New Ideas and New Products

Electric car company Tesla Motors today launched their latest electric car. It’s called the Model S and it looks stunning.

This is the second car from Tesla Motors. They already have the more sporty roadster but the Model S is a saloon.

This car does seem to address a number of the big issues for electric cars:

1. Range. The Model S will have a range of 300 miles after one charge. That should be enough for most people. I know I wouldn’t want to drive more than 300 miles in a day.
2. Time to charge. This car can make do with a quick charge in 45 minutes or a full charge in 4 hours.
3. Acceleration. 0-60 mph in 5.6 seconds. That’s quick.
4. Priced for the right market. At $49,900 this should be attractive enough to make people consider it instead of their Mercedes or BMW.
5. Looks. It doesn’t look like a tin can on wheels, it looks beautiful. It also looks safe.

It won’t actually be launched until 2011 so we have got a bit of a wait. But I do like the way that Tesla are producing electric vehicles that are desirable instead of some kind of compromise between satisfying your green conscience and actual performance and style.

Tesla could well be one of the beneficiaries of the Stimulus plan by receiving a federal loan to help them build out manufacturing capacity.

Electric vehicles have still got a lot to prove. I think reliability is a factor that we have no way of analysing right now. We still have to work out the infrastructure to allow these vehicles to be recharged. Not such an issue for someone who will buy this car but for the generation of electric vehicles that are affordable for your average driver and aren’t parked in a private garage but on the street.

Anyway this is great news. I look forward to driving past one of these in the not too distant future.

A fairly significant amount of money from the recent Stimulus bill has been earmarked to develop the alternative energy industry in the US. The net effect of the legislation could translate to around $150 billion of investment. There are numerous programmes in place from direct federal investment in R&D, putting solar panels on government buildings and making them more efficient, upgrading the electricity grid, support for electric vehicles manufacturers, etc.

The most important in my mind though is the $6 billion of federal loan guarantees for new alternative energy projects such as solar and wind installations. This $6 billion investment will support $60 billion of government guaranteed debt financing which is sorely needed after many financial institutions have simply stopped providing to financing to capital intensive infrastructure projects.

When I first read about this part of the bill I thought to myself, this is really good news for the alternative energy industry, but, it’s going to take them a long time to get this money to the people who need it. The applications for this kind of financing through the Department of Energy have historically taken months or even years. Energy Secretary Steven Chu has been revamping the process to apply for DoE grants and he had said he expected to see projects being approved by May which I thought sounded ambitious. Therefore it was great yesterday to see the first company benefit from this programme.

The company Solyndra is a manufacturer of Solar Photovoltaic panels and they have received loan guarantees of $535 million to allow them to build out a new commercial sized production plant.

Although it was positive to see that money was starting to be allocated at this early stage I was somewhat surprised to see this programme being used to support a manufacturer with a relatively unproven early stage technology (they use a relatively inefficient thin-film technique using CIGS instead of the established crystalline silicon technology). It seems to me the DoE should be targeting this money at new alternative energy installations such as large scale solar and wind farm projects. There is currently an excess supply of solar panels in the market and adding to that supply in the near future is not going to help the industry as a whole or the economic viability of a company based around young technology. Don’t get me wrong I’m all for investing in new technology and R&D but I don’t think this is the programme that should be used.

There is an opportunity to take advantage of the worldwide excess supply of solar panels by helping to fund large utility scale installations who can take advantage of depressed solar panel prices based on proven technology. These large projects are far lower risk than providing debt to an early stage company like Solyndra. Solar farm projects have very predictable cash flows, low ongoing costs, and can be installed quickly once approval has been given.

I will keep my eyes peeled for further news of where this money is going and keep you updated.

Another good way to keep up with what’s happening in our current credit crunch is the Planet Money podcast and blog. The guys who write this are the team that did the episodes of This American Life that focused on the credit crunch. I like to listen to their podcast every now and then to hear their views.