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US Government Seizes Fisker’s Cash Reserve

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 Weak Fisker: On April 11 the federal government seized $21 million from the company’s cash reserves. Image: Flickr/Fisker Auto

U.S. electric car pioneer Fisker Automotive once posted a manifesto on its Web site: “New isn’t easy.” Not for them, it wasn’t. Now their site is defunct and the company is scrambling to find a funder or face bankruptcy.

An electric car company buoyed by federal dollars in 2010, Fisker has now been crippled by supply chain and other problems, and joined legions of start-ups that get dragged down by technical glitches and financial woes. The capital backing from taxpayers caused a dustup that has kept Fisker in the limelight.

The greater question now is whether Fisker’s crash will have repercussions for the electric vehicle industry, which has seen some sales successes with Tesla’s Model S in recent months but largely remains unrealized.

Rewind to just a few years ago when the future for electric vehicles looked promising. In 2010 the Nissan Leaf and Chevrolet Volt hit the road. Gas prices were rising and Pres. Barack Obama pledged to put one million electric vehicles on the road by 2015. With climate change legislation on the table in Congress as well, the EV market seemed primed for an upswing.

Enter Fisker, whose electric sports sedan Karma rolled into showrooms in 2011 amid fanfareTIME listed it as one of the 50 best inventions of 2011. The Anaheim, Calif.–based company netted a $529 million government-backed loan to help fuel its efforts. In recent years it reportedly raised $1 billion more in private funds.

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But things started to fall apart. Its lone battery supplier, A123 Systems, floundered and eventually went bankrupt—a significant blow when as much as half of electric cars’ price tag comes from that piece of technology. Karma had to halt production. The U.S. Department of Energy (DoE) froze Fisker’s loan at $192 million in June 2011. A flawed cooling fan was also linked to a fire in 2012, prompting recalls.  In October Hurricane Sandy destroyed several hundred Karmas waiting for shipment at Port Newark, N.J. Fisker’s founder left last month, leaving the company to contemplate its next steps. This month it laid off the majority of its employees. It is also reportedly being sued by a Web designeran investor and some former employees.

And the hits keep on coming: On April 11 the federal government seized $21 million from the company’s cash reserves. Fisker did not respond to a request from Scientific American for comment on this story.

Republican lawmakers blasted the company at a House Subcommittee on Economic Growth, Job Creation and Regulatory Affairshearing on Wednesday, accusing Fisker of profiting from close connections with the Obama administration. But lawmakers saved most of their fire for the DoE, blaming it for continuing to dole out funds when some lawmakers believe there were early indications the company was not delivering on its product. “The real issue here…is the government shouldn’t be in this business of actually trying to be a venture capitalist. The government is a very poor venture capitalist,” said Rep. Patrick McHenry (R–N.C.). “We lose taxpayer dollars, and when we lose taxpayer dollars it outrages the public.” Armed with private e-mail correspondence House Republicans obtained between the company, DoE and related consultants, it tried to pin down who knew what and when.

Henrik Fisker, the company’s former chairman and founder, told House lawmakers that strategic financing at this stage could still allow the company to rebound. In any case, Fisker’s bevy of problems are unique to the company and do not reflect the electric vehicle landscape, says Alan Baum, a Michigan-based analyst specializing in the automotive industry. Start-up car companies—electric or not— often fail, he said.

The real next steps in the industry will come from the larger auto companies such as General Motors, Ford, Toyota, Nissan, Mercedes, Honda, Mitsubishi and BMW. “All those automakers I mentioned have vehicles in the pipeline that will debut in then next two or three years if they have not yet,” Baum says. “Major carmakers know with electric vehicles you can’t just sit on the sidelines.”

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Navigant Research predicted this month that a total of 21.9 million electric vehicles (both all-electric and plug-in hybrids) will be sold worldwide between 2012 and 2020Its forecasts suggest a fraction—368,000—will be sold in the U.S.; and only 107,000 would be all-electric vehicles (instead of plug-ins). That means that in seven years electric vehicles are expected to comprise only a sliver of the anticipated U.S. car market in 2020—roughly 2 percent, says Dave Hurst, a principal research analyst with Navigant. It will be an uphill climb, Navigant’s researchers expect about 71,800 electric vehicles to sell in the U.S. this year, 17,300 of which would be all-electric vehicles.

One issue is cost. Even with up to $7,500 in federal tax credits, electric vehicle prices can be steep. Without the credits, Karma’s sticker price was in the six-figures. Tesla’s top-of-the-line Model S costs $95,000. The Chevy Volt sells for about $40,000 and the Ford Fusion Energi rings in at $39,000. The price for the Nissan Leaf, which recently moved its manufacturing operations to the U.S., has dropped to around $29,000.

