Air Date: Week of April 8, 1994

Cy Musiker reports from California on the efforts of small companies to design an economically viable electric car. Regulations in California and some other states would require the Big Three car manufacturers in Detroit to make a percentage of their cars electric by 1998. While many in Detroit are fighting the laws, some utilities and small electric vehicle manufacturers see the trend as an economic bonanza.

Transcript

CURWOOD: This is Living on Earth. I'm Steve Curwood. The future is now for electric cars, or at least it's just around the corner. Starting in 1998, in California, New York, and 8 other states, major auto makers must begin selling a small number of non-polluting cars. And in the short term, the only practical zero-emission technology is the electric automobile. Detroit is moving to meet this challenge, but only reluctantly. GM, Ford, and Chrysler say that in 4 years they'll only be able to produce expensive electrics with limited driving ranges, and that consumers won't be interested. But while the Big 3 lobby to overturn the 1998 state mandates, small companies are rushing to produce electric cars and they're getting some important help from electric utilities. Cy Musiker has our story.

MUSIKER: Sebastopol, California, is best known for its Gravenstein apples and wine grapes, but some day it could be famous as the birthplace of US electric cars.

(Auto drills, sounds of the shop floor)

STARR: We're inside our prototype shop up here in Sebastopol. This is where we do all the original design work of the vehicles, work out the various connection pieces, the brackets and so forth.

MUSIKER: Company founder Gary Starr is showing me around US Electric Car's corporate headquarters. Starr is an engaging host, almost jumpy with a personal static charge of his own.

STARR: And what you're looking at is of course a Geo Prizm with its hood open, but what you see different is no engine in it. That's because we actually pull out that gas engine and everything related to it, and in its place we actually put in an electronic - you could almost say an electronic computer, and that's why I say these vehicles are more apt to be built by California companies by Detroit companies because they really are computers on wheels.

MUSIKER: For a cost of about $30,000, US electric rips out the drive train of a Geo Prizm and installs massive lead-acid batteries, an electric motor, and a power controller. The company now has over 200 cars on the road, more electric cars in service than any other manufacturer.

(Office; phone ringing)

MUSIKER: We're back in Gary Starr's office. The atmosphere here is one of controlled chaos. US Electric Car's gone from 30 to 120 employees in the past year, and the company's scheduled to open a new satellite factory soon in Los Angeles. Starr claims it's good business for a small company to see electric cars.

STARR: What Detroit is saying when they say there's no market, they're meaning no consumer market. And I think where today's technology is, perhaps they're correct. Because they almost need to sell maybe 100,000 vehicles of any given model to operate profitably. You know, what we're trying to do with our small satellite facilities is build maybe just a few hundred vehicles per satellite location and operate profitably.

MUSIKER: In fact, US Electric Car, along with other electric car companies, is gearing up to sell directly to corporate fleets, especially those owned by utility companies.

FITZGERALD: I'm sure that even just a percentage of the fleet vehicles in California would meet the 2% mandate in 1998. I'm sure of that.

MUSIKER: Dan Fitzgerald is with Pacific Gas and Electric, which serves most of northern California. Fitzgerald's job is to calculate the size of the market for electric cars. Utilities like PG&E are eager to stimulate the industry. One utility group aims to put 5,000 electric vehicles into utility fleets by 1998. By guaranteeing a market, utilities could help manufactures reduce costs and work out technical problems. The eventual payoff, says Fitzgerald, would be millions of consumer-owned vehicles around the country recharging each night when utilities have excess generating capacity.

FITZGERALD: One of the ways that we're proposing to help manage this load so that it is off-peak, is we are developing an electric vehicle rate that we're proposing to put into place in 1995 as well. And what that will do will provide for a very low-cost refueling during our off-peak periods.

MUSIKER: Fitzgerald figures the California mandate could mean half a million electric cars on the road just in California by 2005. That would produce well over $200 million in new revenues for California electric utilities. Despite this kind of optimistic planning, Wall Street has remained skeptical about an industry that outside of Detroit remains so small and fragmented. There are only 2 major electric car companies in the country, while half a dozen more do electric conversions as a sideline. Mike Gordon is an analyst at Montgomery Securities, who follows battery companies.

GORDON: There's been many small companies that have been formed, basically R&D companies, to pursue this market. But it's been really a market that I see is built on dreams and the imagination, and there hasn't been a lot of substance behind that.

MUSIKER: Gordon thinks the industry's main problem remains the limited range of current battery technologies. Even stock analysts who would seem to have a bias toward electric cars still have reservations about the industry. Progressive Assets Management was the first socially-responsible brokerage company, and underwrote US Electric Car's first stock offering. Some analysts there think electric car and related industries are so volatile that it's hard to pick winners, especially while big US and foreign car companies are still working out their technologies and corporate strategies. Still, Progressive Assets analyst June Dogherty recommends the stock of US Electric. Dogherty notes the company recently hired a new, well-respected CEO and acquired a crash test and lightweight materials company.

DOGHERTY: So now they have the ability to not only convert cars, which a lot of people have been doing for a long time. They now have the capability to build them from the ground up. I think that the Big 3 have marked the public wrong on this one. The public wants quiet, affordable cars that don't pollute and that don't need so many darn repairs.

MUSIKER: Next month the first cars are scheduled to roll out the door at US Electric Car's new Los Angeles facility. Some day historians may note the day as the birth of a new era in transportation, or as another footnote in the long saga of folly. For Living on Earth, I'm Cy Musiker in San Francisco.