Who Will Pay for San Onofre Nuclear Power Plant Fiasco?

San Onofre nuclear power plantIf you’ve ever driven down Highway 5 going to San Diego, you’ve probably seen the San Onofre nuclear power plant. There’s been a lot of turmoil over it lately since evidence of a nuclear leak has come out. Whether you’re talking about powering homes or electric cars, it does make for a difficult situation for nuclear power ever since the Fukushima nuclear crisis in Japan two years ago. Southern California is now relying on imported energy because of the prolonged outage of the San Onofre Nuclear Generation Station (SONGS) that will now be closed permanently.

The two nuclear reactors at San Onofre have been in place there for many years in the northern part of San Diego County and within the Camp Pendleton military grounds. The reactors have become iconic symbols in the area, similar to surfers riding waves about a mile off the coastline of the San Onofre State Beach. Southern California has met the constraints with “significant refinements” to demand response programs, according to a US Nuclear Regulatory Commission (NRC) report, as well as installing more capacity resources. The plant is used by Southern California Edison for power in its coverage region; the utility will have to find other ways to replace the 2,200 megawatts that the nuclear plant provided.

According to the LA Tmes: “The decision to decommission the San Onofre nuclear power plant doesn’t end its saga, which instead promises to drag on for decades. There are long-term uncertainties about where to find replacement power for Southern California Edison customers and how long to allow the plant to take up beach space in Camp Pendleton before demolishing it. Before that, though, the state’s Public Utilities Commission will have to decide who should pay for the fiasco that led to San Onofre’s early retirement.”

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Hey car shoppers: Want a sweet deal on a plug-in EV? Now’s the time – the price wars are here!!!

dealer sales lotsPlug-in electric vehicles have been manufactured long enough to start seeing some of the resources of the global economy – being manufactured long enough at scale to cost less to build, and a competitive marketplace driving down prices even further. Government incentives have played their part, along with the “coolness” of launching a new cutting edge technology scooped up by a wave of early adopters. That part is over, so now automakers and their dealer networks have to target typical car shoppers and tire kickers.

Here’s some of the latest developments in a price war that’s just begun to bring expensive technology more into the realm of typical car shoppers (like me) who aren’t going to lease a Tesla Model S.

  • Nissan cut the price of the 2013 Leaf about 18% — March and April saw sales volume more than triple those of previous months.
  • Honda cut monthly payments of its 36-month lease from $389 to $259, and is pumping up the number of Honda dealers who carry it from 36 to more than 200.
  • Ford, Toyota, Mitsubishi, Fiat, and Chevrolet did some deep discounting when launching new EV models this year.
  • The Chevrolet Spark EV is costing less than $20,000 after the federal tax credit of $7,500 is applied, and certain states are offering tax credits and incentives. There’s also a lease offer on the Spark EV at $199 per month for a 36 month lease with $999 down; this is directly competitive with the Fiat 500e lease.
  • The Smart Fortwo ED will be offering a separate cost for acquiring the electric car and renting its battery. The US pre-incentive base price is $25,750 including shipping – and that’s not counting the battery for which rental fees still need to be worked out. In Europe, the monthly battery rental is 65 euros, or about $83.
  • Mitsubishi and Toyota threw out some huge incentives to get the ball rolling – selective dealers received as much as $10,000 to sell the i-MiEV electric car. Toyota dealers have dropped the sticker price of the RAV4 EV $10,000 in a few markets for limited time periods.
  • General Motors is offering cash rebates of $4,000 on the 2013 Volt and $5,000 on the 2012 model. The rebates are being offered from June 3 to July 1, and are in addition to the federal tax credit and available state incentives. You can lease a Volt now for $2,399 down and $269 per month for 36 months.
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California legislature dealing with take away of carpool lane access for EVs

California carpool lanesCalifornia owners of plug-in electric vehicles have been furious with the state government for allowing disappearance of HOV carpool-lane single passenger access on a few major freeways – turning them into toll roads and taking away one of the key benefits of spending more on a hybrid or electric vehicle. The Harbor freeway (110) in Los Angeles has been one of them, and the San Diego freeway (405) has been scheduled to go that same route. The state has been looking for additional tax revenue and will continue expanding the toll roads that require FasTrak and E-ZPass billing and payment systems.

On May 20, the California Assembly passed a bill by a wide margin to extend carpool-lane access to EVs and other clean vehicles. AB 266 also gives these vehicles access to carpool lanes converted to toll roads. The bill is now moving on to the state Senate.

