Wanna Bet? Putting Money Down on the Future of EVs and Fuel Cells
Maybe you'd rather bet on the stock market--and if so, there's another reason to get your head examined. If by some chance you don't spend your time on a minute-by-minute analysis of Tesla Motors stock performance, you can check it here. The share price has been up and down since Tesla (maker of the super-sexy $109,000 Roadster) became the first EV company to go public June 29, but it's been consistently above the initial offering at $17.
I know that if Tom and Ray had wanted a stock analyst, they would have raided TheStreet.com instead of fishing me out of the gutter, but bear with me a minute here. Whether you're an optimist or a pessimist about Tesla's stock (and the company itself) probably depends on your attitude toward EVs in general. Greg Blencoe, for instance, thinks it will be "in the single digits" a year from now. And he's challenging Tesla CEO to take a $1,000 bet that he's right. Musk, who probably has other things on his mind, hasn't responded yet.
Blencoe, a hard-core hydrogen activist and battery skeptic, is definitely a betting man. He has had another wager going with climate blogger Joseph Romm since 2007, and that one is about the percentage of new cars that will be running on hydrogen in 2015. If fuel cell sales hit one percent of the U.S. market by 2015, Blencoe wins; if not, Romm wins. Blencoe tried to get Romm to admit he was in the wrong last year, but no dice. Romm told me the whole thing was "a sucker bet," and that he'd be willing to triple the stakes to $3,000.
Automakers (including Daimler, Ford, GM, Hyundai, Kia, Honda and Toyota) said last year in an open letter that "from 2015 onwards a quite significant number of fuel-cell vehicles could be commercialized. This number is aimed at a few hundred thousand units over life cycle on a worldwide basis." They didn't italicize "could"; I did. But if the U.S. car market is 13 million in 2015 then one percent would be 130,000, and I'm not sure we'll get to that by 2015.
Frankly, I'm not sure about all this betting stuff. The most famous wager of this type was launched in 1980 between Stanford biologist Paul Ehrlich, author of the bestselling Population Bomb (which projected disaster ahead if we didn't control the birth rate), and the University of Maryland's Julian Simon, a conservative activist. Ehrlich predicted that the price for five metals (copper, chromium, nickel, tin and tungsten) would rise by September 29, 1990 (because resources would get scarce) and Simon said they'd drop.
Prices went down and Simon won. The whole thing became a big victory for environmental critics. But Ehrlich might have triumphed if they'd figured out a way to put a price on soils, forests, species diversity and other key environmental indicators.
OK, I haven't put any money down, but Tesla stock could indeed be in single digits in a year. But stocks fluctuate wildly; even if Musk loses the bet he's probably not going to take, it wouldn't necessarily mean all that much. Blencoe told me there could be "100,000 to 200,000" hydrogen cars on the market here by 2015, but if pressed I'd probably bet against that number. My guess is that they'll still be scattered around in demonstration projects by then, even though Toyota has famously said that the fuel-cell cars it intends to introduce in 2015 could cost $50,000. The company has also said people would be surprised at how much it will be able to bring the costs down in the next few years.
I would still say that the more interesting bet is on the size of the market for EVs, which I believe will take off before fuel cells (though the latter has excellent long-term prospects). Will "75 percent of miles traveled by 2040 be electric miles"? The Electrification Coalition predicts that, but only if its rather demanding road map (including lots of government subsidies) is passed. But the Boston Consulting Group sees only "limited" penetration by 2020 unless we invent better batteries.
Mike Sullivan, a Los Angeles Toyota/Lexus dealer, is the biggest seller of hybrids in the country and is soon to expand into an off-the-grid, solar-powered dealership for the Fisker Karma plug-in hybrid. It's safe to say he likes battery-enabled EVs, but he's not willing to bet they could be anything like five percent of the U.S. market in a few years. "Two percent is more of a goal," he said. "Five percent could be the whole alternative fuel market, including hybrids."
So will we pass legislation giving what amounts to a $10,000 subsidy to EV early adopters in key markets? Will early adopters love them, learn they can live with the 100-mile range and create great word-of-mouth for their friends to jump in too? Will the Department of Energy-sponsored programs that are putting free EV chargers in target cities spread nationwide and give everyone places to plug in?
Big ifs. Would I put money down? Definitely not, but stay tuned for up-to-the-minute answers as they emerge.