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Tom Friedman Embraces the Electric Car 15 Years Late

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When you start advocating Federally backed “moon shots” as a way to compensate for the shortcomings of American management, you know you are in deep doo doo.

Tom Friedman has a characteristically breathless article at at the New York Times arguing America better get off its duff because China is very serious about electric cars:

China is doing moon shots. Yes, that’s plural. When I say “moon shots” I mean big, multibillion-dollar, 25-year-horizon, game-changing investments. China has at least four going now: one is building a network of ultramodern airports; another is building a web of high-speed trains connecting major cities; a third is in bioscience, where the Beijing Genomics Institute this year ordered 128 DNA sequencers — from America — giving China the largest number in the world in one institute to launch its own stem cell/genetic engineering industry; and, finally, Beijing just announced that it was providing $15 billion in seed money for the country’s leading auto and battery companies to create an electric car industry, starting in 20 pilot cities. In essence, China Inc. just named its dream team of 16-state-owned enterprises to move China off oil and into the next industrial growth engine: electric cars.

Not to worry. America today also has its own multibillion-dollar, 25-year-horizon, game-changing moon shot: fixing Afghanistan.

OK, so far, not unreasonable. But Friedman later argues the US needs to chase China in the electronic car biz:

The electric car industry is pivotal for three reasons, argues Shai Agassi, the C.E.O. of Better Place, a global electric car company that next year will begin operating national electric car networks in Israel and Denmark. First, the auto industry was the foundation for America’s manufacturing middle class. Second, the country that replaces gasoline-powered vehicles with electric-powered vehicles — in an age of steadily rising oil prices and steadily falling battery prices — will have a huge cost advantage and independence from imported oil. Third, electric cars are full of power electronics and software. “Think of the applications industry that will be spun out from electric cars,” says Agassi. It will be the iPhone on steroids.

Europe is using $7-a-gallon gasoline to stimulate the market for electric cars; China is using $5-a-gallon and naming electric cars as one of the industrial pillars for its five-year growth plan. And America? President Obama has directed stimulus money at electric cars, but he is unwilling to do the one thing that would create the sustained consumer pull required to grow an electric car industry here: raise taxes on gasoline. Price matters. Sure, the Moore’s Law of electric cars — “the cost per mile of the electric car battery will be cut in half every 18 months” — will steadily drive the cost down, says Agassi, but only once we get scale production going. U.S. companies can do that on their own or in collaboration with Chinese ones. But God save us if we don’t do it at all.

Um, let’s consider a little backstory Friedman omits. His own paper, the New York Times, reported in April 2009 that China was out to become the the leader in electric and hybrid cars:

Chinese leaders have adopted a plan aimed at turning the country into one of the leading producers of hybrid and all-electric vehicles within three years, and making it the world leader in electric cars and buses after that.

The goal, which radiates from the very top of the Chinese government, suggests that Detroit’s Big Three, already struggling to stay alive, will face even stiffer foreign competition on the next field of automotive technology than they do today.

The big reason the US is behind in the electric car game is Detroit, and the battle was lost some time ago. (Separately, the time for higher gas prices was also some time ago, but the then Big Three and a host of others would have fought it tooth and nail. And think we’re gonna impose gas taxes now in the middle of a deep downturn and worry about adequate demand? Sure, there’s a way to have compensation elsewhere, mainly offsets to other taxes middle and lower income people face, but that’s too many moving parts to be realistic unless you had a well disciplined party with a decent majority in Congress behind that agenda, conditions notably absent right now).

In 1993, I did due diligence on an advanced battery venture on behalf of a major hedge fund, visited Detroit, and drove an electric car made by a GM consortium. At the time, there was a mandate in California as well as the Northeast scheduled to come into effect in a few years to have 2% of cars sold be electric. Now the idea of forcing a sales goal seems silly, unless you had some obvious targets. The early vehicles were best suited for city use (no worry about your car running out of juice on the interestate). Public transport, delivery services (think the Post Office, UPS, Fedex) and government fleets were logical buyers, particularly since they also solved the chicken and egg problem of charging station infrastructure (fleets go home at night and can be recharged in relatively few locations). But the states did nothing to help create a market.

