is Uncertain, The
Wall Street Journal, June 24, 2009.
60
Chrysler website.
61
Peter Valdez-Dapena, Chrysler Developing Electric Sports Car for 2010, CNNMonday, April 15, 2009.
62
Matthew Dolan and John Murphy, op. cit.
63
Alex P. Kellogg and Neal E. Boudette, Chrysler Plans Electric Car Push in 2010, The Wall Street Journal,
January 12, 2009.
64
Andrew Donoghue, Chrysler Moves Electric Car Plans Up a Gear, BusinessGreen, April 9, 2009.
p. 12
Battery Makers
The type of battery used in traditional hybrids (HEVs), such as Toyotas Prius, was nickel metal
hydride (NiMH), but for electric cars, a new type of battery was needed. Lithium-ion batteries
were used in laptop computers and cell phones, and car makers were converting these batteries
for use in electric cars because they were lighter and more powerful than the NiMH batteries.65
(See Exhibit 5 for a comparison of Lead Acid, NiMH and Lithium-ion batteries.)
There were challenges with lithium-ion batteries. They were expensive to producethe battery
for the Chevy Volt would cost about $10,00066and they generated too much heat.67 This
problem was highlighted in 2006 when six Dell computers with Sony lithium-ion batteries
caught fire, prompting Dell to recall 4.1 million notebook computer batteries.68 Nevertheless,
most car makers had settled on lithium-ion as the electric car battery of the future, and battery
makers were quickly ramping up production capacity of these batteries. In 2008, the market for
hybrid batteries was $900 million, but the market for all advanced automotive batteries was
expected to grow to between $30 and $40 billion by 2020.69
Lithium-ion batteries were first designed and developed in the United States in the late 1980s,
but the Japanese company Sony was first to license the technology for manufacturing.70 As
opposed to U.S. companies, Asian companies had 20 years of experience actually making
rechargeable batteries. U.S. car makers found themselves concerned that they would be
dependent on foreign sources of advanced batteries. Because of this concern, U.S. automakers
applied for and received money from the federal government to help push forward U.S. electric
car battery production. (See Exhibit 6 for a list of battery makers by country.)
Regardless of where they were made, batteries were quickly becoming the bottleneck in the
electric car industry. Most of the lithium-ion battery capacity was used for the nearly 200 million
laptop computers and other handheld electronic devices built each year. Making enough batteries
for just 1 million electric vehicles would require doubling the current manufacturing output.71
A123 Systems
Boston-based battery makers A123 Systems, founded in 2001, quickly became one of the
worlds leading lithium-ion battery suppliers. It supplied batteries for TH!NK, and it formed a
strategic partnership with Chrysler in which it would produce batteries for Chryslers new
electric vehicles. In August 2009, A123 received a $249 million grant from the U.S. Department
Mitsubishi Plans Plant to Meet Battery Demand, Automotive News, August 19, 2008.
Justin Hyde, Hybrid Batteries: One More Way We Are Dependent on Foreign Energy, Detroit Free Press,
August 15, 2008.
67
Jerry Flint, Electric Cars: They Need Gas, Forbes.com, June 10, 2008.
68
Damon Darlin, Dell Will Recall Batteries in PCs, The New York Times, August 15, 2006.
69
John Murphy, U.S. AutoMakers Target Battery Gap with Japan, The Wall Street Journal, September 15, 2008.
70
Justin Hyde, op. cit.
71
Robert A. Burgelman, Andrew S. Grove, Research Paper No. 2013. The Drive Toward the Electric Mile, A
Proposal for a Minimum Winning Game, Stanford Graduate School of Business Research Paper, February 2009.
65
66
p. 13
of Energy for building advanced battery production facilities in the U.S.72 A123 was required to
match the funds over time as they were used. A123 System planned to build its manufacturing
operation in Livonia, Michigan.73 The company also received $100 million in refundable tax
credits from the Michigan Economic Development Corporation. A123 had raised more than
$350 million74 in private equity from investors including Sequoia Capital, General Electric,75
Qualcomm and Motorola.
Ener1
Indiana-based EnerDel, a subsidiary of Ener1, was an automotive lithium-ion battery company
based in Indianapolis, Indiana. The company had strategic partnerships with Volvo, Nissan,
Think, and Fisker. EnerDel was also working with Think Electric Drivetrain to work on Japans
postal service conversion to electric vehicles. In August 2009, the company received $118.5
million dollars in federal grants as part of the U.S. stimulus package. The grant would allow
EnerDel to double its U.S. production capacity.76
Johnson Controls-Saft
Johnson Controls-Saft was a joint venture between U.S.-based Johnson Controls and Francebased Saft that was a leading world supplier of lithium-ion batteries. In April 2009, Johnson
Controls-Saft announced that it would build its first U.S.-based manufacturing facility in
Michigan for lithium-ion hybrid batteries. The company already had a manufacturing facility in
Nersac, France, where it was producing batteries for the Mercedes S-class hybrid, which was to
hit the market in late 2009.77 Ford was also planning on using Johnson Control-Saft technology.
In August 2009, the company was awarded about $400 million in federal grants.
Retrofitters
There were some companies that did not make electric cars, but instead converted or retrofitted
existing cars to turn them into plug-in hybrids. This process was known officially as Aftermarket
Fuel Vehicle Conversions (AFV). Conversions of small cars to PHEVs ranged in price from
about $5,000 to $20,000, while conversions to all-electric cars were much more expensive, on
the order of $55,000.78 The cost for converting trucks and SUVs to PHEVs ran about $60,000.
The safety of these converted cars was still being debated. In June 2008, a converted Prius
caught fire. Although the fire was blamed on improper installation, it still raised some questions
about the readiness of lithium-ion batteries.
72
A123 Systems press release, August 5, 2009.

Ryan McBride, A123 Systems Wins $249 Million Piece of DOE Grants, Xconomy Boston, August 5, 2009.
74
Ibid.
75
Norihiko Shirouzu, Race to Make Electric Cars Stalled by Battery Problems GM, Toyota Seek Ways to Snuff
Out Fire Risk; Start-Ups See Opening, The Wall Street Journal, January 11, 2008.
76
Ener1 press release, President Obama Announces EnerDel will Receive $118.5 Million Grant, August 5, 2009.
77
Johnson Controls press release, Johnson Controls-Saft Announces Plan to Build Lithium-ion Battery Plant in
Michigan, April 14, 2009.
78
Ibid.
73
p. 14
In addition, the high cost of these conversions raised the question of whether retrofitters could
find a large enough market for their companies to survive, even as niche players. Some observers
also felt that retrofitting cars was a short-term solution to be pursued until new PHEVs and
electric cars hit the market. Investors might be wary of a company that only had a life span of a
few years.
Small Car Conversions
A123s Hymotion
In 2007, Lithium-ion battery maker A123 acquired Hymotion, the leading fabricator of
aftermarket plug-in hybrid modules.79 The company took 2004-2009 models of Toyota Prius
hybrids and converted them into plug-in hybrids that used lithium-ion batteries. These cars were
able to go about 100 miles per gallon, with an electric range of 30 to 40 miles. The Hymotion L5,
a plug-in conversion module, sat in the spare tire well in the trunk, and a hole was drilled into the
bumper to allow for the installation of the cord. The conversion process took a few hours to
complete and cost the customer $10,000.80 There was also a 10 percent federal tax credit for the
cost of the conversion.81
Hymotion had installation partners in 14 cities around the country. Utility Pacific Gas and
Electric and Google had both run tests on Hymotion converted cars.82
CalCars
CalCars, a nonprofit that promoted PHEV and electric cars, converted the first Prius hybrid to a
Plug-In Hybrid in 2004. The company also created a set of open standards for the conversions.83
CalCars did not sell its converted cars, but rather focused on public policy, technological
development, and creating demand for PHEVs.84
Plug-In Supply
California-based Plug-In Supply made PHEV conversion kits based on CalCars open standards.
The company offered $5,000 conversions using full, lead-acid batteries. These conversions
allowed the owner to drive up to 20 miles gas-free. The company also offered either $8,500 or
$12,000 conversions that used lithium-ion batteries. The $8,500 converted car could go 20 miles
in all-electric mode, while the $12,000 converted car could go 30 to 40 miles in all-electric
mode. This gave the car a total of 100 miles per gallon.
Plug-In Conversions
San Diego based Plug-In Conversions charged $3,500 to convert Prius conventional hybrids to
PHEVs.85 Converted cars could get 100 miles per gallon.
79
A123 press release.