Under the legislation, cars with while clean-air stickers – EVs, hydrogen fuel cell, and compressed natural gas vehicles – would have carpool lane access to 2020. If the bill doesn’t pass, the state program will run out in 2015. Cars with green stickers – plug-in hybrids – would have carpool lane use until 2018. There’s no limit to white stickers, but green stickers cap out at 40,000 vehicles. That limit was originally placed on Toyota Priuses, which is why you’ll see newer models driving down the freeway with no stickers, while an older model has a carpool-lane sticker.

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Bob Lutz May Become Fisker Automotive’s Godfather

Bob LutzBob Lutz will be remembered for a lot of things in the auto industry, and one them might be as the Godfather of Plug-in Hybrids.

The former vice chairman of General Motors is credited with the concept that turned into the Chevy Volt. He also helped startup Via Motors, a maker of converted plug-in hybrid work trucks. Now he’s going after Fisker Automotive as it barely stays alive.

Another company that he leads, boutique automaker VL Automotive, has cut a deal with major Chinese auto parts supplier (and chief investor in what used to be called A123 Systems) Wanxiang Group to buy Fisker for $20 million. That may sound like chump change for acquiring an automaker, but Fisker might need to take that offer.

While he took the Dept. of Energy to task for funding Fisker, and Fisker executives for not playing by the rules of the game in vehicle manufacturing, Lutz did admit in his Forbes column that the Karma is “quite possibly the most beautiful four-door sedan ever.” And he thinks its powertrain technology is “ground-breaking.”

Back in January at the Detroit Auto Show, Lutz and VL Automotive showed off a Karma adapted with just a gasoline engine, called the Destino. He loves the design, but thinks it’s not a pragmatic model to run as an extended range plug-in. Lutz thought it worked better running on a 638-horsepower supercharged V8.

Details on the $20 million investment aren’t very clear yet, but it appears that Lutz will want to have Fisker continue making plug-in hybrids and not converting over to gas-engine Destinos. Fisker owed the Dept. of Energy $171 million, and it’s likely that won’t be paid back. Fisker has laid off a lot of its staff and has been in talks with potential investors to sell its assets. Bankruptcy is likely to happen, but this VL Automotive/Wanxiang acquisition could stop that from happening.

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Driverless Cars Becoming its Own Industry

Driverless autonomous carRobotic, autonomous, driverless cars are starting to look like the real deal and go mainstream. Here’s some evidence: It now has a trade association and they’re having a conference!

The Association for Unmanned Vehicle Systems International (AUVSI) will be hosting its Driverless Car Summit at MotorCity Hotel in Detroit, June 11-13, 2013. Driverless Car Summit 2013 will be dedicated to understanding and working to solve the core challenges impacting driverless vehicle integration onto tomorrow’s roadways.

For two days, leaders from the robotics and automotive sectors will have discussions with their colleagues and counterparts with a common goal of making driverless cars a reality by 2022. The event will feature a mixture of inspiring presentations as well as interactive discussions designed to be the first steps in developing a path toward making driverless vehicles a mainstream mode of transportation.

Keynote speakers will be Rick Snyder, Governor of Michigan; US Senator Carl Levin; John Maddox, Associate Administrator, Vehicle Safety Research, NHTSA; and John Augustine, Managing Director, ITS JPO, US Dept. of Transportation. Two of the highlighted speakers will be Dr. Gary Smyth, Executive Director, North American Science Labs for General Motors; and Dr. Chris Urmson, Tech Lead, Google, Inc.

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Why AeroVironment is an EV Charger Company to Watch

Ford AeroVironment EV chargerElectric vehicle charging solutions provider AeroVironment just made an agreement with Ford Motor Co. to be the preferred installation partner and authorized charging station supplier for its plug-ins – Ford Focus Electric and the C-Max Energi and Fusion Energi plug-in hybrids. Customers will get a 240-volt charger and schedule a turnkey professional installation after making a call to AeroVironment (with a web-based option soon to come). AeroVironment also brings its nationwide network of certified installers and a three-year onsite parts and labor warranty.

AeroVironment has become the leader in the field – having installed 11,000 charging stations (home, public, and workplace). Two of its competitors – ChargePoint and ECOtality – have deployed US Department of Energy-grant funded installations, but AeroVironment has surged forward through its partnership with the Nissan Leaf and other customers who are very familiar with the diverse company known for its technology expertise. AeroVironment plays a leading role in supplying the US Dept. of Defense and its military organizations with electric-powered unmanned aircraft systems (aka drones). In the early 1990s, AeroVironment worked with General Motors on an electric vehicle test program that became the EV1 electric car.