GM spent over $1.5 billion manufacturing and marketing the EV1, its electric car, despite its ambivalence (at least when I was investigating, which prior to the 1996-2000 opportunity to lease the car in Arizona and California). GM did costly consumer marketing in those states, despite being able to manufacture only 600 cars a year. California also welched on its promise to lease electric cars and trucks in meaningful numbers and wouldn’t install public chargers.

Another issue was the batteries were not ready for prime time (I had looked at all the competing technologies adn recommended against investment for that reason and the lack of enthusiasm for the iniative). Batteries don’t do well in the cold. And electric engines don’t throw off heat the way an internal combustion one does, so the early EVs had small gas fired heaters to warm the passenger area.

However, success also depends on commitment to overcome obstacles, and GM had already divested key bits of relevant technology BEFORE the EV1 launch. Which begs the question, how hard were they really trying to make this work (for instance, did they press the California government when it started waffling?).

We have ceded leadership in battery technology to Asia, and reader Keenan pointed out, also the know-how for the related drive trains:

h torque DC servomotors are the sine qua non for electric vehicles.

High torque performance is achieved via magnets made of alloys of various so called “rare earth” elements. Prominent among the alloys are samarium-cobalt and neodymium-iron-boron. GM held a majority interest in Magnaquench, an Indiana company with expertise in such materials and magnet fabrication. GM however decided that electric motors did not fit into its “core competencies.”.

While the article highlights the aspects of defense technology, the commercial / industrial side of the business is every bit as important in today’s world of economic warfare.

GM sold Magnaquench in 1995:

Magnequench had a unique expertise in the manufacture of high-powered neodymium magnets, which it pioneered in the 1980s for its parent company, General Motors, to use in airbags and mechanical sensors. When GM restructured in the early 1990s, the company began to divest itself of subsidiaries that were not in its “core competence.” Magnequench, in spite of its high-tech pedigree—and the fact that it provided critical component parts to “precision guided munitions” that were then in great demand by the U.S. Department of Defense—was put up for sale.

Reportedly, Magnequench supplied 85 percent of the neodymium magnets used in servo motors for PGMs,[5] but neodymium magnets are far more important and ubiquitous than their use in advanced weaponry might suggest. They are the sole reason high-speed, high-capacity computer data storage devices can work. They are found in literally every computer in the world, and in 2004, Magnequench, together with its merger partner NEO Material Technologies (and its integrated Chinese joint-venture partners), supplied about 80 percent of the world market share of neodymium and rare-earth oxide powders used in those magnets.[6]

So when GM put Magnequench on the block in 1995, who should come up with the $70 million asking price?[7] An investment consortium headed by Archibald Cox Jr. (son of the illustrious Watergate prosecutor) acting in concert with two Chinese state-owned metals firms, San Huan New Material and China National Nonferrous Metals Import and Export Company (CNNMIEC), which had been pestering GM to sell Magnequench since 1993.[8]…

Magnequench’s Chinese owners cleverly reinterpreted the CFIUS conditions. One Magnequench employee reported that shortly after the Chinese took over, Magnequench’s neodymium-iron-boron magnet production line was “duplicated in China” and that, after the Chinese “made sure that it worked, they shut down” the U.S. production in Indiana. The employee added, “I believe the Chinese entity wanted to shut the plant down from the beginning. They are rapidly pursuing this technology.”[16]

So this vignette reveals the degree to which Detroit helped seal its own fate. It went along with the electric car mandate fully hoping its 2% goal would make it a non-starter (that was the line I heard, anyway, that the cars would be costly enough that the target was pretty certain to be unrealistic) and played the game out, rather than try to influence the legislation so as to get a program that might be viable for the states as well as the carmakers.

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34 comments

  1. Jim

    Ah, Tom Friedman… an intellectual for the aspiring middlebrow. The market solves everything… until it needs government assistance, apparently.

    Wonderful analysis, Yves. Love your blog.

  2. F. Beard

    I have been eagerly awaiting PRACTICAL electric cars myself. However, China is shooting itself in the foot by jumping the gun. They will waste a lot of money. Furthermore, our electric grid is currently inadequate to transition to electric cars.