Hymotion website, http://www.a123systems.com/hymotion/products/N5_range_extender
81
Internal Revenue Service website, http://www.irs.gov/formspubs/article/0,,id=210607,00.html
82
Ibid.
83
Elsa Wenzel, Do It Yourself Electric Cars, CNET, August 15, 2008.
84
CalCars website.
85
Plug-in Conversions website.
80
p. 15
AC Propulsion
AC Propulsion, also based in California, focused on converting gasoline cars to all-electric
vehicles. The companys eBox converted all-gasoline Scion xB cars, allowing them to hit speeds
of 95 miles per hours and go 150 miles per charge. The cost to the customer was $55,000.
Truck and SUV Conversions
Chicago Institute of Technology and Hybrid Electric Vehicle Technologies
At the other end of the spectrum, some companies were looking to convert the most gas-guzzling
cars to PHEVs, as opposed to focusing on relatively fuel-efficient sedans and hybrids. A team at
Chicagos Institute of Technology converted a Ford F-150, which originally got 16 miles per
gallon, to a PHEV, which pushed the fuel economy to about 40 miles per gallon. The F-150
could run without gasoline for 15 miles.86 A spin-off company, Hybrid Electric Vehicles, was
carrying out the conversions, at a cost of $60,000 each.87
Infrastructure Providers
In order for electric cars and PHEVS to succeed, a vast infrastructure of charging stations was
required. In the United States, about 50 percent of car owners drove 25 miles or less each day,88
and about 80 percent drove less than 50 miles each day.89 (See Exhibit 7 for daily miles driven
in the U.S.) The average worker commuted 33 miles between work and home each day.90
Therefore, many car owners would be able to charge their electric cars and PHEVs at home at
night, and have enough charge for the following day. However, those taking longer trips would
have to recharge the electric car battery outside the home. For example, the distance between San
Francisco and San Jose, California was about 50 miles. PHEV users who made that daily
commute and wanted to stay mostly in electric mode would need charging stations available near
their places of work, since PHEVs, such as the Chevy Volt and the Fisker Karma, would get 40
and 50 miles per charge, respectively.
However, this presented a chicken-and-egg quandary: Cars needed a charging infrastructure, but
who would invest in infrastructure before there were cars on the road that needed it? One
company that was stepping into the role of infrastructure provider was Arizona-based Electric
Transportation Engineering Corporation (eTec), a subsidiary of ECOtality Inc. In August 2009
eTec received $99.8 million from the federal government and $8 million from the state of
California to join Nissan in building 12,750 charging stations and deploying 5,000 Nissan LEAF
electric vehicles in five U.S. markets: the states of Tennessee and Oregon, the cities of San
Diego and Seattle, and the Phoenix/Tucson region.
86
Ibid.
Elsa Wenzel, Do It Yourself Electric Cars, CNET, August 15, 2008.
88
Electric Power Research Institute (EPRI).
89
U.S. Department of Transportation.
90
Kim Clark, Career Spotlight: New Benefit: Help with Commuting Costs, US News and World Report,
September 24, 2005.
87
p. 16
This project was the biggest of its kind inside the United States, a fact that raised questions about
how far the country still had to go. For electric cars to gain any real foothold in the U.S., there
would have to be millions of charging stations across the nation.
An Infrastructure provider that was achieving a wider reach, albeit outside of the U.S. mainland,
was California-based Better Place, founded by former SAP executive Shai Agassi. Better Place
was working with the Israeli, Danish, Japanese and Portuguese governments to build charging
stations and charging spots throughout urban areas, where drivers could plug in their cars. Better
Place was also working with the utility Hawaii Electric to build a car charging network,91 as
Hawaii had some of the highest gas prices in the country. Better Place had raised over $400
million for all its ventures from investors around the world.
In Israel, Better Place had raised $200 million92 from holding company Israel Corp., investment
bank Morgan Stanley, venture capital firm Vantage Point and a group of private investors.93
Better Place had an aggressive goal of building a network of 100,000 charging spots and dozens
of battery swap stations by the end of 2010.94 Better Place and the Israeli government were also
working with the Renault-Nissan Alliance to provide the electric cars, beginning in 2011.95 The
cars computers would be programmed to tell drivers when they needed to recharge and where to
find the nearest charging point.96 Israels goal was to make its transportation system oilindependent by 2020.97 The government planned to substantially reduce its 78 percent car tax for
citizens who bought electric vehicles.98
Renault-Nissan and Better Place felt that Israel was an ideal place to mass-market the electric
car, since the country was only 8,50099 square miles, about the size of New Jersey. Ninety
percent of Israeli car owners drove less than 40 miles per day, and all major cities were less than
90 miles apart.100 Denmark was also considered an excellent country for mass-marketing electric
cars, because it was about 16,000 square miles101 and because the country needed only 750 wind
turbines to power every car in the country.102 The average commute time in Denmark was 12.4
miles per day.103
91
Jeff St. John, Better Place Goes to Hawaii, GreentechMedia, December 2, 2008.
Bradford Plumer, The Future of the Electric Car, The New Republic, August 25, 2008.
93
Steven Scheer, Renault to Develop Electric Cars for Israel, Reuters, January 22, 2008.
94
Better Place website.
95
Bradford Plumer, loc. cit.
96
Better Place website.
97
Ibid.
98
Bradford Plumer, op. cit.
99
Israel Central Bureau of Statistics.
100
Nissan press release, January 21, 2008,
http://www.nissan-global.com/EN/NEWS/2008/_STORY/080121-02-e.html.
101
The official Tourist Website of Denmark.
102
Tamar Snyder, Who Revived the Electric Car? The Jewish Week, August 6, 2008.
103
Melissa Valadon and Nicolaj Stenkjaer, Do Electric Cars Make Sense in Denmark? Nordic Folkecenter for
Renewable Energy, January 2008.
92
p. 17
Because it took several hours to charge an electric car, part of Better Places plan was to separate
the battery from the car to enable customers to pull into charging stations and swap out their
batteries for charged onesa process that would only take about one minute.104
Other U.S.-based infrastructure providers included California-based Coulomb technologies,
which had a target of installing 1,000 charging stations in 2009 at a minimum cost of $2,000
each.105 Coulomb had a contract with the city of Amsterdam to install 200 charging stations by
2012. Drivers would be able to subscribe to the power stations through the web and get a smart
card to give them access to the stations, called the Charged Point Networked Charging
Stations.106 Coulombs customer base was made of up 37 percent municipalities, 39 percent
businesses, 22 percent utilities, and 4 percent automakers.107 In addition, PowerUp Systems was
planning to set up a network of e-stations in Vancouver, Seattle and Toronto for the 2010
Vancouver winter Olympics.108
Utilities
In the U.S., some utility companies were beginning to take an interest in electric cars and
PHEVs. One of the most active utility companies was Southern California Edison. SoCal Edison
provided electricity to 13 million people in southwest California, and around 17 percent of the
power it provided came from alternative or renewable sources.109 The company had its own
electric fleet of 300 vehicles, the largest EV fleet in the country. It also ran the Electric Vehicle
Technical Center in Pomona, California, where several automakers, including Ford, Mitsubishi,
Daimler and GM, had tested their electric cars. To prepare for what it estimated would be 30,000
EVs in its region by the end of 2012, SoCal Edison was planning to install 5.3 million
SmartConnect meters in every home in its service region, about 50,000 square miles, by 2012.
The cost would be $1.9 billion.110
In July 2008, General Motors joined with more than 30 U.S. utility companies to work on issues
that would arise when the Chevy Volt hit the streets. A big question was whether the electric
generation system could handle the increased demand for power. They also planned to work on
policy issues such as government tax incentives.111
Other utilities were getting involved by joining with local governments and private businesses to
build a network of charging stations. For example, in collaboration with the local government,
Portland General Electric (PGE) installed 20 charging stations in Portland, Oregon, and had a
strategic partnership with eTec on its project of installing thousands of charging stations in the
Portland area. PGE planned to study how electric vehicles could be integrated into the smart grid
104
Chuck Squatriglia, Better Place Unveils an Electric Car Battery Swap Station, Wired, May 13, 2009.
Peter Henderson, Electric Car Future May Power a Charging Industry, Reuters, August 9, 2009.
106
Lisa Sibley, Amsterdam Picks Coulombs EV Charging Stations, Cleantech Group LLC, May 5, 2009.
107
Matt Kelly, Plug in 2009: Coulomb Charging Ahead! Examiner.com, August 14, 2009.
108
Peter Henderson, Electric Car Future May Power a Charging Industry, Reuters, August 9, 2009.
109
Candace Lombardi, Ford, Electric Utility to Promote Hybrids, CNET, July 9, 2007.
110
Robert Chew, Utilities Scramble to Meet Power Needs of Electric Cars, Time, July 16, 2009.
111
Tom Krisher, GM Eyes Electric Car Future, Joins with Power Companies, USA Today, July 22, 2008.
105
p. 18
efficiently and at a low cost.112 Meanwhile, Northeast Utilities applied for about $700,000 from
