Electric cars: iPhones of the auto industry?

Consumer desire for greener cars is giving small, tech-driven companies the rare chance to outmaneuver the auto giants, start-ups say.

Depending on who you talk to, electric cars pack the disruptive force of either Dell PCs or the Apple iPhone.

Regardless of your choice of analogy, the auto industry is facing the kind of technology-based competition it hasn't seen in years.

And in this game, start-ups claim to have the upper hand on the incumbents.

Click on the photo to see a photo gallery of electric cars at the 2008 New York Auto Show. CNET Networks

"This is probably something that has not been seen since we moved from the horse to the engine," said Henrik Fisker, the CEO of Fisker Automotive, which is designing a luxury hybrid electric car, the Karma .

"We suddenly have an open field where current carmakers don't know about batteries, or software, or designing these vehicles," he said, adding that incumbent companies are still four or five years away from mass-producing plug-in electric cars.

That may sound like bravado coming from a designer of flashy cars. But when you look at the race to deliver a breakthrough battery-driven car, the field is thick with newcomers.

The best known is perhaps Tesla Motors, which just began producing the Roadster sports car with a starting price of about $100,000. But there are several others, offering up different designs and business models to give the internal combustion engine a run for the money.

At a panel of three young car companies--Detroit Electric, Fisker Automotive, and Phoenix Motorcars--at a clean-tech investor conference last week, executives laid out some of the business opportunities and technical hurdles to cleaner cars.

On one point, they agreed: consumers will have more options to kick, or at least cut down on, their gas habit. But beyond that, their views differed on which technology--all-electric, plug-in hybrids, or hybrid electric--would succeed.

"It's a fallacy to say that everyone is going to jump off of oil onto batteries. Then we'll just have a shortage of lithium and the prices will go up," said Daniel Elliot, president and CEO of Phoenix Motorcars. "What's really going on is a fracturing of fuels."

Pick a horse
The diversity of approaches reflects the challenges that current battery technology pose.

Fisker's $80,000 Karma, expected for release at the end of next year, will have a custom-designed lithium ion battery that can go 50 miles. That's a range that covers what most people drive in a day. To ensure a longer range, the car will include a four-cylinder internal combustion gasoline engine that charges the battery.

Click on the photo to see a gallery of electric cars of all shapes under development. Phoenix Motorcars

But, having both a battery and gasoline engine in one car raises costs, say advocates of all-electric cars. Fisker and Tesla have gone after the luxury market first, catering to environmentally oriented customers willing to pay for the latest technology.

Phoenix Motorcars, by contrast, is making an all-electric truck and car, as is another supplier, Miles Electric. To get around the range limitation, Phoenix Motorcars is designing its vehicles, based on an Altairnano lithium titanate battery, for use in fleets where the use and range are known.

"It's difficult to move to plug-in hybrids and make economic sense ...You have to have a conventional drive train and a battery," said Elliot. "When you're talking about going down-market, you really have to pick a horse."

In the next few years, a variety of battery technologies will be put through the paces to see which chemistry will be safe, have a long life, and can be recycled.

Parallel to technical development in batteries, new companies are trying to innovate with new business models.

Project Better Place, started by ex-SAP executive Shai Agassi, is planning to test a battery-swapping program in Israel, Denmark, and perhaps San Francisco. It now has a prototype of its car, which will be built by Renault.

Premium green
Apart from all the technical and business challenges remains the question of customer demand.

To fleet owners, replacing trucks with rechargeable electric vehicles could simply be a question of saving money in the face of rising fossil fuel prices. They can also potentially benefit from government incentives for cleaner transportation, such as California's zero-emissions vehicle plan.

But for many consumers at this point, it's more of a lifestyle statement , argued Fisker. Buying a luxury hybrid electric car is like buying Apple's iPhone when it first came out. Buyers of some of the first consumer-oriented electric cars will be technology early adopters, eager to be part of the future, he said.

Meanwhile, Think Global is making an all-electric town car, called the Think City , which can top out at 65 mph and go 110 miles on a single charge. Rather than try to compete with a typical sedan, it's aimed at urbanites who want a smaller, fuel-efficient car, perhaps used as a second car. It plans to bring the Think City to the U.S. and is exploring business models where consumers can swap out batteries.

The incumbent automakers are not sitting still, either. Nissan this week said that it will offer an all-electric car in 2010. GM's Chevy Volt is supposed to come out in 2010, while the other incumbents are pursuing different paths to better mileage.

"We're putting the pressure on the bigger boys," said Albert Lam, CEO of Detroit Electric, which plans to make electric cars and buses in 2009. "We are the 'Dells' of the industry--the smaller boys that have a tremendous opportunity to validate the industry and to be the next big thing."

Lam said consumers are also getting more savvy about green claims from automakers. He said a hybrid with a big 6-liter engine, like the one Lexus is making, is "a joke, an oxymoron."

Fisker likens battery-powered cars to iPhones, a product consumers are willing to shell out extra for, even if it means taking on some risk of being an early adopter.

"We're seeing a movement where people are demanding a product which is not there. People want a green car," he said. "I think what we are going to see are people are going to take that risk because there is no other alternative."

 

Join the discussion

Conversation powered by Livefyre

Don't Miss
Hot Products
Trending on CNET

HOT ON CNET

Still taking notes with pen and paper?

Bump up your grades and school supplies with these laptops, desktops, and tablets!