Charged 2012 | Ray Lane On the Future of the EV Industry

Ray Lane (left) chats with Fisker sales manager Eric Schaefle at Charged

The closing keynote at the Silicon Valley EV Symposium was Ray Lane, managing partner at VC Firm Kleiner Perkins Caulfield & Byers, and Fisker board member. Ray began with his involvement with the Electrification Coalition:

“The Electrification Coalition is a lobbying group comprised of about 15 CEO’s.  It was started by conservatives and liberals out of a concern for national security, and frustration that that 90% of world’s oil is in hands of foreign governments, not being traded in a free market. The United States has no influence on oil prices.”

I sure wish he could’ve made that clear to California voters back in 2006, when most of us voted against Prop 87 because oil company advertisements convinced enough voters that our paltry little tax would raise the price of gas.

Lane went on to explain that the EC wants to diversify fuel sources, so we’re not so dependent on one single energy source. That’s just smart business. He’s hugely disappointed that Obama hasn’t focused enough on energy policy, and hopes he’ll give it as much fervor in his next term as he gave to healthcare in 2009. He named Fred Smith of FedEx as a devoutly Republican business leader who is also a real backer of the EC. FedEx is also walking the walk, with their industry-leading fleet diversification. They have more electric trucks than any other major shipping company.

When asked what he thought of internet-enabled cars, Lane said: “Get EV’s out on the street first, get to critical mass first, then think about apps and such. Then people can view the EV as their rolling personality, like a smart phone or tablet, and transport that to the car. App developers will have plenty of opportunity, but the market isn’t there yet. Automakers have difficulty accepting concept of installing a third party device for the instrument panel, like the iPhone or iPad. But they will need to come on board.”

I was very disturbed by the amount of time focused on this at the conference, and at the LA Auto Show. Sure, driving sucks. It’s no fun most of the time. But if you don’t want to commit 100% of your attention to the task of driving, get someone else to drive. Like Google. I was surprised nobody talked about the self-driving car at this event. Anyone who’s presenting distractions as a serious option for vehicles needs to first consider making the car fully automatic.

Lane on Clean Tech Investing

“We (Kleiner Perkins) championed clean tech investing, mainly to get freedom from foreign oil. In 2005 we understood more than most other VC firms that clean tech investing would be way different than internet technology investing- it’s more capital intensive and requires a much longer term payback. The question is: can VC’s practice in this space? Can we reduce risk and increase capital efficiency? Some of our clean tech investments make the auto industry look cheap!

For example, we have one that makes natural gas out of coal, which we sold to the Chinese. It costs $1.5 billion to build one plant. The recession disrupted clean tech investment and it’s worse with the current political bifurcation. 80% of Venture Capitalists have walked from Clean Tech, we’re going to stay in, although we may move more toward Agriculture and Water, and away from biofuels. There’s been too much focus on drilling domestically, creating short term jobs, but we need to think more long term. This election can’t end soon enough.”

Lane went on to talk about where he sees the industry going — “The next generation will wonder what a gas station is- it will be like describing life without a fridge or TV. They will prefer the convenience of charging while parked over the INconvenience of stopping for gas. Most estimates say 5-8% of fleets in next 10 yrs will be electric. I think it’s much more than that.

I’m more bullish on extended range EV’s because Battery EV’s won’t interest most consumers. Most will be ok with using 70% less gasoline, like in the Volt, over 100% less gasoline, like in the Leaf, because they won’t have to change their driving style at all. ICE development has had 100 years to improve efficiency & cost, it’s not going to get noticeably better, and can’t compete against EV on efficiency. But there is no Moore’s Law for batteries, they’re just not advancing that quickly.”

I was sad to hear this, as I like to think it is. But this article explains the arc of progress in the rechargeable battery industry.

What do you look for in a startup?

We work hard to help companies do very hard things. We don’t have a crystal ball, but we think we can make 10 times their money- We want the most disruptive, biggest solutions. We look at a company and ask ourselves:

  • How disruptive is it?
  • How feasible is it — cost, time, etc?
  • How will it get fully funded- we can’t provide 100%
  • Is the team experienced, entrepreneurial, smart, ready to take on these challenges?

What do you think of the business model of companies like MotoCzysz or Mission, who are selling electric power trains to OEM’s?

“Some big OEM’s are taking this very seriously, others just putting toe in the water, others hoping it goes away. Design and powertrains are what creates a brand’s competitive advantage. Powertrains are the biggest prize possession for an OEM, so an OEM won’t sell theirs to a competitor. But they may feel they’re lagging behind and want to catch up on power train development by buying from a developer, then learning and developing their own.

It’s going to be hard for third parties to convince OEM’s to buy their power trains & use them in mass production. At Fisker we started with a powertrain that had 20 years development with military, but we have since moved our development in-house. It’s nice to learn from existing powertrain developers but OEM’s will want their own powertrain.

What do you think of wireless charging?

“It has a lot of promise and will change the industry and will happen. The only reason we didn’t invest in wireless (handheld) device charging is because we thought people wouldn’t buy it. The ease of parking vs plugging is not enough of a business case for wireless. The easiest thing I do every day is plug in my car. I haven’t been to a gas station in 5 months. And I use 110v to charge my Fisker.”

“I don’t believe consumers can be taught total cost of ownership. EV’s need to compete on sticker price. At Fisker we designed a car that looks more expensive- it looks like a $140,000 car. But sells at as little as $96,000, even though it’s a loss leader at that price. (perhaps they’re not in a position to be selling at a loss?) The biggest rap the Chevy Volt has taken is that it’s not worth $41,000. OEM’s need to develop EV’s from the ground up, not just convert existing platforms to meet California’s EPA requirements. I enjoy being in my car so much, I love the experience of quiet luxury so much that I don’t even turn on the radio.”

This makes me worry for the state of the human race. Even when I posted a screen shot from VIA’s website in this article, which clearly shows that I’ll save $3,093 per year owning a VIA instead of a comparable gas-only truck, I still had someone gripe about the sticker price in the comments. It’s right there, clear as day in a nice colorful bar graph. That $3,093/year could pay for a lot of really fun stuff. But people either do all their own oil changes & tune-ups, brew their own biodiesel from stolen used cooking oil, or simply cannot comprehend a life without gasoline taking a major percentage of their monthly budget.

 

 

Susanna Schick

Susanna is passionate about anything fast and electric. As long as it's only got two wheels. She covers electric motorcycle racing events, test rides electric motorcycles, and interviews industry leaders. Occasionally she deigns to cover automobile events in Los Angeles for us as well. However, she dreams of a day when Los Angeles' streets resemble the two-wheeled paradise she discovered living in Barcelona and will not rest until she's converted the masses to two-wheeled bliss.