the U.S. Department of Energy to help in its plans to build 275 charging stations in Connecticut
and Massachusetts by 2011. The government funds would cover half of the projects projected
cost. As mentioned above, Hawaii Electric was working with Better Place to install charging
stations in that state. 113
ELECTRIC CAR INDUSTRY IN CHINA
The Nascence of Chinas domestic auto industry created advantages and disadvantages for
Chinas automakers that were entering the electric car sphere. On the plus side, these new
companies were not encumbered with legacy systems and organizations, so could more easily
leapfrog existing technologies and focus on the electric car. However, they faced the challenge of
scaling up quickly enough to compete with the more established global players who were also
making the electric car a priority.
Start-Ups
BYD Auto
Chinas BYD (Build Your Dream) Auto was part of BYD Company Limited, the worlds
second-largest battery maker,114 founded in 1995.115 BYD supplied power units to mobile-phone
makers including Motorola, Nokia, Samsung and LG.116 Thus BYD Auto, headquartered in
Shenzhen China, had the advantage of both advanced battery technology expertise and
substantial financial resources. In addition, Warren Buffets Berkshire Hathaway invested $232
million to acquire a 10 percent stake in the company. In the first 11 months of its involvement
with BYD, Berkshire Hathaway had earned 1 billion dollars paper profit.117 Overall, BYD Auto
sold 170,000 conventional vehicles in 2008, and targeted 400,000 for 2009 and 700,000 for
2010.118
BYD launched two plug-in hybrid cars, the F3DM (dual-mode) and the F6DM (a larger, more
luxurious version of the F3DM) in December 2008.119 BYD planned to enter the U.S. and
European markets in 2011.120 BYD also planned to produce a pure electric car, the E6, by 2009
112
Portland General Electric press release, PGE to Participate in Largest Electric Vehicle Project in U.S. History,
August 5, 2009.
113
Jeff St. John, Better Place Goes to Hawaii, GreentechMedia, December 2, 2008.
114
David Barboza, Chinas Industrial Ambition Soars to High Tech, The New York Times, August 1, 2008.
115
Joanna Kujawska BYD Plans to Take on Giants with Electric Car, AFP, May 14, 2009.
116
Buffet Earns $1 billion on Chinas Hybrid Maker BYD, Bloomberg, July 31, 2009.
117
Ibid.
118
BYD Sets 10 Car Sales Target at 700,000 Units, Reuters, July 27, 2009.
119
Sebastian Blanco, Detroit 2009: Plug-in hybrids, the F3DM and the F6DM, Autoblog, January 13, 2009.
120
BYD Plans to Take on Giants with Electric Car, AFP, May 14, 2009.
p. 19
or 2010.121 The E6 needed 9 hours to fully charge, but could charge 80 percent in only 15
minutes.122
The F3DM could go 63 miles on its battery or 360 miles in hybrid mode with gasoline, with a
top speed of 90 miles, and could accelerate from 0-60 in 13.5 seconds.123 BYD said that the
F3DMs electricity cost was about a quarter of the cost of a comparable gasoline-powered car.124
The F3DM would first be marketed to corporations, which had the resources to buy a small
hybrid fleet and build the necessary recharging infrastructure.125 However, as of April 2009,
BYD had only sold 80 units of the F3DM. The Shenzhen government purchased 20 of those and
China Construction Banks Shenzhen branch bought the remainder. BYD was also in talks with
the citys taxi fleets, but the high price of the car, almost $22,000, was making negotiations more
challenging.126 The price was close to double that of a similar gas-powered car, 127
However, BYD received good news as Chinas Ministry of Industry and Information
Technology (MITT) announced that the F3DM was one of five energy-efficient vehicles to
receive regulatory approval for production and sale.128 That meant that the car was eligible for
federal subsidies for consumers beginning in September 2009. BYD said that since the F3CM
was the only sedan on the list, it qualified for the highest subsidy level, 50,000 yuan, or about
$7,300 per unit.129 The government was also carrying out an experiment in allowing sales of the
F3DM in 13 cities, including Shanghai,130 to see if it made sense to build a system of charging
stations across the country.131
BYD wanted to set up a system of charging stations in China in order to make its PHEVs and
electric cars more commercially viable for the average consumer. As such, BYD was in talks
with utility companies, including State Grid Corporation of China, about building such a system.
According to BYDs general manager for auto exports, Henry Z. Li, Its a positive cycle. More
electric cars, more charging stations. Its no use asking which comes first, the chicken or the egg.
We have to put something out there first.132
121
Norihiko Shirouzu, Chinas BYD Auto Co. to Unveil All-Electric Car, The Wall Street Journal, April 18,
2008.
122
Ibid.
123
Chris Lydgate, Portland to Electric Car Maker BYD Auto: Build Your Car Here. Please! Portland Tribune,
September 11, 2008.
124
Li Fangfang, Subsidy Will Help Plug-In Hybrid Sales, BYD Says, China Daily, August 19, 2009.
125
Joanna Kujawska BYD Plans to Take on Giants with Electric Car, AFP, May 14, 2009.
126
Ally Liu, BYD Has a Long Way Off to Commercialize Worlds First DM Electric Car, Gasgoo, April 14,
2009.
127
Joanna Kujawska, op. cit.
128
The other four were Nanjing Ivecos electric commercial vehicle, Jianghuai Autos electric engineering vehicle,
JMCs electric service vehicle, and Zotye Autos electric light minibus. Li Fangfang, Subsidy will Help Plug-in
Hybrid Sales, BYD Says, China Daily, August 19, 2009.
129
Ibid.
130
Cities include Beijing, Shanghai, Chongqing, Changchun, Dalian, Hangzhou, Jinan, Wuhan, Shenzhen, Hefei,
Changsha, Kunming and Nanchang.
131
BYD F3DM and Zotye Electric Cars to Launch Soon, China Car Times, August 19, 2009.
132
BYD Plans to Take on Giants with Electric Car, AFP, May 14, 2009.
p. 20
In May 2009, BYD joined forces with Volkswagen to develop lithium-ion battery-powered
hybrid and electric vehicles.133 Volkswagen was BYDs first major industrial partner. In August
2009, BYD also announced that it would be supplying Shanghai Automotive Industry Corp
(SAIC) with lithium-ion batteries for hybrid vehicles. These batteries could be recharged more
than 2,000 times, which allowed the batteries to last for 375,000 miles.134 SAIC would use the
BYD batteries for its own Roewe brand hybrid vehicles, which it planned to have on the market
by 2010.135 BYD had 5,000 auto engineers and 5,000 battery engineers.136
Yet BYD had some major challenges ahead, as it was competing in the electric car industry with
more established global automakers such as Japans Nissan, which expected to sell its electric
vehicle for as low as $25,000within striking range of BYDs $22,000 F3DM. Some observers
wondered if BYD had the experience necessary to go head-to-head with companies like Nissan
in mass-producing and selling its electric vehicle.
Chery Automobile Company
Chery Automobile, a Chinese automaker founded in 1997 in Wuhu, Anhui Province, rolled its
first electric car off the production line in February 2009. The Chery S18 could travel up to 93
miles on a charge and had top speeds of 75 mpg. It took four to six hours to completely charge
the vehicle and 30 minutes to charge 80 percent of the battery under a quick-charging mode.137
Chery Automobile planned to bring the S18 to market by early 2010, at a price of less than
100,000 yuan ($14,600). The first S18s would go to government agencies for trials.138
Chery Automobile was owned by the Wuhu local government and was founded to give a boost to
the remote Wuhu province. Chery began developing electric car models in 2001, the same year
Shanghai Automotive Industry Company (SAIC) invested in Chery, which allowed the company
to obtain a license to sell cars all over Chinaa license that had previously been denied. Chery
quickly grew to become one of the top China own-brand automakers in the country. At the end
of 2010, the Wuhu government planned to merge Chery with Jianghuai Automobile Co (JAC) to
create the "Da-An Motors" Group.139 It would be one of the largest car companies in Eastern
China. Chery had recently taken in about $300 million when it sold 20 percent of its stock to
Chinese investment companies. It planned to use that money on the merger.140
Zotye
Chinas Zotye entered the electric car race with Chinas first all-electric SUV. The four-seater
mini SUV had a range of 185 miles and a top speed of about 65 mph. The car would be priced at
133
Ally Liu, BYD to Supply Lithium-ion Battery to a Major Chinese Automaker, Gasgoo, August 17, 2009.
Ibid.
135
Ally Liu, BYD Signs Contract to Supply Lithium Batteries to SAIC, Gasgoo, August 18, 2009.
136
Keith Bradsher, China Vies to Be Worlds Leader in Electric Cars, The New York Times, April 2, 2009.
137
Chery International website, http://www.cheryinternational.com/engine_technology
138
Chery Auto Unveils Its First Electric Car S18, Gasgoo, February 20, 2009.
139
Ally Liu, Chery, JAC to Merging to Form Da-An Motors Group, Gasgoo, July 24, 2009.
http://autonews.gasgoo.com/auto-news/1011441/Chery-JAC-merging-to-form-Da-An-Motors.html
140
JAC, Chery Merger Plans to Be Shown at Year End, China Car Times, August 16, 2009.
134
p. 21
$16,000.141 Zotye, based in Zhejiang, China, planned to bring this car to China in late 2009 and
to the rest of the world in the subsequent few years. Zotye was also developing a system that
consumers could use at home that would recharge car batteries in less than an hour.
Great Wall
The Chinese company Great Wall, known in China for its SUVs and trucks, was coming out with
a two-seater electric car that had a top speed of 40 mph. The electric car was designed for city
driving, and could travel about 90 miles per charge. It could recharge with 70 percent capacity in
