Palm Springs, California

Musk has talked about both cars before. Back in 2008, he was even hoping the mainstream electric car could go for as low as $20,000. And Musk spoke about the Model X SUV at a recent tour of Tesla’s recently acquired NUMMI plant. But as the company gets closer to launching the Model S, it’ll get that much closer to Musk’s original vision of making electric vehicles truly mainstream.

As far as how fast EVs will become mainstream Musk had some pretty aggressive predictions going. By 2020 it’ll be dirt cheap to have a long range vehicle battery, said Musk. By 2030, the only cars sold in America will be electric cars, and by midcentury the vast majority of cars on the road will be electric, said Musk. Those are tall orders, and mere decades away. All transportation is going electric, except — ironically — rockets, said Musk (Musk is the founder of rocket company SpaceX).

But first in line, the Model S. Coming in late 2012 or 2013 (if it’s on time), the Model S is being designed so that people would buy it even if wasn’t electric. “It’s arguably the most advanced car in the world.” The battery pack can even be swamped out in under a minute, said Musk — which I’m sure got the attention of the Better Place folks.

Several questions from the audience at the conference asked Musk for advice on running companies and competing in the marketplace. Musk advised entrepreneurs to build a useful prototype as soon as possible for their ideas, for the least amount of money. That’s the first thing we did with Tesla, said Musk, because only so many things can be explained by power point.

In addition, Musk said, allow for a certain amount of chaos in an organization — allow for failure. Google is pretty good at this, said Musk, and we plan to eventually implement time for SpaceX and Tesla employees to work on their own projects. Finally, let employees have some irreverence, said Musk. For example, for a SpaceX rocket launch SpaceX employees hid a secret wheel of cheese inside the vessel.

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To get an initial clue into what GM Ventures might be attracted to, just look at the companies it has backed: electric vehicle maker Bright Automotive, battery startup Sakti3, and wireless charging firm Powermat. Yeah, all over the map. But Lauckner explained how the investments fit in its five key sectors to focus on: automotive cleantech (electric and low-carbon cars), infotainment, smart materials (light weight, phase change, forming tech), other automotive tech (like advanced sensors), and alternatives to traditional business models (like car sharing). The mission statement of GM Ventures is basically a spinoff of the mission statement of GM: Help GM build the best vehicles.

Rather than compete with venture capitalists, Lauckner said GM Ventures would actually be more eager to invest in startups that already had some sort of venture interest. “Venture capitalists have a lot of valuable experience that we can learn from, including knowing when to cut things and move on, working with management, and doing due diligence,” said Lauckner.

In terms of startups, Lauckner said GM Ventures is commonly investing as a customer, so the startup wouldn’t only get equity but often, a commercial relationship, which could be crucial for an early stage company. In addition, Lauckner said if GM starts working on the technology with a company at an early stage, GM can likely help the startup “shave the lead time off of the product development process,” by months or more.

Other benefits (beyond the obvious equity) would include GM being able to raise the profile of the company. We can “de-risk the equity structure of the company. We can take a lot of risk out of that from the beginning.” As a bonus, automotive testing and R&D is also an expensive undertaking and GM can help startups use its facilities and expensive tools.

On the flip side, what does GM get in return? Lauckner said it’s not common for GM to demand exclusive deals, but GM wants “a head start,” or basically a 12-month to 18-month exclusive lead time, before the startup starts selling the tech to other auto competitors. “We’ve done that for a couple [startups] and it works pretty well.”

GM has also taken the unusual step of licensing cathode technology from Argonne National Labs, and Lauckner said “the national labs do some tremendous work. It’s intellectual property at this moment, so it has it be turned into a product, but it’s extremely promising.”

Will GM Ventures be able to invest $100 million into helping GM produce the best cars in the world? Well, it certainly won’t hurt.

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Abu Dhabi, United Arab Emirates

The PRT pilot project began running last November, and it ferries people from a parking lot to the institute, which started classes two years ago and is co-developed with the Massachusetts Institute of Technology. Several pods waited at individual bays in a sleek station when we arrived, and a touch-screen kiosk allows users to summon them. Each pod seats four people and comes with a screen and a voice-over system to tell riders where they are headed. It also comes with an emergency button if you need to stop its operation on the track.