Finding an advanced battery that comes in the perfect package—high in energy density, small in size and lower in price—remains one of the largest hurdles to getting more electric vehicles on the road. “If we want to change things dramatically in the next 10 years we have to find a new material set—a new cathode–anode electrolyte set that will hopefully decrease the cost and increase energy density,” says Venkat Srinivasan, deputy director of the Joint Center for Energy Storage Research (JCESR). “If we can achieve that something dramatic would happen and significantly change the penetration curve.” JCESR, an “advanced battery hub,” was established in 2012 at DoE’s Argonne National Laboratory outside Chicago with the far-reaching goal of finding batteries with five times the current energy storage at one fifth the price in five years.

On the research side, federal loans from the Advanced Technology Vehicles Manufacturing Loan program (ATVM) have also supported other electric vehicle options, including Tesla, which received $465 million from DoE in 2010 and has said it expects to repay its loan five years early. Under this loan program, established under the George W. Bush administration, DoE also cut Ford a check for $5.9 billion to upgrade and modernize factories that produce vehicles including the Focus, Escape and Fusion. To Nissan, ATVM gave a loan for $1.4 billion to support the Leaf. And the Vehicle Production Group, LLC, received a $50-million loan to develop a wheelchair-accessible vehicle that will run on compressed natural gas. “To date, DoE has committed and closed five ATVM loans, totaling $8.4 billion, to auto manufacturers large and small who are adopting cutting-edge technologies and deploying them into the market,” Nicholas Whitcombe, former acting director of the ATVM program at DoE, told lawmakers Wednesday.

But the same problems continue to plague the electric vehicle industry year after year: the need for a battery that is long on power and short on cost; and a public that still feels uneasy about purchasing electric vehicles. So much of the future for electric vehicles also remains murky because it is difficult to predict gas prices. Navigant’s forecast for 2020 assumes that fuel prices continue to climb around 7 percent per year, electric vehicle costs come down and government incentives to buy electric vehicles stay in place for consumers. That’s a lot of what-ifs.

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In the coming years there may be a host of experimentation with electric vehicles—inclusive of testing different products under the hood but also different types of cars with more spacious backseats and trunk space. “Every major automaker is going to be offering one or several models, and they come in at different price points and configurations,” says Genevieve Cullen, vice president of the Electric Drive Transportation Association.

In Europe several companies have tried to lower the price of purchasing an electric vehicle by allowing consumers to buy the car but lease the battery. That has not yet caught on in the U.S. but smart USA plans to offer it to U.S customers for the first time when its smart fortwo Electric Drive is released in May. Whereas leasing batteries could lower risks and costs, consumers still might balk. “It’s like buying a car without an engine and then leasing the engine,” Navigant’s Hurst noted.

“It’s a fantastic idea in some ways,” JCESR’s Srinivasan says. “What you’re telling consumers is don’t worry about the battery and how long it will last and how much it will cost.”

Leasing batteries is just one business model approach, Cullen says. Some carmakers are also exploring how they could tap the batteries’ remaining energy once their life in the car is over, she said. “Diversity in the marketplace will be an enormous step in growing this market.”

Click here to view original web page at www.scientificamerican.com

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Tesla exec reveals shock development with Cybercab

“If we have to have a steering wheel, it can have a steering wheel and pedals.”

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(Credit: Teslarati)

Tesla is planning to launch the Cybercab in the second quarter of next year, and it is designed to be fully autonomous, so much so that the company is planning to build it without a steering wheel or pedals.

However, a Tesla executive said today that the company could ditch that idea altogether in what would be a major shift from the plans the company, and especially its CEO Elon Musk, have announced for the Cybercab.

Earlier today, Robyn Denholm, the company’s Chair for the Board of Directors, revealed that Tesla would potentially switch up its plans for the Cybercab based on potential regulatory requirements.

Credit: Tesla Europe & Middle East | X

Currently, even autonomous vehicles that operate for companies like Tesla and Waymo are required to have steering wheels and pedals. From a regulatory perspective, this could halt the plans Tesla has for Cybercab.

Denholm said in an interview with Bloomberg:

“If we have to have a steering wheel, it can have a steering wheel and pedals.”

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Interestingly, Musk and Tesla have not veered away from the idea that the vehicle will be without these operational must-haves.

Since the vehicle was revealed last October at the We, Robot event in Los Angeles, Tesla has maintained that the car would be built without a steering wheel or pedals, and would equip two seats, which is what is statistically most popular in ride-sharing, as the vast majority of rides have only one or two passengers.