10 minutes. As of August 2009, a release date had not been set. 142
Hafei
Chinese company Hafei, a regional car maker in north eastern China, planned to come out with
its all-electric Hafei Saibao by 2010. Hafei had been working with U.S.-based Miles Electric for
several years on the electric car, and the Saibao was a collaboration between the two companies.
In the U.S., the Saibao was branded as Miles Electric and would sell for about $50,000. 143
Jinzhou Wonder Motor Co and CT&T
Jinzhou Wonder Motor Co., a subsidiary of Wonder Auto Technology, Inc., came out with its
first electric car in March 2009 in Chinas northeastern city of Jinzhou. It did so as a joint
venture with Korean electric car maker CT&T. The joint venture was created to build a $10
million electric plant that would produce 50,000 vehicles in its first phase.144 Wonder Auto
Technology was a leading Chinese manufacturer of automotive electronics, and CT&T, founded
in 2002, manufactured golf carts and small electric cars. With production facilities in South
Korea, Canada and South Korea, CT&Ts target was to manufacture 71,000 electric cars by
2010.145
Changzhou Micro EV Technology
In May 2009, Changzhou EV Technology Company delivered its first batch of three-seat electric
cars, with a range of 62 miles and a top speed of 32 mph. (At that point, no price had been
indicated.)
Geely Automobile
Geely Autos PHEV was called Gleagle EK2, and the company hoped to bring it to market by
2011. The Gleagle (meaning for fashion) EK2 had a top speed of 95 mph, with a range of 115
miles.146 Geely was also in talks to convert Londons black cabs into electric vehicles. Geely coowned black London taxi-maker Manganese Bronze. Geely Automobile, a subsidiary of Geely
Holding Company, began auto production in 1998. It was the first independent automaker in
China and held its IPO in 2004.147 Geely was also in talks to buy Fords share of Volvo.
141
Zotye Pure Electric SUV: 110,980 rmb, China Car Times, April 21, 2009.
Great Wall Continuing Electric Car Development, China Car Times, March 6, 2009.
143
Hafei Working on Pure Electric Vehicle, China Car Times, January 9, 2009.
144
Ally Liu, Wonder-CT&T Venture Rolls Out First Electric Car, Gasgoo, March 24, 2009.
145
Ibid.
146
George Gao, Geely to Make EK2 Plug-In Electric Car by 2011, Gasgoo, May 6, 2009.
147
Geely: Well Make an Electric London Cab, Reuters, October 20, 2008.
142
p. 22
Battery Makers
BYD
As mentioned above, BYD Company Limited was the worlds second-largest battery maker.
Founded in 1995, BYD was a private enterprise with over 130,000 employees.148
BAK
The Chinese company BAK was one of the largest lithium-ion battery makers in the world, and
was developing lithium-phosphate batteries for light electric vehicles and plug-in hybrids. In
December 2008, the government announced that BAK would receive up to $3.1 million in grants
from Shenzhens municipal government through Chinas 863 program. BAKs 3 million square
foot facilities were located in Shenzhen and Tianjin.
Infrastructure Providers
While the main push to build electric car charging stations was coming from one of Chinas
biggest utilities (see upcoming section on utilities), private companies were also teaming up with
Chinas government to build the stations. In July, 2009, eTec joined with the Shenzhen Goch
Investment, Ltd. to establish manufacturing and distribution operations for charging stations in
China. Their initial investment was $17.5 million.149 Renault-Nissan was targeting 2011 for
selling electric cars in China, and to that end signed a deal with the Wuhan city government to
bring in electric vehicles and provide guidance for building a charging network.150
Utilities
Chinas power industry went through a reform in December 2002, and the monopoly State
Power Corporation (SPC) was split into 11 smaller companiesfive electric power generation
companies, two electric power grid operators and four business companies. The five state
holding companies generated 80 percent of the countrys electricity: China Huaneng Group,
China Datang Group, China Huadian, Guodian power, and China Power Investment. Most of the
remaining 20 percent was operated by IPPs (Independent Power Producers). State Power
Corporation divested all of its electricity transmission and distribution assets into the Southern
Power Grid Company and the State Grid Corporation of China, both state owned.
Chinese utilities were beginning to make investments in electric vehicle infrastructure. In
September, 2008, the State Grid Corporation of China announced it was speeding up its plans to
build electric car charging stations in large cities such as Shanghai, Beijing, Guangzhou, as well
148
Scott Doggett, Chinas BYD to Showcase Production Plug-in Electric Hybrid Vehicle at Detroit Show,
Edmunds.com, January 5, 2009.
149
ECOtality press release, ECOtality Establishes Joint Venture to Manufacture and Distribute Electric Vehicle
Charging Stations in China, July 6, 2009.
150
Lisa Sibley, Amsterdam Picks Coulombs EV Charging Stations, Cleantech Group LLC, May 5, 2009.
p. 23
as smaller cities such as Dalian, Ningbo, and Qingdao.151 The charging stations cost between
$36,000 and $44,000 each to set up.152
ELECTRIC CAR INDUSTRY IN THE REST OF THE WORLD
Start-Ups
TH!NK
One example of a European electric car start-up was the Norwegian company TH!NK, which
was producing a different type of all-electric car, marketed and distributed in a very different
way. Think had three modelsThink City, Think Ox (concept car), and Think Open (concept
car). The Think City, released in Norway in 2008, was a two-seater with a backseat option that
had a range of 124 miles per charge and a top speed of 62 miles per hour.153 The car sold for
about $32,000 in Norway,154 (by comparison, a Toyota Corolla cost about $40,000 in Norway)
but that did not include the battery. Think retained ownership of the battery and charged a
monthly fee of about $150155 for battery use and maintenance. Customers could choose either
sodium or lithium-ion batteries.156 As of April 2009, Think had sold 1,200 cars to consumers in
Norway, and it planned to distribute 3,000 cars to governments across Europe.157 Think also
planned to open a manufacturing plant and technical center in the United States, with production
starting in 2010. Thinks goal was to produce 2,500 cars in the first year, mostly to be used for
pilot and demonstration fleet projects. The cost in the U.S. would be about $20,000, plus an $80$90 fee per month to lease the battery.158
Think also planned to sell cars online and allow customers to design their own cars (similar to
the way Dell sold computers), rather than going the traditional route of car showrooms. Think
had raised $133 million in investment money from Scandinavia, the U.K., and the U.S.,159 with
much of that money coming from General Electric160 as well as Silicon Valley161 firms Rockport
151
The Revolution Begins Now PRC to Get Electric Car Charging Stations, China Car Times, September 16,
2008.
152
Megan Lampinen, China: State Grid Corporation Prepares Electric Vehicle Charging Stations,
AutomotiveWorld, September 24, 2008.
153
Think website, www.think.com.
154
Brady Holt, Review: Think City Electric Car This Affordable Gas-Free Car Demands Too Many Sacrifices,
The San Francisco Examiner, July 26, 2009.
155
This was the intended fee in Norway.
156
Think website, www.think.com.
157
Adam Vaughan, Behind the Wheel of a Think City, The Guardian, April 15, 2009.
158
Sebastian Blanco, Think Details U.S. Manufacturing, Sales Plans: Hopes to Sell EV City for Under $20,000,
Autoblog, March 12, 2009.
159
John Reed, Jump-Start in the Race to Go Electric, The Financial Times, December 11, 2007.
160
Norihiko Shirouzu, Norways Think Plans to Produce, Sell Small Electric Cars in US, Dow Jones News
Service, May 29, 2008.
161
Dan Neil, The Next Big Think: Electric Car from Norway Could Be Coming to the U.S., Los Angeles Times,
June 25, 2008.
p. 24
Capital Partners, and Kleiner Perkins Caufield and Byers.162 Think got $40-$50 million of that
money from unnamed donors.163
Think cars had been in the United States before. Ford owned Think from 1999-2003,164 having
purchased the company to meet Californias zero-emission vehicle policy. Ford invested $150
million in the company, but when the zero-emission policy was revised, sold it to a Swiss
company. Think went bankrupt in 2006 and was then bought by Norwegian investors.165
Incumbents
Daimler
Germanys Daimler was in the testing phase for its Electric Smart EV, a small town car. Tesla
was providing the battery packs for the car, which had a top speed of about 60 miles per hour and
a range of 70 miles. Daimler was leasing 100 e-Smarts to customers in London for $660 a
month.166 The company planned to begin production of the car in November 2009167 and to
mass-produce it by 2012.168 The company was also working on a Mercedes brand EV car, which
would follow the release of the Smart EV.
BMW
By the summer of 2009, BMW had leased about 500 Mini E electric cars to customers in the
United States. Drivers were paying $850 a month and were part of BMWs test fleet. The Mini E
had a range of about 100 miles, with an estimated cost of $50,000. The anticipated launch date
was 2012.169
Renault-Nissan Alliance
In August, 2009, Nissan unveiled the Leaf, which had a range of 100 miles and a top speed of
over 85 miles per hour. Nissan said the Leaf would get 367 miles per gallon170 (although the
method of calculation was still being debated171). The car took seven hours to charge, but its fast
charge capability allowed 80 percent of the battery to charge in 30 minutes.172 The car would
cost between $25,000 and $30,000, before government incentives ($7,500 tax credit in the
162
The Electric Car Lives, BusinessWeek, June 16, 2008.