The Ford program is a little bit different than the dealer program AeroVironment announced at the National Automobile Dealers Association convention earlier this year. Those buying a battery electric vehicle or plug-in hybrid have the option of financing the charger in combination with the vehicle at the time of sale. Dealers can now offer a one-stop shop experience for EV drivers. Dealers can offer various “bumper-to-bumper” warranty options for the chargers that match the financing terms of the vehicle. Chargers bought through the dealer program are installed by a licensed electrician certified in EV charging installation in all 50 states.

Nissan is working with AeroVironment on this program, and the charging station maker may do something similar with BMW, Mitsubishi, and other OEMs. Ford’s alliance with AeroVironment is very similar to the one-stop financing program with Nissan. Ford is seeing gradual increases in EV sales, and is getting a lot of attention with its C-Max Energi and Fusion Energi plug-in hybrids. It wouldn’t be surprising to see other major OEMs announce similar supplier agreements with AeroVironment.

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Don’t Throw Hydrogen Fuel Cell Vehicles Out the Window

hydrogen fuel cell vehiclesWhile some of you may think that hydrogen fuel cell vehicles are entirely lofty and unrealistic (and sounded good 10 years ago), here are few interesting snippets, and not necessarily just under the hood….

  • Hyundai has committed to supporting the Mayor’s London Hydrogen Partnership in the UK. The city has launched a project worth more than 50 million in pounds, funding hydrogen buses, taxis, scooters, refueling stations, and materials handling vehicles. Hyundai will provide its expertise in fuel cell vehicles to the program, helping to build the infrastructure needed to support deployment of fuel cell vehicles in the region.
  • California Fuel Cell Partnership anticipates 68 hydrogen fueling stations will be in place in the state by 2015, service 10,000 to 30,000 fuel cell vehicles by 2016.
  • Ballard’s ClearGen proprietary proton exchange membrane fuel cells are now powering a stationary power generation platform at the Toyota facility in Torrance, Calif.
  • BMW’s manufacturing plant in Spartanburg, S.C. has more than doubled its fleet of material-handling equipment using hydrogen fueling systems made by Linde North America. Hydrogen powers lifts and trucks that were previously powered by lead acid batteries. Hydrogen now powers 230 of these vehicles at the plant.
  • Aston Martin was scheduled to race its hydrogen-powered Rapide S during 24 Hours of Nurburgring.
  • Hydrogen fuel cell vehicles will cost 1/20th of the initial pricing years ago when prototypes were being developed, Toyota said. They prototypes were costs makers about $1 million each and are now in the neighborhood of $50,000 – paving the way for a more workable business model. Toyota will start selling its fuel cell vehicle in the US in 2015, though the sticker price will be more than $50,000 and under $100,000.

Why I think hydrogen fuel cell vehicles will be a profitable growth segment within 10 years:

  • Honda, Mercedes Benz, Toyota, and General Motors are taking the technology seriously, testing out fuel cell vehicles and appear to be gradually ramping up to production volumes.
  • The fueling is fast. While there aren’t enough fueling stations in place today, as that infrastructure grows, you’re talking about a fueling process that can be completed in three-to-five minutes – just like a regular gas station and sometimes even faster.
  • California Air Resources Board and a few other agencies place fuel cell vehicles at the top, or near it, of its lowest CO2 emitting vehicles. That’s one of the reasons CARB has included fuel cell vehicles, along with battery electric vehicles and plug-in hybrid electric vehicles, on its list of zero emission vehicles required for sale in the state. Fuel cell vehicles are making electricity to power the car’s motor – this one comes from fuel cell stacks while electric vehicles and plug-in hybrids are receiving it from battery packs.
  • While it’s expensive and time consuming to produce hydrogen, it is getting better all the time and coming from various sources. There’s a lot of hydrogen going into commercial and industrial applications such as forklifts, so production and distribution of hydrogen is staring to reach economies of scale.
  • The tailpipe emission is water vapor – H20. Not so bad, eh?
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Please Step Away from the Electric Car, Says Car Alarm Guru and House GOP Watchdog Darrell Issa

Issa_Darrell_CongressmanUS Rep. Darrell Issa (R-Calif.) is usually very effective and shrewd at what he does. Case in point:  the recall election of California Governor Gray Davis in 2003. Most people think of that gubernatorial transition defined by the launch of Arnold Schwarzenegger’s term in the job. Arnold wouldn’t have had that job if it weren’t for Darrell Issa. Issa led the maneuver and funded $1.6 million into the recall campaign, which tossed out Davis. Issa wanted the job, but action movie megastar Schwarzenegger stepped forward late in the game and Issa didn’t think he stood a chance of winning, which was probably true. So he endorsed Arnold.