    The CO2 scare is bogus. Once we admit that then carbon is seen as an ideal storage mechanism for hydrogen. So then, the emphasis should be on finding or synthesizing hydro-carbons for our portable fuel needs.

    If we are going to spend vast sums for infrastructure, then let it be for upgrading the power grid and building thorium reactors. Then, when electric cars are practical, the electricity will be there to fuel them.

    1. A.Lizard

      > Friedman’s looking to profiteer off climate change and Peak Oil.

      Right.

      > The basic scam where it comes to electric cars and other examples of green cornucopianism is that it’s sold as something that will benefit the people and the environment, when the goal is really another corporatist boondoggle which will prop up the luxury consumption of the rich.

      Was the original source of your talking point Big Oil or Big Auto? Both of which have incentives to prop up the status quo and to prevent the transition to electric transportation until they’ve made as much money out of the existing system as possible?

      > Does “green” corporatism invest in upgrading the lifestyles of the poor of the world in such a way that they’ll be upgraded in a less pollution-intensive and more energy-efficient way? No, it doesn’t, and it never has and never will.

      You are saying that Walmart has some sort of moral objection to selling Chinese greentech products to lower income people, which is an absurdity.

      > Instead something like the biofuel scam further impoverishes the poor of the Global South by stealing and ravaging even more of their land and further destroying their environment, and it’s all used not for a transition to a post-oil transportation system, but merely to feed the monster of normal Western consumption. Much of this is done with taxpayer subsidies (the US ethanol racket is a pure welfare parasite which has never turned a cent of legitimate revenue).

      You’re correct about ethanol, and even with respect to palm oil. The second and third generation biofuel technologies will be online soon. Your objections are irrelevant to bacteria and other single-cell based biofuels.

      In any case, if we want to keep eating, we don’t have a lot of choice about making biodiesel. Agricultural machinery and the trucks that transport that food to the fields to supermarkets or processing plants universally run on diesel fuel. We can burn oil, burn biofuel, or stop eating.

      I’ll put you down as a vote for burning oil.

      > Industrial wind, industrial solar, electric cars, are all the same thing: engage in highfalutin propaganda, extract subsidies, socialize all the costs, feed luxury consumption, pocket the “profits”.

      You are aware that wind-turbine based wind is either cheaper or cost-competitive with coal, right? If you aren’t, I suggest finding out what you think you are talking about before making a fool of yourself in public again.

      >Where’s the call for an electric “People’s Car”?

      First generation technology is always more expensive, and the early adopters who buy it subsidize the development of the cheaper second and third generation technology.

      The original IBM PC cost $1995 in 1981. That’s $4791 in current dollars. You can get a far superior computer today for (And all this is leaving out the fact that we will have to get beyond the personal car, period. That’s not optional; it’s only a matter of how hard we’re going to make it on ourselves.)

      Just because that’s an article of your personal faith doesn’t make it true. If you think the cost of essentially replacing America’s building infrastructure to make universal public on top of greening the power grid and on top of retrofitting buildings for energy efficiency and on top of the $2.2T ASCE estimate for fixing civil infrastructure is affordable, I question your sanity. And this leaves out the resource cost of essentially tearing down America’s suburbs in favor of new green urban / inner-ring suburban high-density developments.

      1. Alan Wynnewood

        Lizard is wrong on the “windpower is cheaper.” Wind power is very expensive to set up compared to a nuclear plant. At current European rates (the subsidy included) the same money will by, over the life of current 20 year capex/power-sales plans, about 13 times the power from a standard French nuclear plant. Wind power is expensive.

        1. A.Lizard

          Go argue with this guy, he gets windfarm projects financed … Wind Lowers Power Prices: New Scientist.

          sample quote:
          ———————————–
          So are wind farms subsidised?

          In the sense of direct government support, very rarely. What they do enjoy in most countries, though, is a guaranteed right of access to the grid, and minimum prices for the electricity they produce.

      2. attempter

        Lizard is talking his book and spewing the same lies I just talked about. As the reader can see, he either takes for granted that the “growth” infrastructure based on cheap, plentiful energy (including the personal car) will continue forever, or is pretending to do so. Either way it’s false.