Rockport Capital Partners also has a Boston Office.
163
Sami Grover, Think Electric Cars Get Massive Funding Boost, Treehugger, June 16, 2009.
164
Douglas A. Bolduc, Think to Launch New Car in 2008; Former Ford-owned electric car maker will start
production in autumn, Automotive News Europe, July 23, 2007.
165
Dan Neil, The Next Big Think: Electric car from Norway could be coming to U.S., Los Angeles Times, July
18, 2008.
166
Jack Ewing, Daimler: The Dawning of the Age of the Electric Car, BusinessWeek, July 20, 2009.
167
Michael Graham Richard, Second Generation Smart Electric Drive Production Begins in November,
Treehugger, August 24, 2009.
168
Martin LaMonica, Daimler Grabs Tesla Stake in Electric Car Push, CNet, May 19, 2009.
169
John C. Abell, We Drive BMWs Electric Mini E, Wired, July 2, 2009.
170
Bryan Walsh, Electric Cars: Chinas Power Play, Time, August 31, 2009.
171
Based on new EPA federal fuel economy methodology.
172
Chris Paukert, 2010 Nissan Leaf Electric Car: In Person, in Depth, and U.S. Bound, Autoblog, August 1, 2009.
p. 25
United States).173 Nissan planned to begin production in Japan in the fall of 2010, starting at
50,000 units a year. Soon thereafter, Nissan expected to export small numbers of cars to the
U.S.174 By 2011, Nissan planned to have the capacity to build at least 100,000 electric cars a year
at its plant in Tennessee. Nissan received $1.6 billion in loans from the U.S. Department of
Energy to build those cars 175
Nissan believed that electric cars could make up 10 percent of all car sales by 2010, and it
wanted to be a leader in the field.176 After previously stating that it would not enter the Plug-in
hybrid market, Nissan CEO Carlos Ghosn said in August 2009 that Nissan might begin to
produce them if strong market demand emerged for PHEVs.177
Renault planned to make electric versions of the Menage and the Kangoo and install lithium-ion
batteries developed by Automotive Energy Supply Corp (AESC), a joint venture between Nissan
and Japanese battery maker NEC.178 The electric cars would be branded as Renault in some
markets, and Nissan in others.179 The cars would have a daily range of 100 miles and a top speed
of around 75 miles per hour. It would take about 8 hours for the car to completely recharge.180
The cars were ready for production and were scheduled to hit the market by 2011.
As mentioned earlier in the case, the Renault-Nissan Alliance was working with California-based
Project Better Place to bring all-electric cars to Israel and Denmark by 2011, and was separately
working with the Portuguese government to bring all-electric cars to Portugal by 2011 or 2112.
The Alliance also planned to bring electric cars to the United States and Japan in 2011, and
distribute them globally by 2012.181
Toyota
By 2010, Toyota planned to launch plug-in hybrids for fleet vehicles.182 The company also
intended to build a compact, shorter-range EV by 2012.183 The FT-EV concept car was geared
for urban consumer who drove up to 50 miles per day. Masatami Takimoto, Toyotas executive
vice president commented in 2009 that the time is not here for electric cars.184 Toyota wanted
to wait on mass producing them until battery technology had improved. This decision left some
173
Michael Kanellos, Nissan Turns Over a New Leaf with Electric Car, New HQ, Greentech Media, August 2,
2009.
174
Matthew Dolan and John Murphy, Nissan, Ford Plan Electric Car Push Aided by U.S., Demand Is Uncertain,
The Wall Street Journal, June 24, 2009.
175
Ibid.
176
Ian Rowley, Introducing the Nissan Leaf Electric Vehicle, BusinessWeek, August 2, 2009.
177
Nissan Unveils Electric Car to Be Available Next Year, Reuters, August 2, 2009.
178
Better Place website, www.betterplace.com.
179
Nick Kurczweski, Renault Develops an Electric Vehicle for Israel, and a Small Car Strategy for the World,
Auto Observer, January 22, 2008.
180
Rick Kranz and David Sedgwick, Nissan: Electric Cars to Get Here by 2010, Automotive News, March 10,
2008.
181
Yuri Kageyama, Nissan Shows Test Models of Electric Car, Hybrid, Associated Press, August 6, 2008.
182
John Letzing, Toyota Reported Planning All-Electric Car for the U.S. by 2010, MarketWatch, August 5, 2009.
183
Jeff St. John, Hybrids on the Menu as Well as EVs, Greentech Media, July 27, 2009.
184
Hiroko Tabuchi, Toyota, Hybrid Innovator, Holds Back in Race to Go Electric, The New York Times, August
19, 2009.
p. 26
observers wondering if Toyota was risking falling behind in the electric car market, or if it was
correct in holding back. Were there lessons that Toyota, the pioneer of the hybrid vehicle,
learned from its experience with the Prius that led to this decision?
Mitsubishi
In June 2009, Mitsubishi unveiled its four-passenger electric car, the i-MiEV, in Japan. The car
could run up to 100 miles on a charge, with a top speed of 80 mph. The Japanese version had a
target price of $40,000-$50,000, but Mitsubishi estimated that the price would drop down to
$30,000 with tax incentives from the government.185
Honda
There were rumors that Honda would unveil a prototype of an electric minicar at the Tokyo Auto
Show in October 2009. The vehicle would hit the U.S. market in 2015.186
Tata
Tata planned to put an electric car on the market in September 2009.187 The Indica was to hit
Norway first and then expand to other European markets and possibly the United States. Tata
said it chose Norway because it had the existing infrastructure to support the car.188 The Indica
could go 125 miles on a full charge.
Battery Makers
Mitsubishi
In order to meet what it expected to be a sharp increase in demand for lithium-ion batteries, the
Japanese company Mitsubishi entered a joint venture with the GS Yuasa Corporation to build a
new battery factory in Kyoto for $21 to $32 million. The JV, called Lithium Energy Japan,
would make enough lithium-ion batteries for up to 15,000 vehicles. The goal was to meet the
expected demand for Mitsubishis electric i-MiEVs. The plant was scheduled to open by the fall
of 2010.189
This plant followed another new lithium-ion battery plant that Lithium Energy Japan began
constructing in 2008 in Kusatsu, Shiga Prefecture. That plant would have capacity for batteries
for 10,000 vehicles.190
Toyota and Matsushita
Japanese companies Toyota and Matsushita Electric Industrial teamed up in a joint venture
called Panasonic EV Energy to produce a limited number of lithium-ion batteries in 2009,
185
Ken Bensinger, Mitsubishi Electric Car to Get U.S. Market Test by PG&E, Edison, Los Angeles Times,
August 8, 2008.
186
Viknesh Vijayenthiran, Honda Electric Car on Sale in U.S. by 2015, The Car Connection, August 23, 2009.
187
Tata Electric Car by September, Nano in U.S., Thailand, Press Trust of India, June 5, 2009.
188
Tata Motors Unveils Electric Version of Indica and Ace, Asia Pulse, September 4, 2008.
189
Eric Loveday, Lithium Energy Japan to Build Battery Factory to Support Increased i-MiEV Production, All
Cars Electric, May 26, 2009.
190
Lithium Energy Japan Building Second Li-Ion Plant for Mitsubishi i-MiEV, Green Car Congress, May 25,
2009.
p. 27
scaling up in the subsequent few years.191 Panasonic EV already had Japans most advanced
battery-making facility,192 and was building a $290 million plant to make NiMH batteries. The
company expected to produce enough NiMH batteries to power 1 million hybrids a year by
2010.193 However, Panasonic EV was unable to keep up with demand for lithium-ion batteries,
which led Toyota to procure batteries for hybrids from Sanyo Electric Co.194 Toyota also opened
a battery-research center in July 2008, which it planned to grow to 100 scientists and support
staff by 2010.195
Nissan and NEC
In May, 2008, Nissan and NECs Automotive Energy Supply Corp (AESC) announced they
were investing $115 million in a factory that would have a start-up production of 13,000 lithiumion battery packs a year and ramp up to 65,000 battery packs a year by 2011.196 In July 2009,
AESC began a trial production. The batteries would be used for Nissans electric car and original
hybrid. AESC also was preparing to sell batteries to other automakers.197
Hitachi Ltd.
Japanese battery maker Hitachi Ltd. had a contract with General Motors to produce lithium-ion
batteries for 100,000 GM hybrids.198 In 2009, Hitachi produced 400,000 lithium-ion batteries
per month, and was planning to raise production to 3 million units.199
Sanyo Electric and Volkswagen
In May 2008, Japans Sanyo Electric, the worlds largest rechargeable battery maker, and
German automaker Volkswagen agreed to co-develop the next generation of lithium-ion batteries
for conventional hybrids (HEVs).200 Volkswagen was expected to use those new batteries for an
all-electric car it planned to build.201 Sanyo Electronic also supplied batteries for Ford hybrids
(HEVs)202 and had a contract to supply lithium-ion batteries for Toyotas Prius.
191
Toyota, Matsushita JV Set 2009 Start Date, Reuters, June 11, 2008.
John Murphy, op. cit.
193
Ibid.
194
Toyota to Source Lithium-ion Batteries from Sanyo, Green Car Congress, August 18, 2009.
195
Ibid.
196
Chuck Squatriglia, Nissan, NEC to Invest $115 Million in Li-Ion Battery Factory, Wired, May 19, 2008.
197
Nissan press release, Automotive Energy Supply Corporation Begins Trial Production of Lithium-ion
Batteries, July 16, 2009.
198
John Murphy, U.S. Auto Makers Target Battery Gap with Japan, The Wall Street Journal, September 15,
2008.
199
GM Hybrids to Use Hitachi Lithium-ion Batteries from 10, Associated Press, July 3, 2009.
200
Sanyo press release, May 28, 2008.
201
Domenick Yoney, Sanyo Seeking New Customers for Lithium-ion Batteries, Autoblog Green, August 24,
2008.
202
John Murphy, op. cit.
192
p. 28
Samsung SDI and Bosch