The pods can go can go up to 40 kilometers per hour, but they run at 25 kilometers per hour to go the short distance between the parking lot and the institute. The ride was a little bumpy, and I could hear the motor sound from underneath. We zipped around the ground floor of some structure to arrive at the institute, a 2-minute ride that covered 800 meters. There are also pods designed to carry freight.

Masdar City planners initially envisioned having a PRT network under a raised street level throughout the city, but that doesn’t seem to be the plan anymore. Since the government announced the Masdar City project in 2006, advancement in electric vehicles has prompted the planners to look at other types of electric rides, including buses, so how big a role PRT will play still remains a question. Masdar folks have talked about putting in a light rail system before as a primary way to transport lot of people at once.

The PRT is one of many ideas for creating low-carbon mass transit system for urban areas. Another idea that has gained popularity is the car-sharing network. Companies such as Zipcar have been expanding their service in the U.S. and other countries, though the cars in the sharing network have tended to be gasoline-powered or hybrids.

Research institutions such as MIT also have been coming up with newfangled designs for personal transport that can fill the last-mile gap in public transit by taking people from a subway station, for example, to their final destination. Google, too, has a keen interest in low-carbon transit technology and recently invested $1 million in Shweeb to develop a human-powered monorail system.

(Disclosure: I’m attending the World Future Energy Summit in Abu Dhabi, a trip paid for by the emirate).

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The financing isn’t KLD Energy’s first. Last Summer the electric vehicle tech maker raised $4.9 million in equity, and then another $2.8 million in equity and debt earlier this month. KLD also announced a $1 million Series A financing round in 2009, and regulatory filings show a pair of $2 million equity raises during the first few months of 2010.

KLD Energy makes an electric drive system that includes a battery, battery management system, electric motor and motor controller. The company says its technology can give electric two- and three-wheeled vehicles speed and performance capabilities on par with gas-powered counterparts. KLD’s system has no transmission, has high frequency and low RPM, and uses a computerized controller.

Ferber told us last summer that KLD planned to build its business by first deploying its system in electric three-wheelers and scooters internationally (starting in Asia and South America), and targeting the electric scooter market in the U.S. through a deal with Vietnamese scooter manufacturer Sufat (with a starting scooter price of $3,288). KLD Energy offers the technology for licensing, while its subsidiary KLD Motors America manufactures electric motors using a nano-crystalline composite material at a facility in Vinh Phuc, Vietnam.

As we’ve noted before, companies that move early and fast to dominate the EV market in China — which has significant government support on its side and could reach $220 billion by 2030 — could use the country as a springboard for a broader international play.

But remember it’s not exactly easy to be a startup electric scooter maker. The business costs a lot of capital (as you can see by the fund-raising), and it’s a field that has no shortage of casualties (Vectrix closed up shop in 2009 but has more recently emerged). There’s also a lot of competition from players like Brammo, Zero Motorcycles, UltraMotors, Mission Motors, and Vectrix (and that’s only the startups).

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Well, those are the visions. However, there are major hurdles to implementing these ideas. Here are the road blocks:

Infrastructure Investment

First and foremost, there will be a colossal investment needed for both clean power and electric car infrastructure to make their way onto the market, and both will take a lot of time. Author and professor Vaclav Smil has explained in his recent book that an all-electric U.S. fleet would conservatively need 980 TWh of electricity per year to run, which was 25 percent of the U.S. electricity generation in 2008. Smil thinks utilities wouldn’t realistically be able to build that additional amount of electricity generation within two decades.

In addition, that extra generation would have to come from clean power to be carbon-reductive. As anyone who has followed the utility-scale solar market knows, it takes years for utility-scale solar projects to move from drawing board to supplying electricity. In the case of BrightSource Energy’s inaugural solar thermal project Ivanpah, it has taken over three years to just get regulatory approval, and now here come all the environmental protests.

