by Michael Kanellos
It was the Segway.
We've certainly come a long way since then. Startups like Tesla Motors (NASDAQ:TSLA) have made the case that electric cars don't have to be clunky, utilitarian people-movers. Over the next two years, Nissan (OTCPK:NSANY), General Motors, Ford (NYSE:F), Toyota (NYSE:TM), Volkswagen (OTCQX:VLKAY) and other established car makers will come out with cost-effective vehicles that will let consumers wean themselves off gas.
So what will happen next? Here are some of the things emerging at Plug-In 2010 in San Jose:
1. For the Car-Charging Industry, It's Apocalypse Soon
I can't think of a more difficult industry in the world than selling chargers or charging services. Maybe carving burlwood bears with a chain saw at the county fair, but that's about it.
Charging station specialists are trying to sell a slightly expensive ($1,000 to $2,500) item that will rapidly decline in price into a market with few barriers. Fifteen of the roughly 40 exhibitors at the conference are showing off technologies related to charging stations. To top it off, conglomerates -- and the engineering and volume buying they can bring to bear on a problem -- have discovered the market. Schneider Electric (SBGSF.PK,), the multi-billion dollar electrical supplier, showed off home-based, office-based, and parking lot chargers that will start to roll out later this year.
It gets worse from there. In most states, charging station producers/service providers technically can't sell electricity by the kilowatt hour yet. Only utilities can do that. As a result, they will sell services that happen to include electricity.
"We sell access fees," says Colin Read, vice president of corporate development at Ecotality, which released its Blnk chargers at the show (see photos). "We would love to sell electricity. It would make things simpler and easier."
Selling subscription services actually provides an opportunity for a sustained revenue stream, he added. Ecotality will sell access fees and bundle it with, let's say, premium access to high-powered chargers for quick charges, or the ability to get free charging or high priority from car rental agencies. If the fees can be kept to $20 to $60 a month, or less than the cost of gas for a month, consumers might find that the convenience and benefits outweigh the somewhat marginal cost.
But here's the problem. The vast majority of consumers will charge at home, where they can buy their power directly from utilities. Public charging won't be as common as you might think.
"We see it as very important from a psychological perspective and for places outside the normal commute patterns, but our focus will remain on residential charging," said Rich Steinberg from BMW. "In megacities, [public charging] makes sense, but not so much in most of the U.S."
Ford's Nancy Gioia said public charging was third in priority, behind home and office charging.
"The gas station will be the private garage," said Carlos Tavares from Nissan, who dismissed the need to have battery swapping stations here.
Charging station companies will garner revenue for installation fees and the hardware, but the infrequency of public charging -- consumers will in essence be paying $20 a month for the right to download $1.20 of electricity -- becomes a tougher sell.
Retailers, meanwhile, will give away power to electric car owners. Thirty cents for 3 kilowatt-hours of power will become the cheapest consumer loyalty program ever. This concept is already gaining ground in Europe and California. (Office charging will occur, but because of the need to curb peak power, it will be discouraged.)
The silver lining, potentially, for charging station companies may lie in the fact that electric car buyers will ultimately need at least some public charging stations -- and they will understand that they have to pony up some cash for the convenience. They might even understand that charging station owners could not live on the 30 cents of power a driver might occasionally buy, so a subscription is necessary. Charging station subscriptions won't be like cell phone accounts, but more like Ticketmaster charges: just something you have to put up with.
But in the end, the circumstances might shrink the number of survivors in the market to just a few key players.
2. Series Hybrids Will Fly or Flail in 2012 and 2013
Series hybrids -- that is, hybrids in which the gas engine largely exists to charge the battery pack -- are intellectually interesting cars that remain challenging to make. Series hybrids can consume less gas than parallel hybrids -- where the gas engines takes a larger role in propelling the car forward -- and can go farther than electric cars.
Unfortunately, getting the cost down is a challenge. The Chevy Volt will sell for $41,000, or around $8,000 more than the all-electric Nissan Leaf. The delayed Karma from Fisker Automotive will contain two electric motors and a repurposed gas engine from a Pontiac. Imagine -- a $90,000 car with a Pontiac engine. Ford, Toyota and others are concentrating on parallel hybrids and parallel plug-in hybrids.
GM will have released 40,000 Volts by the end of 2012. The Karma comes out later this year and the $40,000 Nina hits in 2012. How these cars compare -- and the word of mouth they receive -- will determine whether series hybrids stay part of the mix.
3. Tesla Becomes a Badge
This one comes from Erik Straser and Josh Green at Mohr Davidow Ventures. Tesla will make cars under its own name but also produce drivetrains, battery packs and components for other companies. Toyota is an ally and Daimler (OTCPK:DDAIF) has worked with Tesla.
While the components can help a manufacturer accelerate its electric car plans, the value of selecting Tesla as a partner might be more effective in terms of marketing. A "Powered by Tesla Motors" badge could give a new entrant a whiff of luxury-car exclusivity.
Conversely, if the car flops or something goes wrong technically, the larger manufacturer can blame Tesla.
"It creates a protective container around your brand," said Strasser. "Tesla stands for excitement. Is the greater value in the IP or in the brand it has created? Time will tell."
Advertising, meanwhile, is already kicking in. Earlier this year, Kevin Czinger, CEO of Chinese-U.S. car maker Coda Automotive, said his company would try to reach out with humor the way Volkswagen did back in the mid 60s. (Dustin Hoffman appeared in VW commercials before he hit big.). Coda started running ads a few weeks ago-not on this site but on buses and public kiosks. Nissan has Lance Armstrong. Expect cheekiness from India's Reva too.
4. Taiwan and Japan Will Benefit in Odd Ways
Weight is the third fuel in modern cars, equal in importance to biofuels and batteries. Ford says it will cut 250 pounds to 750 pounds out of its cars by replacing steel with new types of materials. Bright Automotive, Aptera, and Gordon Murray Design are trying to show how materials and design reduce consumption.
And where do the best carbon fiber manufacturers and designers work? In Asia's developed markets. Check out this video to learn more about what you can do with materials.
5. Demand Will Far Outstrip Supply
But if you've waited in line to drive a Volt or Leaf, you knew that already. Polls conducted by manufacturers indicate that energy security has become as important an issue as going green. Thus, the cars seem to have an appeal that resonates beyond the niche of hardcore environmentalists.
Electrics and plug-ins will own only a minority share for years, and sales will vary by models -- Tesla's sales have dropped to around 10 cars a week. But the electrons are out of the bottle.
Disclosure: No positions