The Korean company, Samsung SDI, and the German automotive supplier Bosch set up a joint
venture called SB LiMotive to develop, manufacture and sell lithium-ion batteries for cars.
Samsung SDI already produced lithium-ion batteries for a large number of laptops, cell phones
and power tools.203 SB LiMotive was chosen by BMW to supply batteries for its future Megacity
electric vehicle.204
LG Chem
Korea-based LG Chem provided lithium-ion batteries to Hyundai and its affiliate Kia motors.
The two companies planned to mass-produce hybrid cars by 2009. LG was also chosen to build
batteries for GMs Chevy Volt.
Retrofitters
One example of an electric car retrofit business was Vancouver-based Rapid Electric Vehicles
(REV) Technologies, Inc., founded by former professional snowboarder and entrepreneur Jay
Giraud. REVs model was to convert new and used Ford Rangers and Escapes to all-electric
vehicles for sale to the North American Fleet vehicle market. The trucks had a range of up to 125
miles and a top speed of 105 mph. REV was also working on a Ford F150 model. The cost to
the customer for retrofitting was $30,000 to $45,000 per vehicle.
The company had completed three working prototypes and had orders from Canadian companies
Angel Restoration and Novex Couriers, as well as from the Province of British Columbia, U.S.
Utilities, and private corporations. REV also had a strategic alliance with Metro Motors, a major
Ford dealer in Western Canada. New Ford vehicles converted with REV and sold through Metro
Motors would retain their original factory warranty. REV then provided its own warranty for
labor, and passed on supplier warranties for parts to consumers.
In the pre-commercial stage, REV clients were shipping new and used vehicles to the company,
which was doing the conversions itself. REVs next step was to develop Plug-In Aftermarket
Conversion Kits, REV PACKs, to sell to fleet markets through existing auto repair shops. The
company planned to develop the Fast Install Training (FIT) Licensing Program for auto repair
shops to service fleet customers. REVs medium-term goal was to have these licensees provide
the warranties instead of REV. Giraud estimated that 90 percent of conversions would be done
on used vehicles, as fleets found this financially more attractive than purchasing all-new
vehicles. REV also had an alliance with Aerovironment, which had established relationships with
many U.S. utilities to bring rapid charging stations to market.
Utilities
Utilities around the world were also stepping into the electric car industry. For example, in
Germany, utility RWE joined forces with Daimler AG to run a project called E-Mobility
203
Katrin Pudenz, Bosch and Samsung SDI Joint Venture for Lithium-ion Batteries, AZT, June 17, 2008.
Jeremy Korzeniewski, SB LiMotive to Supply Batteries for BMW Megacity Electric Car, Autoblog Green,
August 4, 2009.
204
p. 29
Berlin, which would put 100 electric cars on Berlins streets. The project also involved building
500 charging stations. RWE planned to supply the electricity and install charging points in public
parking areas and at drivers homes and workplaces. The project would use Smart Car EVs and
the Mercedes EV for the project.205
Another example of utilities getting involved was in Japan, where the countrys largest power
company, Tokyo Electric Power Co. (TEPCO), began working with three domestic automakers,
Mitsubishi Motors, Nissan Motors, and Subaru-maker Fuji Heavy Industries to formulate a plan
to build a network of battery-charging stations. TEPCO was also gradually switching out its own
fleet by buying or leasing up to 3,000 electric vehicles.206 Separately, Mitsubishi was working
with Japanese utility companies to see how well electric cars ran, how reliable they were, and
how much they used the grid. 207
EXISTING TECHNOLOGIES AND MARKETS ADJUST
While the various forces driving toward the adoption of electric cars and PHEVs were gaining
momentum, innovators in combustion energy technology were striking back in an attempt to
dramatically increase fuel efficiency, thus turning themselves into a moving target.
Simultaneously, consumers were rapidly shifting their buying patterns toward more fuel-efficient
cars, leaving gas guzzlers unsold on the dealers sales floors.
Evolving Demand for the Combustion Engine
A main selling point for electric and PHEV cars was their fuel efficiency compared to the
combustion engine. But that advantage would not necessarily last for long. Internal combustion
engine makers were not standing still, but were actively working to create more fuel-efficient
engines with better performance. For example, Valeo, a French automotive supplier, developed
the e-valve system, which used electromagnetic controls to open and shut valves instead of using
the traditional camshaft-operated pushrods. The company said it could cut fuel consumption and
CO2 emissions by up to 20 percent using the e-valve system. If used to make three-cylinder and
two-cylinder engines, the e-valve system could also make the car run more smoothly.208
Other innovations included a supercharger designed by the British company Antov Automaker
Technologies, which forced more air into the engines combustion chambers, giving the car 40
percent more pulling power, or torque. It also reduced the size of the engine by 50 percent, so
the car using the supercharger would use less fuel and emit fewer CO2 emissions.209 Italian car
maker Fiat designed a new valve-control system called Multiair, which it said could translate to
fuel savings of about 20 percent, and Daimler designed a new type of engine which combined
the low emissions of a gasoline-powered engine and the high efficiency of a diesel engine.210
205
Berlin Getting Charge out of Electric Cars, Associated Press, September 8, 2008.
Japan Electric Car Makers, Utilities Plan Battery-Charge Stations, Physorg, August 5, 2009.
207
Chuck Squatrigila, Mitsubishi Testing its Cute EV in California, August 7, 2008.
208
The Old Motor Roars Back, The Economist, August 14, 2008.
209
Ibid.
210
Ibid.
206
p. 30
The ultimate goal for engine designers was developing a car that could get 100 miles per gallon.
For small cars, some analyst felt that the new technologies were making that achievement look
possible. 211
Evolving Demand for Fuel-Efficient Vehicles
Americans were certainly addicted to their cars. In 2008, Americans drove about 3 trillion
miles.212 The number of cars owned per civilian worker had increased 95 percent between 1950
and 2005, and had increased 34 percent between 1970 and 2005.213 (See Exhibits 8, 9 and 10 for
cars per capita, employee, and household over time.) In 2005, miles driven per capita topped
10,000 miles.214 (See Exhibit 11 for miles driven per capita over time.)
Americans spent 25 percent of their driving time on family or personal business, and those trips
averaged 7.5 miles. Driving to and from work accounted for 22 percent of driving time, with an
average of 12.1 miles.215 The other big chunks of time Americans spent in their cars were for
shopping (21 percent of the time, 6.7 miles per trip), and social and recreation events (14 percent
of the time, 9.6 miles per trip).216 (See Exhibit 12 for driving lengths and trip purposes.)
When the price of oil shot up well above $100 a barrel in the spring and summer of 2008,
however, consumers were quick to substitute the gas-guzzling SUVs that had become so popular
with smaller, more fuel-efficient cars. In May 2008, sales of minivans, pickups, SUVs and
crossovers were down 16 percent from May 2007.217 In June 2008, Ford sold 55 percent fewer
SUVs than it had in the previous month, and some automakers were discounting their new SUVs
by more than $9,000.218 (For more detailed information on the effects of the oil price increase,
please see the Stanford Graduate School of Business research paper, U.S. Dependence on Oil in
2008: Facts, Figures and Context.219)
CONCLUSION
As existing combustion technologies tried to strike back and consumers adjusted their buying
patterns toward more fuel-efficient cars in 2009, it seemed that the time of the electric car had
finally arrived. Yet there were still many questions to be answered. For instance, what role could
governments play in the transition from oil-based to electricity-based transportation? Were the
current governmental strategies the right ones, and were there enough financial resources
211
Ibid.
Department of Transportation, Federal Highway Administration.
213
U.S. Commerce Department, the Polk Company, U.S. Department of Transportation.
214
U.S. Department of Energy, Transportation Energy Hand Book.
215
National Travel Household Survey, nhts.ornl.gov.
216
Ibid.
217
Sarah Webster, Car Sales Drop-Off Feared; Analysts Predict Declines Across Industry in Staggered Economy,
Detroit Free Press, June 30, 2008.
218
N. Bunkley, U.S. Auto Sales Plunge in June on High Prices, International Herald Tribune, July 1, 2008.
219
Andrew Grove, Robert Burgelman, and Debra Schifrin, U.S. Dependence on Oil in 2008: Facts, Figures,
Context, Stanford Business School Research Paper No. 1997.
212
p. 31
available to make them successful? Also, how much impact would the global economic
recession of 2008-2009, and the worldwide decline in auto sales and associated financial
problems of all the major car makers have on the speed with which electric cars would be
brought to market and be accepted by consumers?
It also remained unclear which countries and companies were best suited to become leaders in
the emerging global electric car industry. For instance, how important to securing a winning
position were the relative strengths of different nations in the crucial battery technologies? How
would start-ups fare in the battle for market share with incumbent car makers? What would be
the pattern of consumer adoption of the all-electric car versus the PHEV? Would lithium-ion
battery technology progress fast enough to allow car makers to meet their deadlines for rolling
out their new electric cars? And if those deadlines could be met, could they bring the cost down
enough to sell electric cars and PHEVs on a mass scale? These and other strategic questions
required urgent answers.
p. 32
Exhibit 1
Comparison of Hybrid and Electric Cars
Car type
Hybrids
Description
Battery and Electric Motor
power car at low speeds. Gas
engine accelerates for highway
driving.
Pros
Significant
increase in fueleconomy,
especially in
stop-and-go
driving.
Cons
Price premium of
$2,500 - $8,000.
Larger vehicles
have less mileage
improvement.
Mild Hybrids
Electric motor only assists the