        For example the notion that wind is “competitive” without subsidies, leaving out the fact that this infrastructure is completely dependent upon the fossil fuel platform. No one has ever demonstrated how you can do a mass buildout of any of these things other than with the support of Daddy (cheap oil).

        http://www.postcarbon.org/report/127153-energy-nine-challenges-of-alternative-energy

        But convincing people that exponential growth and exponential consumption can continue forever is part of the elites’ project to maintain power. And using corporatist subsidies to develop and demonstrate “green” tech is intended to help provide for the maintenance of elite power once fossil fuels become relatively scarce.

        But even if Peak Oil weren’t true, neoliberalism would seek the same effect. As I said, the people are paying for this RD&D, but none of it is planned to benefit the people (as I said, that could’ve been pre-planned, which certainly would’ve been the most efficient route if the developers and their funders had any such intent) and the deployment will not be done for the people’s benefit. As it has been so far, so it will continue to be rationed by wealth.

        In any case, if we want to keep eating, we don’t have a lot of choice about making biodiesel. Agricultural machinery and the trucks that transport that food to the fields to supermarkets or processing plants universally run on diesel fuel. We can burn oil, burn biofuel, or stop eating.

        I’ll put you down as a vote for burning oil.

        No, you can put me down as a “vote” for the fact that the existing food production and distribution system is unsustainable and must be fully relocalized. We’ll all have to become our own growers, on individual and co-operative bases. We’ll have to do it according to historical norms, which during the ahistorical fossil fuel blip have come to be called “organic” practices. This is not, of course, something anyone’s free to vote for of against. It’s a natural necessity.

        But thanks for confirming my initial assessment that you’re telling faith- and especially interest-based falsehoods.

  3. attempter

    Friedman’s looking to profiteer off climate change and Peak Oil.

    The basic scam where it comes to electric cars and other examples of green cornucopianism is that it’s sold as something that will benefit the people and the environment, when the goal is really another corporatist boondoggle which will prop up the luxury consumption of the rich.

    Does “green” corporatism invest in upgrading the lifestyles of the poor of the world in such a way that they’ll be upgraded in a less pollution-intensive and more energy-efficient way? No, it doesn’t, and it never has and never will.

    Instead something like the biofuel scam further impoverishes the poor of the Global South by stealing and ravaging even more of their land and further destroying their environment, and it’s all used not for a transition to a post-oil transportation system, but merely to feed the monster of normal Western consumption. Much of this is done with taxpayer subsidies (the US ethanol racket is a pure welfare parasite which has never turned a cent of legitimate revenue).

    Industrial wind, industrial solar, electric cars, are all the same thing: engage in highfalutin propaganda, extract subsidies, socialize all the costs, feed luxury consumption, pocket the “profits”. Where’s the call for an electric “People’s Car”? (And all this is leaving out the fact that we will have to get beyond the personal car, period. That’s not optional; it’s only a matter of how hard we’re going to make it on ourselves.)

    I think that’s right in Friedman’s line, and he’s right on time (if the time will ever be right; but this scam wasn’t going to work 15 years ago in the heyday of $20 oil and SUVism, so there was no point for a corporatist writing columns about it then).

    1. Sufferin' Succotash

      One of these days we’ll rediscover electric trolley buses.
      A real eye-opener for the Mustache of Understanding.

  4. purple

    There’s no reason the U.S. couldn’t jump back into the game. It has an immense reservoir of money it can borrow on the debt markets which would make it a player very quickly. It’s just a matter of political will.

  5. John from Concord

    Friedman’s piece is ridiculous. He got the whole narrative from the kids at Coda Motors, who are buying bottom-of-the-line, small, out-of-date Chinese cars, stuffing electric drivetrains in them more or less by hand, and planning to sell them at a price point that will be several thousand dollars higher than that of EVs from real companies — Nissan and Ford, among others — that will have comparable ranges and be far better to live with. They will not sell 14,000 of these in CA next year; they’ll be lucky to sell 100. How those guys got funded is beyond me.

    Discount the rest of his article accordingly — if you really want to dig, do some research on the mess that is BYD, the company that is China’s Great Electric Hope.