Issa leads the Government Reform and Oversight Committee, and considers himself the House GOP’s chief watchdog. He’s committed to accelerating a probe into US Dept. of Energy loans into greentech and alternative-fuel vehicle investments in the wake of the Fisker Automotive debacle – a company that will likely be filing for bankruptcy very soon. Issa would like to know whether Fisker should have been granted the loan, and whether the Fisker and lithium battery maker A123 Systems loans and financial failures have thrown a wrench into the gears for other, more capable companies that may have been better to grant the loans to. Fisker “is a design company, not a manufacturing company,” Issa said to Automotive News. “It was destined to fail from the beginning. The greater concern is, does this affect more viable companies, whether they received loans or not.”

Fisker Automotive only received $193 million of the $529 loan initially awarded by DOE through its Advanced Technology Vehicle Manufacturing Loan Program. Ford Motor Co. was the largest recipient, with loans worth $5.9 billion, followed by Nissan Motor Co., which received $1.4 billion. Tesla Motors Inc. drew down its $465 million of loans last year and has announced a plan to repay the funds much faster than its original commitment. But it’s been losses taken by DOE fund recipients Fisker, A123 Systems, and solar energy company Solyndra that have been the focal points of strife; Solyndra drew intensive debate and criticism following its bankruptcy after having been awarded $535 million by DOE.

In May of 2012, Issa sent a letter to then executive chairman Henrik Fisker, asking him to produce all documents related to the company’s loan application, and all of its communications with the Energy Department about the financing. Issa was suspicious that Obama administration officials were giving speedy approvals and special treatment to some companies, while many other had been waiting a long time and were not receiving responses.

Issa has taken pride in being the key watchdog tracking the Obama administration, similar to the role U.S. Rep Henry Waxman (D-Calif.) played during the George W. Bush presidency. Leading the minority party in Washington creates an environment ripe for conflict and drama, which usually delivers plentiful press coverage. He’s been very good at gaining media coverage, and his stark visual presence also gives him an edge for gaining publicity.

Issa had an interesting background. He’d been charged with auto thefts several years ago, and was able to clear his criminal record and become a big name in the car alarm business in the 1980s. He was best known for launching the famous car alarm, the Viper, which featured his own deep voice confronting would-be burglars to “please step away from the car.” That deep voice comes in handy as he sits behind the microphone during hearings, taking on the Obama administration’s efforts to promote greentech and alternative fuel vehicles.

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How to Make it in the Alternative Fuel Vehicle Business – Part 1

dealer financeFor fans of alternative fuel vehicles and technologies, it’s been a dreary time. The A123 Systems and Fisker Automotive dramas have been all over the internet. There have been other time periods where bankruptcies, shut downs, buyouts, closedowns, and other sad tales have sunk promising startups. Lately, it’s been the focal point of political jabs at the Obama administration and symbols of frustration many people have about how extremely difficult it is to move forward in the cleantech business. That applies to solar and wind power, advanced biofuels, fuel cells, biomethane, next-gen lithium batteries, and energy storage. They’re incredibly expensive and need the very best in research and development – and a helluva lot of time. I do sense that many Americans would like to see alternative fuel vehicles and cleantech industries thrive, since we’ve lost so many jobs and opportunities to other global markets, and new technologies have buried several industries that used to be our meat and potatoes.

So, here’s my somewhat wild thinking on how you can make it in the slowly emerging field of green cars, fuels, and technologies. (I’m only going to start with one concept this time, and will come back with a few other crazy ideas later…)

1. Start up your own captive finance company                                                                If you’re Tesla Motors, Wheego, Detroit Electric, Smith Electric Vehicles, Via Motors, an alternative fuel vehicle conversion company (like Quantum, Roush CleanTech, or Venchurs), or Fisker Automotive if it survives a near-death experience – you’d probably better start a captive finance company. This is a financial arm that provides most all of the vehicle loans and leases to your customers. If you have the option, it’s better to have your own bank.

There’s three good reasons for doing it – one is that you could become similar to nearly all your major OEM competitors, and would have a potentially extremely profitable division. For major automakers, building and marketing new vehicles can sometimes be a loss leader (the same being true for dealers on the sales/marketing front). You need to have an impressive lineup of fresh, good looking new cars packed with cool technologies that are well marketed through some kind of dealer network. But you’re going to see capital growth through other business units – pre-owned vehicles, aftermarket products and upgrade packages, service and maintenance extended warranty programs, and financing. Financing could be the best one, once the cash flow is solid and the risk management team has done its homework.