Musk doubled down on the plans for Cybercab as recently as last week, when he said:

“That’s really a vehicle that’s optimized for full autonomy. It, in fact, does not have a steering wheel or pedals and is really an enduring optimization on minimizing cost per mile for fully considered cost per mile of operation. For our other vehicles, they still have a little bit of the horse carriage thing going on where, obviously, if you’ve got steering wheels and pedals and you’re designing a car that people might want to go very direct past acceleration and tight cornering, like high-performance cars, then you’re going to design a different car than one that is optimized for a comfortable ride and doesn’t expect to go past sort of 85 or 90 miles an hour.”

Cybercab is fully conceptualized as a vehicle that has zero need for pedals or a steering wheel because it is aimed toward being fully reliant on a Level 5 autonomous platform.

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Tesla is ramping its hiring for Cybercab vehicle manufacturing roles

Regulators could get in the way of this, however, and although the car could drive itself and be a great solution for ride-hailing, it might need to have these controls to hit the road in the future.

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SpaceX opens up free Starlink service for those impacted by Hurricane Melissa

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(Credit: Starlink | X)

SpaceX is opening up its internet service, Starlink, to those impacted by Hurricane Melissa, as it made landfall in Jamaica and the Bahamas as a Category 5 storm.

Hurricane Melissa is expected to reach wind speeds of over 165 MPH over the next few days as it extends out into the Atlantic Ocean by Thursday and Friday.

Citizens in Jamaica and the Bahamas have been preparing for the storm for the past week, getting necessary goods together and preparing for the massive storm to arrive. It finally did yesterday, and the first images and video of the storm are showing that it could destroy many parts of both countries.

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Starlink is now being opened up for free until the end of November for those impacted by the storm in Jamaica and the Bahamas, SpaceX announced today:

It is a move similar to the one the company made last year as Hurricane Helene made its way through the United States, destroying homes and property across the East Coast. SpaceX offered free service for those impacted by the destruction caused by the storm.

The free Starlink service was available until the end of 2024.

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Elon Musk’s companies have also made similar moves to help out those who are impacted by natural disasters. Tesla has offered Free Supercharging in the past, most notably during the California wildfires.

Tesla and SpaceX’s LA fire relief efforts: Cybertrucks, free Starlink and more

One major advantage of Starlink is that it is available for use in situations like this one, where power might be required to operate things like a modem and router.

Internet access is a crucial part of survival in these situations, especially as it can be the last leg some stand on to get in touch with emergency services or loved ones.

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Tesla board chair reiterates widely unmentioned point of Musk comp plan

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Credit: Tesla

Tesla Board Chair Robyn Denholm appeared on Bloomberg TV this morning to discuss the current status of CEO Elon Musk’s compensation plan, and used the opportunity to reiterate a widely unmentioned key point of the entire package.

Critics of the proposed pay package, which would pay Musk $1 trillion if he completes every tranche, routinely cite the sheer size of the payday.

Of course, many skeptics leave out the fact that he would only get that money if he were able to generate eight times the value the company currently has.

Tesla gains massive vote of confidence on compensation plan for Elon Musk

For Musk, it might have a little bit to do with money, but that is likely a very small percentage point of why the compensation package is being offered to him. He has reiterated that it is more about voting control and overall influence, especially as Tesla dives into robotics.

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He said during the Q3 Earnings Call:

“My fundamental concern with regard to how much voting control I have at Tesla is if I go ahead and build this enormous robot army, can I just be ousted at some point in the future? That’s my biggest concern. That is really the only thing I’m trying to address with this. It’s called compensation, but it’s not like I’m going to go spend the money. It’s just, if we build this robot army, do I have at least a strong influence over that robot army, not current control, but a strong influence? That’s what it comes down to in a nutshell. I don’t feel comfortable wielding that robot army if I don’t have at least a strong influence.”

Tesla shares the idea that Musk is a crucial part of the company, and without him being awarded the voting control he feels he deserves, he could leave the company altogether.

The company is very obviously feeling the importance of the upcoming vote, as it has advertised and pushed heavily for the comp plan to be approved, mostly to retain Musk.

Tesla Board Chair Robyn Denholm said today to Bloomberg TV that it is crucial shareholders understand it is not about Musk’s potential wealth, but more about his influence on company decisions:

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“So firstly, it is a performance package, so he gets nothing if he doesn’t perform against the pretty audacious milestones that are part of the performance criteria that’s been outlined by the board in the performance package. So, I think rather than compensation, it’s actually about the performance and the goals that we have for the company as we move forward. And so, for me, it really is about making sure that investors understand that they actually get paid if he hits the milestones before he will…Elon’s been very public, including on last week’s earnings call, about the fact that it’s around the voting influence that he could have in future shareholder meetings as opposed to the economic interests.”

Musk is not an incredibly flashy person. He does not have crazy cars or a massive house to go back to. He spends a lot of his time working and sometimes even sleeps at his office inside the factory.

He recently said he “only has what is needed” because “material possessions were making him weak.”

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