  6. john haskell

    The Chinese government seems to have put on a “straddle.” If “Peak Oil” is correct, they will lose billions on the ultra modern airports. If “Peak Oil” is incorrect, they will lose billions on the electric cars. It almost makes me nostalgic for the days of losing billions on building houses in Phoenix and Las Vegas.

  7. steve from virginia

    Here we go again!

    The last- ditch effort to keep the automotive business as usual afloat. It will simply fail; electric cars do not scale and if they did the outcome would still be failure.

    Electric cars (and hybrids and other variations) are internally subsidized by the sales of SUVs and giant pickup trucks. Like ALL forms of ‘consumption efficiency’ their fuell demand is ADDED to current demand. With current demand required to support the new there can be no fuel saving.

    The only way to save fuel is to get rid of ALL the cars which the market is in the process of doing without help, thank you very much!

    See Jevon’s Paradox …

    1. A.Lizard

      Jevon’s Paradox assumes an elasticity of demand that I find bogus.

      “Like ALL forms of ‘consumption efficiency’ their fuell demand is ADDED to current demand. With current demand required to support the new there can be no fuel saving.”

      You’re saying that if a person trades in a gasoline powered car for a hybrid or electric car, that the fuel-efficient car isn’t going to displace the gasoline-powered car and thereby reduce overall fuel consumption, assuming that the trade-in is scrapped as IIRC, is required for a tax credit to be applied to the purchase of the fuel-efficient car?

      1. attempter

        No, we’ll just have more and more applications like the hybrid motor being used to goose the gasoline engine to make the thing faster, louder, etc.

        You people can never give an example of where “alternatives” ever replaced fossil fuels instead of just feeding the ever-growing consumption of the monster.

        Lest you forget, let me remind you of an example like how the 70s oil crunch and the consequent innovation and legislation were all used not to put a cap on the transportation use of oil, but rather as the pretext for the SUV. The same effect has occured everywhere else.

  8. chicago dyke

    i was Made in Detroit. it’s always going to be my town, despite my nym (which is born of grad work at UChicago and not love of those stinking, fetid Cubs). it’s nice to hear people talk about Detroit in the 90s. my cousin was mayor for a while, and he’s a good DLC dem. i knew how full of crap most of the party line was then, and this post reminds me of that.

    i have a saying these days: America! look very, very closely at Detroit. all it’s ugly patches, as well as the places where it is being reborn. look at the corporations that ennobled it, and sustained it, and eventually destroyed it. look at the racial history there, and race relations today. look at the standard of living, the internet-famous “feral detroit” houses and neighborhoods, examine the corruption of the political hierarchy. what has come to Detroit today is the future for every suburb, still-prosperous city like chicago or SF or even DC, see how easily Americans adopt (and thrive, even!) to “second” or even “third world” standards of living. and don’t complain, riot, or destroy themselves in an orgy of violence as they do so.

    Detroit is simply the beta test for what will eventually be imposed on all of America. oh, the stories i could tell you about the Big Three’s follies, back in the Day. they amuse me know, even in the face of what Detroit has become, because i can apply what i learned sitting on my union-member autoworking father’s knee, to the New Corporate overlords. very little has changed, when it comes to the audacity of stupidity of the corporate ruling class. indeed, i might even be temped to argue that like so many other things, that product was introduced and first perfected, a true “Made in Detroit!” production.

    (“Made in Detroit” is among other things, a popular line of (union made) clothing that hipsters in the area wear.)

  9. Kel

    Interesting that the question of where the power to charge the batteries is going to come from is not mentioned anywhere (except by F. Beard).

    1. A.Lizard

      In general, the answer to your question is “off-peak” energy. In most cases, there will be plenty to go around with no supply problems until a substantial proportion of America’s vehicles are electric. The fix for that problem is the smartgrid which is going to be required to make it possible to replace coal, given that the best places for solar and wind energy tend to be in places without substantial population.

      Gasoline internal combustion engines are so inefficient that the carbon release per mile is substantially reduced with an electric car *even if the electrical generation is coal-powered*. Of course, if the energy source is green, the carbon release per mile drops to insignificant.

        1. A.Lizard

          Renewable energy transported by smartgrid might keep people alive, even if it doesn’t conform with your ideal vision as to how Americans must be forced to follow what you believe to be an ecologically appropriate lifestyle, as opposed to what the Laws of Nature actually dictate.

