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Richard H. Smith

Richard H. Smith

Posted: May 25, 2010 04:18 PM

Tesla - Toyota - Nummi : The Electric Car Reborn?

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When the history of a 21st Century "Green Revolution" is written, last week's Toyota-Tesla headlines and, behind the lines, the concern of a veteran California politician for a few thousand unemployed auto workers, may be the preface to how the electric car eventually penetrated the consciousness of America.

Two years ago, California State Treasurer Bill Lockyer commissioned me to study the potential of "Green Business" in America. I was struck by all the jokes about a benign "plot", of an environmentally-conscious power elite, determined to drag the gas-guzzling, carbon-loving masses into upheaval against an old regime of fossil-fuel energy.

Bill Gates was one "elitist" who pointed out that a hundred million consumers were not about to "go Green" merely to save the earth. Alternative energy had to be economically competitive before it was adopted on a scale massive enough to truly counter the threat of Climate Change.

Living and working in the Berkeley-San Francisco-Silicon Valley milieu, it's easy to be blinded by Green optimism. More Prius autos are sold per square mile in northern California than anywhere else in America. Solar panels are popping up all over in public places, lighting school buildings and powering traffic lights. But no matter how Green the "Left Coast", a Richard Nixon might still ask, "Will it play in Peoria?"

What could possibly trigger a popular Greening of the American heartland? Maybe the one thing many Americans love above all else - their automobiles.

A documentary film of 2006, "Who Killed The Electric Car?", explored the complex of special interests and happenstance that conspired to doom the first General Motors Electric Vehicles which appeared on California roadways in the 1990s. The same question might have been posed a century earlier when the US Government, having bought a large fleet of electric trucks as transport for its new Parcel Post service, scrapped the metal and the technology and joined the rest of the country in hailing Henry Ford's internal combustion engine.

During the last decade, the gradual acceptance of Toyota's Prius hybrid, sales of which passed the respectable (but not yet game-changing) million mark, held out hope for a slow trend back to that fateful turning-point of the past - until the recent bad rap of real and imagined mechanical failures.

Then, while licking its public relations wounds, Toyota announced it would close the NUMMI (New United Motors Manufacturing Inc.) plant in Fremont, California, which it had been operating for 25 years in collaboration with General Motors. Hard hit by the Great Recession, GM was pulling out of the partnership, and Toyota wasn't willing to go it alone. So over 4,000 unionized auto workers would be out of luck.

That disturbed Bill Lockyer. Before he was elected to state office as Attorney General and then Treasurer of California, Lockyer was the State Senator representing southern Alameda County. NUMMI was a dozen miles from his home and his close ties to the plant and its workers, who adapted well to the Japanese production system, were of long-standing.

So too, as it happened, were his connections with Tesla Motors, one of the best-publicized start-up companies of the new "Green Tech" movement. Soon after being elected Treasurer, Lockyer discovered that he had the statutory authority to give a sales tax exemption to California companies buying manufacturing equipment that would be clearly beneficial to the environment. He offered that exemption to Tesla - a relative pittance in the grand scheme of multi-billion State revenues - just as the company was seriously thinking of leaving California to cut costs. Governor Schwarzenegger was on hand two years ago to announce, with his usual fanfare, that the company had decided to stay. He again found the limelight to which he is so accustomed when Toyota and Tesla joined hands last week.

The handshake wasn't entirely startling, considering that Tesla has already been working with Germany's Daimler to produce battery packs and chargers for an electric vehicle. Tesla, while it still had some of the earmarks of a cottage industry start-up, had thus scratched the surface of the automotive big time. Sooner or later, it was a good bet that one of the auto giants would discover all that the little company had to offer - innovation and style - in setting the stage for electric vehicle mass production.

But why Toyota, and why now? The media found a human interest story in the personal rapport of Akio Toyoda with Tesla founder and CEO Elon Musk. Few connected the dots from Tesla to the unhappy fate of NUMMI, which Lockyer had brought to the attention of the public, appointing a blue-ribbon commission that calculated a billion-dollar cost to the California economy of shutting down the plant. Commission members even traveled to Tokyo to plead with the company to reconsider its decision. Given that Toyota, at that very moment, was being bludgeoned in the media for alleged mechanical faults, there seemed some faint hope that NUMMI could be saved. But Toyota was unwilling to maintain a huge plant, even one with a long record of excellence, without an American partner. The appeal of Lockyer's commissioners apparently fell on deaf ears.

But, maybe, somewhere along the line, a little thought was planted in the back of someone's mind: Corporate giant with PR problems weds well-regarded, flashy start-up in need of big capital, to conceive a new and exciting product in a shuttered physical plant, ready-made for future expansion.

Hmmm... A pipe-dream? Maybe not to Lockyer, linked as he was to all three elements of the potential troika. To what extent he may have helped broker the deal is not on the public record. But Tesla, on the verge of building its own small production plant in southern California, suddenly switched gears and settled on reopening the giant NUMMI (in Mr. Lockyer's neighborhood), that would have been far beyond its reach without Toyota cash and clout.

There was general acclaim and rejoicing when Schwarzenegger Mc-ed the joint announcement by the two companies. As press cameras clicked, Lockyer wasn't in the picture.

How much private satisfaction he can take from the deal depends on whether it turns out to be a truly historic development.

Tesla has been planning for some time to move past its beautifully-styled $100,000 sports car to produce a sedan, less pricey yet still beyond Main Street pocket books. By proving that electric cars don't have to be ugly, it would broaden the appeal of a type of vehicle that hasn't yet captured the imagination of the American consumer. If and when that should happen, Toyota deep pockets and know-how for mass production and marketing could see NUMMI humming again, restored to full capacity.

NUMMI is not just any auto plant - it's located on the northern borderline of Silicon Valley, and that may prove important for the future. It's no accident that Tesla's executive leadership, financing and technological innovations, have been intimately linked with the computer industry. Its product is, after all, not just an automobile, but also an electric machine. The inter-relationship between "Green Tech" and "High Tech" is still in its formative stages, but geographic proximity alone may yield unexpected advantages. A few blocks from Tesla's show room in Palo Alto are the offices of another young company, Better Place, which has designed a transportation infrastructure of renewable energy to support a network of electric vehicles - not hybrids, but plug-in machines, like the Tesla-Toyota cars of the future.

And in the greater, greener scheme of things, there is much to be said for electric car mass production. We often hear today about the economic costs of cutting carbon emissions and battling Climate Change. On the other hand, mass production of affordable, stylish electric cars, with appeal to consumers throughout America and the world, would create jobs and bolster the economy.

Imagine our grandchildren driving tens of millions of sleek electric vehicles on American highways. Imagine a new Detroit, based in an extended Silicon Valley corridor, with manufacturing facilities throughout unemployment-wracked California.

If this should ever become reality, the history books may say that it began here and now, in Fremont, California, where the electric car was reborn.