California’s utilities have struggled to meet the state mandate that says they need to buy 20 percent of their electricity supply from clean power by 2010. Most utilities weren’t likely to make that deadline, but state regulation gives them until the end of 2013 to comply. Meanwhile, the utilities will have to make sure they line up enough contracts or install their own projects to meet the 33 percent goal by 2020. And this is just in California, which has an aggressive state mandate.

Utility scale wind is a more mature market, but wind installations slowed in the U.S. considerably in 2010 due to the slowed economy. In addition, because of intermittency, Smil and other researchers think wind could never be a dominant form of clean power. In fact, it’s far from clear if solar and wind will be able to provide baseload power (provides energy 24/7), and the U.S. will have to rely on other forms of clean power like nuclear, geothermal, and hydro.

From a plug-in vehicle market perspective, perhaps it’s not such a bad thing that clean power will take such a long time to get built out. Because plug-in car adoption will take just as long. Bloomberg New Energy Finance predicts there will be 1.6 million plug-in cars sold by 2015, rising to 7.6 million by 2020. In 2010, the U.S. had about 245 million passenger cars, SUVs, vans, and light trucks.

EV + Clean Power

Clearly, it’s going to take decades for both clean power and electric vehicles to make a sizable dent in the U.S. infrastructure. In the mean time, some utilities and companies are looking at ways to use or sell clean power for electric vehicle projects.

SAP and German utility MVV Energie are starting a pilot project using 30 corporate SAP electric vehicles that will be powered exclusively by the utility’s clean power. MVV Energie will be building and operating the smart charging stations that are capable of filling electric cars exclusively with certified green energy.

Better Place, the electric vehicle infrastructure company, plans to incorporate clean power into its networks, particularly in its launch region in Israel. In 2008, when Better Place CEO and founder Shai Agassi announced the Israel Better Place launch, he said the infrastructure will be powered by “batteries, that get their energy from green sustainable electricity sources.” (We’re thinking that’ll be mostly solar, given Israel’s climate).

Batteries as Aid for the Power Grid

While we’re waiting for EVs to be powered by the sun, electric car batteries could be an aid to getting clean power onto the grid. A network of electric cars could offer the potential of distributed energy storage and grid services like load balancing or frequency regulation.

The power grid works by constantly balancing supply and demand (generation and load) and must be kept at a 60 Hz frequency. That’s a complex and difficult task given today’s grid has little energy storage capacity. So if the frequency goes too high or low, the utility must respond by shifting generation and load. For example, PJM, a regional transmission organization serving a population of 51 million, pings generators to control regulation as often as hundreds of times per day. Electric vehicle batteries could act as the real-time, distributed intelligent frequency regulators, replacing generators.

PJM has a project with the University of Delaware using electric vehicles in a demand response program, but John Gartner, an analyst with Pike Research, says, “We don’t see this as a commercial application until at least 2015.” However, after the issues are resolved, the arrival of electric vehicles will provide greater flexibility for utilities to integrate higher percentages of wind and solar power, says Gartner.

Image courtesy of Better Place.

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In the telco world, this type of connectivity is called machine-to-machine networks, because there are no cell phone-toting consumers in the equation, but just pipes linking machines to the computers of service operators. Cellular companies are increasingly turning to machine-to-machine networks for a variety of reasons including that machine-to-machine services often have lower data needs (the SMS pill service in this instance), compared to, say, bandwidth crunching iPhone users.

Machine-to-machine connectivity is also a needed area of expansion in a saturated wireless market like the U.S. As Stacey on GigaOM reported, the nation’s two largest carriers added more connected devices in the second quarter of 2010 than postpaid subscriptions, according to data from wireless analyst Chetan Sharma. Cell phone penetration in the U.S. has surpassed 100 percent, if you discount children younger than five.

Along with smart meters and the smart grid, electric vehicles and EV charging stations will be a hot area for telcos in the coming years. Already, as we reported last Summer, Nissan has turned to AT&T to connect the digital services for the all-electric Nissan LEAF, one of the first mainstream EVs on sale in the U.S.

