Ed Wallace

Promises, Promises

By Ed Wallace

Special to the Star-Telegram

As automotive announcements go, this particular one literally slid under the radar. On June 13th, Ford and Daimler announced that they would be ending their joint venture with Canada’s Ballard Power Systems to create fuel cells for automobiles. That quiet announcement, along with Ford’s promising to bring its research back into its own laboratories, put another nail in the coffin of what was once hyped as the future of all transportation on the planet.

That being true, it took a puzzling amount of digging through the media’s files to determine that this colossal waste — over a billion dollars invested — started 21 years ago. Only back then it wasn’t a quiet announcement, but instead a super-hyped story: Ford and the parent company of Mercedes-Benz were so sure of a hydrogen future that theirs was a truly monumental Trans-Atlantic partnership. Then again, Ford joined hands with Daimler the year before the German automaker purchased Chrysler, then Mitsubishi, and finally a 10 percent share of Hyundai; and of all those efforts also, nothing remains.

As it turns out, Wards Auto covered the story of Ballard Power Systems in 1998, pointing out that Ford and Daimler had somehow legitimized this company as the future for all things hydrogen. However, it started that column discussing Ballard’s 1988 hiring of Firoz Rasul, who informed his research staff that if they were “looking for a Nobel Prize, you are in the wrong place. If you are looking to make a lot of money, you are in the right place.” Gary Hefferman, listed as corporate technology manager for Ford, was quoted as saying, “Ballard has the best road map to solve technology, packing and cost problems.” Apparently Ford was not aware that Ballard was only in it for the money. However, that column also mentioned that Ford and Daimler would invest $1 billion and have fuel celled automobiles on the market by 2004. As you may have guessed by now, that didn’t happen.

True, Honda has brought a few of its fuel celled models to America for lease, as has Hyundai. But everyone should have understood this was a fool’s game when Honda’s own CEO said years ago that their cost to engineer and build a fuel celled car was currently around $400,000, but when the cost fell to below $100,000, they would bring them to market. Really? Given the choice of a Honda Civic that delivers around 40 miles to the gallon highway, or a Civic-sized car that uses hydrogen but has no place to refuel for five times the Civic’s cost, one needn’t wonder in which direction the average motorist’s next purchase might go.

So Ford and Daimler quit throwing money after this pipedream of a mass-produced hydrogen fuel celled car, a pipedream that as of today is 14 years behind its schedule for mass market introduction. And while Ford said its research will continue, Daimler CEO Dieter Zetsche said that company will work on electric cars instead.

What Actually Will Work Is Working

Ironically, just as that announcement appeared officially ending that joint venture, American car dealers were flying back from a meeting in Germany with Porsche executives, who had informed them that, since a new future for automobiles is only a few years away, now was the time to prepare their dealerships for this massive change. Why? Because, Porsche told its dealers that in five years or so, half of all of the vehicles they sell worldwide will be electric.

Electric appears to be what’s up, way up, in Europe. Volkswagen is promising to build millions of all-electric cars in the near future, including a retro version of its Sixties Microbus — unfortunately, named LD Buzz. Of course, BMW already has its electric car, the i3, in the market, but it does appear that Germany is moving ahead rapidly with plans to change what propels our vehicles.

True, much of this is because of China’s enormous demand for more electric cars for the masses; that’s a huge market for German car companies. But, unlike hydrogen fuel cells — whose costs have fallen dramatically, but not so much that they’ll be truly viable for maybe decades — battery costs for electric cars are now near parity with gasoline engines. Indeed, last year one of Toyota’s engineers working on advanced powertrains admitted that it was cheaper to build a mid-range (150 miles), all-electric car today than a hybrid electric model, such as the Prius.

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Back in March Waymo, the self-driving division of Google, announced that it would purchase 20,000 of Jaguar’s upcoming I-Pace electric SUVs to convert into self-driving taxis. In fact, there is such a rush of all-electric cars coming to market that it’s almost inconceivable that the American motoring public is ready for such a quantum change. Hydrogen fuel celled vehicles were a nice pipe dream, but there’s no infrastructure for refueling them; but most every garage in America has electrical outlets installed. All-electric cars can be recharged every night and be good to go by morning.

And maybe even faster. The most surprising thing Porsche told their dealers last week was that the time needed to fully recharge its upcoming electric vehicles could be counted in mere minutes, instead of hours.

Still, in all of this excitement, or possibly hype, there are still some legitimate shortfalls to all-electric cars. First, they don’t like the heat. Owners are told, “If you can keep your electric out of the sun on hot days, that would be best for the battery pack’s long-term health.” Second, they hate cold even more. Ranges are seriously shortened by extreme cold winter weather. So, all-electrics have heat limitations in places like Texas and range limitations in places like New York. The question is whether or not the untold billions being invested into all-electric cars is any smarter, wiser or more prudent money than the untold billions that were mostly wasted on fuel celled cars.

