Sunday, May 9, 2010

Google, V-Vehicle, and the Bias Toward Electric Cars

Earth2Tech has some mash-up perspective on Google's (GOOG) venture-capital fund and why its investment in start-up carmaker V-Vehicle isn’t going too well:

Last year Google Ventures joined a $66.26 million round raised by V-Vehicle, a then-stealthy company looking to make low-cost gas cars with higher-than-average efficiency and a plastic shell. David Drummond, Google’s Senior Vice President, Corporate Development and Chief Legal Officer, is listed as on V-Vehicle’s SEC filing.

Other investors in V-Vehicle include former oil baron T. Boone Pickens and Kleiner Perkins investors John Doerr and Ray Lane ... one of the best ways to garner a Google Ventures investment is to work with one of the two VC firms that have closely aligned themselves with Google: Kleiner Perkins and August Capital.

Indeed, but for V-Vehicle, it isn’t enough. Like many alternative-mobility startups, including Tesla and Fisker, V-Vehicle, which wants to build its cars in Louisiana, pegged its hopes on securing a loan from the Department of Energy.

But it didn’t get one. Why not? Again, Earth2Tech’s Josie Garthwaite has the skinny:

V-Vehicle remains tight-lipped about design details, and the company has not released images of the prototype or disclosed where it’s undergoing testing. Investors have, however, described V-Vehicle’s planned model as “environmentally friendly and fuel-efficient,” saying that it will run on gas and get more than 40 MPG.

That’s not a groundbreaking figure for fuel economy — Toyota’s latest Prius model gets a combined 50 MPG rating (51 MPG city, 48 MPG highway). But V-Vehicle aims to provide this efficiency at a much lower price: about $10,000, less than half of the base price for the 2010 Prius and about a quarter of the price expected for Fisker’s planned second-gen model, the plug-in hybrid Project Nina sedan. Putting improved fuel economy within reach for a large portion of consumers could be a worthy goal, but if the feds have an option to support an affordable option that will yield more dramatic fuel and emission savings, it seems to me those would be tax dollars better spent.

You could look at how the Department of Energy loans are breaking down and conclude that they’re going to companies that have some kind of electric or low-emissions strategy, including big carmakers such as Ford (F) and Nissan. V-Vehicles' idea is to bring high MPGs to the masses. Low price plus high MPGs equals a solution to our global problem of dwindling oil supplies. Ironically, this is probably the best business strategy for a automotive startup, but it isn’t very sexy. The Google factor gave it some oomph, but now it looks as if the company is going to get steamrolled by the impending rush of E.V.s to market this year and next.

Basically, if your plan isn’t to go electric in some way, either full-on or in hybrid fashion, you’re a chump. I mean, a car that just runs on gas? Please, that’s so 2008.

Too bad. Of course, when the Tata Nano shows up on our shores in a few years, the question of whether people will buy an ultra-inexpensive car that can be filled up on commonplace petrol, in about five minutes, rather than being plugged in for eight hours to rejuice, will be raised once again.

source: thebigmoney