AT&T’s LEAF connection supports services like battery charge monitoring and being able to find the nearest charging station (to help with range anxiety). AT&T’s connection transmits information from the LEAF up to a satellite and then to Nissan’s data centers.

Ecotality will be using the Sprint network for billing, device and service management, and to manage information over the distributed Blink Network that Ecotality will be building across the U.S. Ecotality plans to install 15,000 Level 2 chargers and over 300 fast charging ports this year.

According to a report by Pike Research analyst John Gartner which we published on GigaOM Pro (subscription required), utilities and EV-service providers will steadily increase their investments in IT related to electric car management over the next five years. Gartner predicts that electric vehicle supply equipment — including wall-mounted charge points for homes as well as commercial charging stations — will grow to a nearly $400 million industry by 2015.

New internal combustion cars will also be getting increased connections. Vehicles are now “packed with up to 100 million lines of computer code,” and have “at least 30 microprocessor-controlled devices,” pointed out the New York Times last year. Many automakers already offer services based on network connections, like location-based navigation (enabled by a GPS system) or GM’s OnStar System which is based on a cellular connection.

The phone companies and the car makers will also have a battle on their hands when it comes to the in-car connection — or how the driver accesses connected infotainment services (from directions to news to music). Car companies want to attract drivers to an added vehicle-embedded services, like GM’s OnStar, while phone companies will want to center of the connected service to come from the phone itself, while the car is just the dock for the phone. Expect this relationship to get interesting in 2011.

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News about the layoffs emerged Monday, and company spokesman Patrick Wright confirmed it with us. Wright said the company laid off “a handful of people in Colorado and Georgia,” but declined to disclose the number or reasons. In the same email reply, Wright said that the company could possibly start producing ethanol this week at its plant near Soperton, Ga.

“The Soperton plant is running and is producing methanol and we expect to produce ethanol this week,” Wright wrote Tuesday. In a phone conversation, Wright said the company plans to meet a 2011 production goal set by the U.S. Environmental Protection Agency. He declined to answer more questions about the company’s ethanol production plan. We’ll update the story if we hear more.

Range Fuels is one of the five companies the EPA projected will be able to produce 6.6 million gallons of cellulosic biofuel in 2011. A 2007 law required the EPA to set mandates for different types of fuels that can be blended into gasoline and diesel. Those mandates are supposed to lead the country to produce 36 billion gallons in 2022.

Lawmakers nurtured ambitious goals to wean the country off the use of fossil fuels. But meeting those goals has proven extremely difficult, mainly because many biofuel companies with promising technologies ran into technical problems or were unable to raise the hundreds of millions of dollars needed to build a commercial plant. Or both.

Congress initially set the 2010 target for cellulosic biofuel at 100 million gallons, but the EPA cut that to 6.5 million gallons. It appears the industry might have produced less than 1 million gallons last year, reported ClimateWire Tuesday, citing an estimate by a government analyst. EPA’s estimates are partly based on input from biofuel producers.

The EPA expects Range Fuels to produce 100,000 gallons of cellulosic ethanol and 2.9 million gallons of methanol at its Georgia plant in 2011. Although methanol doesn’t meet the current definition of cellulosic biofuel, the EPA said it’s considering changing that. The agency already counted the projected methanol production for Range Fuels in its 2011 goal. The company is using wood wastes as the primary feedstock.

Aside from Range Fuels, the other four producers that could contribute to the 2011 pool are DuPont Danisco, Fiberight, KL Energy and KiOR.

Range Fuels began producing methanol last summer. At the time, Aldous said the plant had “less than 10 million gallons” of annual production capacity, but the plan was to expand it to 60 million gallons. Construction was to start this summer.

Aldous told Colorado newspaper the Daily Camera this week that the recession and what he called a “public apathy toward green fuels” have hampered the company’s progress. “The critical issue is really that there’s no mechanism to price carbon today,” he told the newspaper. The newspaper also reported that there was a “problem with the feed system at its plant.”

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Photo courtesy of Nancy Qian