Like Flying … Inches Off the Ground

Then again, at the moment the hottest new ticket out of Silicon Valley is their latest gift to the world: Electric push scooters. Oh, sure, they’ve actually been around for decades, but now there’s a business model for them because they have iPhone apps. Ok, that’s an overstatement; there is no real business model for them, but it’s still the hottest rage in venture capital markets right now. Fortune magazine pointed that out last week, when a column discussed how just two months ago Bike Scooters raised $100 million in Series B funding, which gave this push scooter start-up a $300 million valuation. Two weeks ago the scooter company raised another $150 million, for a $1 billion valuation; and even as this is written they are raising another $200 million which will give their company a valuation of $2 billion. (Vanity Fair pointed out that Bird founder and former Lyft and Uber exec Travis VanderZanden apparently has already dumped $44 million of his personal founder’s stock on new investors.)

Lime, a competitor, has raised $132 million and is in the middle of bringing in another half billion for the company’s operations. Gee, Beav, how can this be happening, when San Francisco forced all those scooters off city streets, Santa Monica fined Bird $300,000 for violating city ordinances during its roll-out there, and Charlotte, North Carolina, is up in arms over the dumping of electric push scooters all over its streets?

Keep in mind that Silicon Valley has given us lasers, personal computers, digital watches and calculators, genetic engineering, video games, 3-D computing, LED lighting, radar, and electric measuring devices, to name just a few of their incredible inventions. Now the hottest ticket in town is electric push scooters for the masses to get around in city centers? It turns out that most of Silicon Valley’s soon-to-be-wealthy scooter magnates have all been buying their electric scooters from a Chinese-based manufacturer, Ninebot, which has now merged with Segway.

Just having these little electric gems running around our downtowns has created new job opportunities in a country proud of our so-called gig economy. That’s right, someone has got to go around at night and pick up these scooters to recharge them and put them back out on the streets by morning. Nathanael Buckley did just that for almost two weeks and then wrote about his experience for Slate magazine, pointing out that he made a whopping $125 for his 10- to 15-hour work nights over 17 days. That’s not likely to cover his rent in Santa Monica.

Another group far more likely to benefit greatly from scooter mania is the personal injury attorneys, only they won’t be working on a case for 17 days and collecting only $125 for their efforts. No, according to Bloomberg on June 12th, many attorneys have claimed their phones have not stopped ringing over the past few months with injury claims against these electric push scooter companies. Huh. Maybe that’s why they need to raise billions of dollars to fund their operations.

But even with scooters things are moving at near-light speed. That’s right; in this column just a few weeks ago we made fun of the Lime electric scooter, which a rental company claims has a range of 35 miles. Since that column a new electric push scooter is now being sold at Amazon.com. It’s the Qiewa Q1 Hummer and it sells for $1,399; it does come with free shipping, but not with life insurance.

Now that’s a lot of money for an electric push scooter, until you realize that this skateboard with a handle has a top speed of 35 miles an hour and a range of 62 miles. It gets better; a second Qiewa electric push scooter, their Qpower, has a top speed of 53 miles an hour and only costs $2,299. One can almost see the TV commercials for attorney Jim Adler, the Texas Hammer, dumping his push for victims of big rig truck accidents and moving over to electric push scooter injuries and deaths with the Q1 Hummer or QPower models.

Really, this is the insanity of what’s being promoted as the next big mobility trend in America.

Electric cars aren’t coming to market, they are here now. The question is, what is the real size of that segment of the automotive market? I’ve owned one for six years, and the next car we buy will be another electric. Tesla has proven there’s actually a huge market for these vehicles, while Chevrolet is doing fairly well with its all-electric, 250-mile-range Bolt. But deep down inside I’m fairly certain the real future is something closer to what the BMW i3 is today: An electric car with far more range than 99 percent of the public would ever use in one day, but with an electric range extender; a motorcycle engine drives a generator in the BMW, which allows for much longer trips. What I’m fairly sure won’t be our electric future is a 53-mile-an-hour push scooter with a 62-mile range.

However, as the scooters are showing up on our streets much faster than electric cars are, the potential for a real economic windfall is back in America’s future — assuming you have a license to practice personal injury law.

© Ed Wallace 2018

Ed Wallace is a recipient of the Gerald R. Loeb Award for business journalism, bestowed by the Anderson School of Business at UCLA, and hosts the top-rated talk show, Wheels, 8:00 to 1:00 Saturdays on 570 KLIF AM. Email: edwallace570@gmail.com