Planet Gore

Vinod Khosla on the Limits of Electric-Car Technology

A good explanation of the venture capitalist’s thought process on what makes a good investment in alternative-energy technology. His conclusion:

The key problem is, costs have to come down, or oil prices have to shoot up, for most traditional battery ventures to make big winners of entrepreneurs and their investors.  But new technical approaches that change the cost and safety equation (with significant new technology risk) will make the battery technologies competitive even if oil prices stay below $100/barrel. That is what we look for in investments—more technical risk now, less market risk later, and bigger breakthroughs for society. We are dealing with much harder science and technology, so we will see much higher rate of failure, but the wins will be bigger.

We will likely ship a billion new cars worldwide in the next 15 or so years. The key question is not whether hybrid or EV cars/batteries will be successful financially (they probably will), but rather what it will take to get 80% of these billion cars to be low-carbon cars. The most important thing to remember is economic gravity: the cheapest thing ends up winning. Our hope is to win that battle over the long term,  because it will take these breakthroughs to change the overall carbon trajectory for passenger cars.

With electric cars, there is yet another major risk: in the foreseeable term,  China/India and even the US will be “plugging into a lump of coal” for years to come. And though renewable electricity from wind and solar is a good goal for these cars, it will likely be much more costly (about 5X higher currently in India where a new coal plant costs 4c/KWh), so economic gravity again dictates high-carbon electricity to power these expensive electric cars. Another breakthrough is needed there.

Back in 1990, everybody assumed the digital world would be interactive TV … before the Internet came from left field, from an unlikely instigator: the web browser. Right now, it’s too early to tell what the instigator will be for energy.  In the interim, I see plenty of money to be made in both batteries and biofuels, but it will take more than current biofuels and current batteries to make the car world low-carbon. It will require a Black Swan of automotive propulsion.

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