The second reason is that you can float the market a bit with incentives – rebates, cash back, discount financing rates, zero percent loans, etc. Leases have a lot of perks to offer, too, especially for expensive cars like luxury and plug-in models (or better yet – luxury plug-in models). You could be a moderately upper income person who goes and leases a Tesla Model S when purchasing it was out of the question. If you talk to some OEMs, such as Toyota, they will warn you to be very careful about the loans and leases you’re putting out there. Don’t flood the market – you will regret it. There are incentives out there right now for plug-ins such as federal tax incentives and state rebates, but those won’t last forever and have been a bit questionable in being effective in selling new plug-in electric vehicles. The Nissan Leaf and Chevrolet Volt have been sold through incentives and lease deals, and that won’t last forever. But other manufacturer incentives packaged through captive finance arms can make the product competitive and profitable for OEMs. Of course, building them for years and streamlining economies of scale brings down the pricing, but the financing arm closes the deal.

And number three – fleet sales and financing programs. Fleet sales require a delicate balance for OEMs, much like retail leasing. Automakers are selling around 20% of their new vehicles to fleets through corporate, government, delivery, utility, car rental, and other fleet segments. They’ve had to be more conservative about the sales and how they’ve affected used vehicle values and brand image. Some alternative fuel vehicles, such as CNG and LNG mid-size to heavy-duty trucks, are doing well with fleets. For passenger vehicles, it’s still very early in the game. Hybrids are starting to see sales pick up with fleets, but there’s a long way to go.

Fleet managers can be very conservative about risk taking with new technologies, and want to see the safety, reliability, resale value, and charging/fueling infrastructure solidly in place. They like to see incentives out there, and some of the programs, especially in California, have encouraged fleets to replace ICEs with AFVs. OEMs don’t have as much to do with financing fleet acquisitions – companies like GE Capital Fleet Services, ARI, LeasePlan, PHH Arval, Wheels, and Enterprise’s fleet division are going to lease a lot of these vehicles. But automakers do offer fleet incentive programs and usually have fleet sales departments that go direct to clients of all types. The captive finance executives at OEMs are part of these transactions and have their say about what goes into fleet sales volumes, pricing, and funding.

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EPA Proposed Rules on Clean Gasoline and Tailpipes Has Supporters and Enemies

catlytic converterThe US Environmental Protection Agency just proposed a package of rules to make gasoline cleaner, along with stricter limits from the tailpipes of car. The rules are known as Tier 3, and are being supported by automakers, as they would bring federal standards in line with those of California. In California, gasoline must have a lower sulfur content to reduce tailpipe emissions. Here are a few of my thoughts on the proposed rules after reading about it:

  • The proposed rules are similar to the low sulfur, and later ultra-low sulfur, diesel standards that California mandated and that were later adopted nationally. That has gone pretty well, along with changes being made to diesel powertrains, producing what’s now called “clean diesel.” It might be a good sign that adopting these standards for gasoline engines could work out.
  •  Oil companies are objecting. Going to low-sulfur gasoline could cost tens of millions of dollars for the upgrade. Oil industry lobbyists have warned that a few refineries would have to close down rather than going through such costly retooling. Gasoline prices are going to come up to pay for it, they warn. Supporters of the rule argue that such a price increase won’t make too much of a difference, especially since new engine technology will save consumers more money than added costs at the pump.
  • The equipment would add an estimated $130 to the cost of a car but reduce certain emissions by 80% and, used nationwide, could prevent an estimated 2,400 premature deaths due to air pollution annually, the EPA said.
  • Catalytic converters are a big part of the rule – automakers want to see the same rules implemented nationally that are going to be adopted in California in 2017 for advanced catalytic converters.
  • The EPA says that reducing sulfur would extend the lifetime of a catalytic converter to 150,000 miles from 125,000, which would go over well with a lot of car owners who are tending to keep their cars 11 or more years these days. Catalytic converter makers like it too – in that it will bring them more business. Dow Corning and BASF have given the EPA the “high five” on the new rules.
  • Low-sulfur fuel would also help existing cars run more cleanly, akin to taking 33 million older cars off the road, according to the Alliance of Automobile Manufacturers and Association of Global Automakers.
  • The EPA’s proposal would reduce the sulfur content of gasoline from 30 parts per million to 10 parts per million by 2017, the same standard as Europe, Japan and California.
  • The New York Times took the EPA proposed rule to task for creating two potential problems:  hurting the chance of alternative fuels and technologies (such as electric vehicles) to have a viable chance of surviving in the car market; and adding more complexities and puzzlement to the byzantine layer of federal standards on vehicle emissions.
  • If the federal government does adopt these standards, they’ll be similar to the 54.5 mpg by 2025 rule – there would be no favorite fuel or technology. The goal is reducing tailpipe emissions and consuming less gasoline.
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