          If you want to go offgrid with a roof covered with solar panels / battery pack (good luck in finding one that’s environmentally friendly) / inverter (I guess grid-tie’s a non-issue for you) … go for it, I encourage you to do so.

  10. TDK

    I’ve been a vocal critic of Detroit for many a year, however the emphasis on Detroit’s mismanagement is to a large degree misguided. The bigger problem is that the boundary conditions are all wrong. We have by developed country standards dirt cheap gas, our infrastructure is built assuming cheap and plentiful oil, and transportation alternatives are really only found in the cores of large cities. Detroit (and, it has to be pointed out, the American public) has simply been responding to those incentives. Those kinds of incentives are only appropriate if 1) you can assure cheap and plentiful oil for the foreseeable future, and 2) that the use of such has minimal external costs.

    Don’t just push technological solutions (such as the EV) on us, because that’s not the problem. We already have technological solutions. Nothing will happen unless we also change the boundary conditions — as they have done and continue to do in Europe, as they are doing in China. Fifty years ago we made major investments in infrastructure that underpinned economic growth and prosperity for the last half-century. We now need transportation and energy investments suitable for the next half-century. Losing our edge (or, at this point, not regaining it) is a choice we make.

  11. Glen

    I’ve never been able to figure out if Friedman is “talking his book” or if he’s, well, for lack of a more graceful way to put it, neoliberalism for dummies.

    But you can bet, it’s too little, too late, if he’s finally decided to pitch it.

    Obviously electric cars were an excellent move for Detroit to make back then, but they didn’t WANT to do it. Call it greed or short sightedness, I’m not sure which. But in so doing they gave up their technology edge (which the Japanese had been pushing hard anyways).

    My suggestion would be to jump over batteries and go directly to fuel cells if the US industry wants to gain an edge.

    As for those berating the high price, supported by SUV sales, crummy technology, you are correct, but I’m damn glad Henry Ford didn’t listen to the buggy and whip makers who said the exact same things. And point out that the current auto industry is and always has been the recipient of hundreds of billions in support from the government, so having the government support electric vehicles is certainly nothing new for this industry.

  12. Dirk

    I made an electric car out of a kit back in the day. It was fun. But electric cars are not a source of energy; they just use electricity generated from other sources. If you really want to solve this energy problem, cut the DoD budget by 90% and bring everyone home from the Middle East and elsewhere. There are plenty of people in this country who will step up if necessity arises. If you don’t, then, well, you could try tapping into all the hot air you create, you know?

  13. Keenan

    While visiting a company in Denver earlier this month, my host offered a ride in his Tesla roadster. This vehicle’s powerplant is a 3 phase AC induction motor, the basic design of which goes back to Nikola Tesla himself and which does not use permanent magnets.

    As with the diesel vs 4 stroke gasoline engine camps, electric vehicle designers have their AC motor advocates as well as DC motor proponents. The AC induction motor has a high power-to-weight ratio and high efficiency over a wide RPM range. Until recently, the technical hurdle was in producing/modulating AC power from the DC storage battery. This is facilitated by a variable frequency inverter at the heart of the power control electronics.

    The battery is lithium-ion (same as used in computers, cameras, etc ). Storage capacity is around 55kw-hours, providing the Tesla’s range of about 250 miles. It moves – 0 to 60 in less than 4 seconds – but it’s kind of spartan, like a race car, to minimize vehicle weight which is around 1800 lbs.

    1. Dean

      The Tesla Roadster is based on the Lotus Elise, which has a curb weight of about 1,900 lbs. The Telsa, by the time you add the battery packs, has a curb weight of about 2,800 lbs.

  14. Richard Kline

    When Tom Friedman gets a clue, it’ll be because someone sold him the first one he’s ever had. It says everything of the times that this tireless mouthpiece of the masters of wealth even has a column to blather on in.

  15. MA Solar Installer

    In some ways I think, maybe we should let China spend all its money to be a pioneer in the electric car industry and learn from all their successes and mistakes. But, I think that would weaken our place in the industry. I wish we could enact some of the same energy programs that the Chinese have put in place, but our government is too divided these days to get anything done.

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