gasoline engine, cannot drive
the wheels on its own.
Less expensive
than full
hybrids.
Only modest
improvement in
fuel economy.
Plug-In
Hybrids
(PHEV)
Full hybrid with large battery

that can be recharged by
plugging into an AC outlet.
Enormous
boost in fuel
economy; can
go up to 120
miles on the
battery alone.
Electric Car
Powered by long-lasting
battery and electric motor. Can
have small gas engine to charge
the battery.
Almost no
emissions or
engine noise.
Recharges from
AC outlet.
The advanced
batteries required
are still in
development. The
batteries are
expensive and can
overheat.
Technology still in
development.
Vehicles
Toyota Prius,
Ford Escape
Hybrid, GMC
Yukon Hybrid,
Lexus LS600h,
Lexus 400h,
Chrysler Aspen
Hybrid, Dodge
Durango Hybrid.
Honda Civic
Hybrid, Chevrolet
Malibu Hybrid,
Saturn Aura
Hybrid.
In development
by multiple car
companies. Some
companies are
converting
existing cars into
plug-in hybrids.
In development
by multiple car
companies.
Source: The Wall Street Journal.
p. 33
Exhibit 2
U.S. Government Programs to Promote Electric Vehicles
Plan
Description
Advanced Technology Vehicle

Manufacturing Loans Program
$25 billion direct loan program for companies to develop

electric-powered cars and improve battery technology. Big
recipients include Ford, Nissan and Tesla.
American Recovery and

Reinvestment Act
$2.4 billion in grants. Of the total, $1.5 billion went to U.S.based manufacturers to produce batteries and components,
$500 million to produce electric drive components, and $400
million for building charging infrastructure and buying test
fleets. Big recipients included GM, LG Chem, Ford and
Chrysler.
American Recovery and

Reinvestment Act
$7,500 consumer tax credits for the purchase of an electric

vehicle or plug-in hybrid.
Exhibit 3
PRC Government Programs to Promote Electric Vehicles
Plan
Description
(Government Subsidy Plan)
Up to $8,800 in subsidies to taxi fleets and local

governments for hybrid and all-electric vehicles. Subsidies
for consumers to follow. $7,300 for hybrid, $8,800 for allelectric.
Automotive Industry
Revitalization Program
$1.5 billion for hybrids, electric cars and fuel cell vehicles,
technology upgrades and dedicated parts and components.
National High Technology

Research and Development
Program (863 Program)
$285 million
p. 34
Exhibit 4
Top Electric Car and PHEV Makers
Company
Country
Vehicle(s)
Type
Price
Release Date
Tesla
U.S.
Roadster,
Model S
All-Electric
$109,000,
$57,5000
Th!nk
Norway
Think City
All-Electric
$32, 000
2008
Aptera
U.S.
Aptera
All-Electric, PHEV
$25,000,
$40,000
2009, 2010
U.S.
ZX40S,
XS500
All-Electric
$19,900,
$45,000
2008, 2010
U.S.
Karma
PHEV
$80,000
2010
BYD
China
F3DM, F6DM
PHEV, All-Electric
$22,000
2008
Chery
China
S18
All-Electric
$14,600
2010
Zotye
China
SUV
All-Electric
$16,000
2009
Great Wall
China
N/A
All-Electric
N/A
All-Electric
$50,000
(U.S.
price)
Start-Ups
Miles Electric
Vehicles
Fisker
Automotive
Hafei
China
Saibao
2008, 2011
N/A
2010
Jinzhou Wonder
Motor Co. and
China,
N/A
CT&T
South Korea N/A
All-Electric
2010
Changzhou
Micro EV
Technology
China
N/A
All-Electric
N/A
2009
Geely
Automobile
China
Gleagle EK2
All-Electric
N/A
2011
Sources: company websites, BusinessWeek, AutoWeek, Los Angeles Times, Wall Street Journal, China Car Times.
p. 35
Exhibit 4 (continued)
Top Electric Car and PHEV Makers
Company
Country
Vehicle(s)
Type
Price
Release Date
U.S.
Chevy Volt,
Saturn Vue
PHEV
$35,000$40,000
2010
U.S.
Transit Connect,
Focus, PHEV,
Escape
PHEV
N/A
2010
Chrysler
U.S.
Dodge Circuit
EV, Jeep
Wrangler EV,
Jeep Patriot EV,
Town and
Country EV,
200C EV
concept car
PHEV, All-Electric
N/A
2010
Daimler
Germany
Smart Car,
Mercedes EV
All-Electric
N/A
2009, 2010
BMW
Germany
Renault
Incumbents
General Motors
Ford
France
Mini
Menage,
Kangoo
All-Electric
$50,000
2009
All-Electric
N/A
2011
Nissan
Japan
Leaf
All-Electric
$25,000$30,000
2010
Toyota
Japan
PHEV, FT-EV
PHEV, All-Electric
N/A
Mitsubishi
Japan
I-MiEV
All-Electric
$40,000$50,000
2010, 2012
2009
Tata
India
Indica
All-Electric
N/A
2009-2010
Sources: company websites, BusinessWeek, AutoWeek, Los Angeles Times, Wall Street Journal, China Car Times.
p. 36
Exhibit 5a
Automotive Battery Comparison Chart
Lead Acid
Cheap
Cost
Heavy
Weight
Poor
Energy Density
Poor
Calendar Life
Poor
Deep-cycle Life
Good
Safety-abuse Tolerance
ICE* starter Motors
Current Uses
Proven technology
Technology Readiness
*Internal Combustion Engine
Source: Cambridge Energy Research Associates, Inc.
Nickel-Metal Hydride (NiMH)

Expensive
Lighter
Fair
Fair
Good
Fair
Gasoline Hybrids
Established for automotive use
Lithium-ion (Li-ion)
Most expensive
Lightest
Good
Fair
Fair
Fair
Laptop Computers
Early stage for auto
Exhibit 5b
Nickel-Metal Hydride vs. Lithium-ion Batteries
Battery
Pros
Cons
Nickel-metal hydride
(NiMH)
Technology ready and

proven, more
environmentally friendly.
High self-discharge rate

(30% per month), heavier
than Li-ion.
Twice the power of NiMH,

size and weight advantage,
low self-discharge rate (5%
per month)
Expensive to manufacture.
Overheating concerns.
Quick aging; frequently
fails after 2-3 years.
Lithium-ion (Li-ion)
Source: Compiled by author.
p. 37
Exhibit 6
Electric Car Battery Makers by Country
Company
Country
A123
U.S.
Johnson Controls
U.S.
Ener1
U.S.
BYD
China
BAK
China
Mitsubishi
Japan
Toyota and Matsushita
Japan
Nissan and NEC
Japan
Hitachi
Japan
Sanyo Electric and Volkswagen
Japan, Germany
Samsung SDI and Bosch
Japan, Germany
LG Chem
Korea
Saft
Source: Compiled by author.
France
p. 38
Exhibit 7
Personal Miles Driven per Day in the U.S.
Source: U.S. Department of Transportation, Plug-in America.
p. 39
Exhibit 8
Vehicles per 1,000 People in the U.S.
1000
Vehicles per Thousand People
900
800
700
600
500
400
300
200
100
19
0
19 0
0
19 5
1
19 0
1
19 5
2
19 0
2
19 5
3
19 0
3
19 5
4
19 0
4
19 5
5
19 0
5
19 5
6
19 0
6
19 5
7
19 0
7
19 5
8
19 0
8
19 5
9
19 0
9
20 5
0
20 0
05
Source: U.S. Department of Energy Transportation Energy Data Book.
Exhibit 9
Vehicles per Civilian Employee
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Source: U.S. Commerce Department, the Polk Company, U.S. Department of Transportation.
p. 40
Exhibit 10
Vehicles per Household 1960-2000
60%
50%
No vehicles
40%
One vehicle
30%
Two vehicles
20%
Three + vehicles
10%
0%
1960
1970
1980
1990
2000
Sources: U.S. Department of Transportation, U.S. Census Bureau.
Exhibit 11
Vehicles and Vehicle-Miles per Capita
1950-2005
Vehicles per Capita
0.8
0.7
10,000
Vehicles per Capita
8,000
0.6
0.5
6,000
0.4
0.3
0.2
Vehicle-Miles per Capita
4,000
2,000
0.1
0
Vehicle-Miles per Capita
12,000
0.9
0
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Source: U.S. Department of Energy Transportation Data Book.
p. 41
Exhibit 12a
Share of Trips by Purpose in the United States (2001)
30%
25%
20%
15%
10%
5%
O
th
er
W
or
k-
To
/fr
re
O
la om
th
te
w
er
d
or
bu
fa
k
m
si
ne
ily
/p
ss
er
Sh
so
o
na pp
in
lb
us g
Sc
in
es
ho
s
ol
/
C
M
hu
ed
rc
ic
h
al
/d
Vi
en
si
ta
tf
l
Va
O
r
ie
th
c
n
er
ds ati
on
so
/r
el
ci
a
al
tiv
/re
es
cr
ea
tio
ns
0%
Source: National Household Travel Survey, nhts.ornl.gov.
p. 42
Trip Lenght in Miles
Exhibit 12b
Trip Length by Purpose in the United States (2001)
50
45
40
35
30
25
20
15
10
5
0
ns
tio
ea
cr
er
/re
l
th
a
es
O
ci
tiv
so
la
re
er
s/
th
O
nd
rie
tf
si
Vi
n
tio
l
s
ta
ca
es
en
Va
in
/d
us
al
ic
ch al b
ed
ur
n
h
M
so
/C
er
ol
ho ily/p
Sc
m
fa
er
ss
th
O
ne
si
ng
pi
bu
op
d
te
Sh
la
re
kk
or
or
W
w
om
/fr
To
Source: National Household Travel Survey: nhts.ornl.gov.

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CASE: SM-175

THE GLOBAL ELECTRIC CAR INDUSTRY IN 2009:

Large-scale transformation of the automotive industry from oil dependence to reliance on

Eric Mayne, Future Shock, Wards Autoworld, June 2009.

The PRC Government

China Auto, May 2009.

Aptera website FAQ http://aptera.com/faqs.php.

Philip Reed, How to Get a Used Car Bargain, Edmunds.com.

A123 Systems press release, August 5, 2009.

A123 press release.

The Electric Car Lives, BusinessWeek, June 16, 2008.

Samsung SDI and Bosch

Electric motor only assists the

Full hybrid with large battery

Source: The Wall Street Journal.

Advanced Technology Vehicle

$25 billion direct loan program for companies to develop

American Recovery and

American Recovery and

$7,500 consumer tax credits for the purchase of an electric

(Government Subsidy Plan)

Up to $8,800 in subsidies to taxi fleets and local

National High Technology

Nickel-Metal Hydride (NiMH)

Technology ready and

High self-discharge rate

Twice the power of NiMH,

Toyota and Matsushita

Nissan and NEC

Sanyo Electric and Volkswagen

Samsung SDI and Bosch

Source: U.S. Department of Transportation, Plug-in America.

Source: U.S. Department of Energy Transportation Energy Data Book.

Sources: U.S. Department of Transportation, U.S. Census Bureau.

Vehicles per Capita

Vehicle-Miles per Capita

Vehicle-Miles per Capita

Source: U.S. Department of Energy Transportation Data Book.

Source: National Household Travel Survey, nhts.ornl.gov.

Trip Lenght in Miles

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