After a 70-year hibernation, Detroit Electric lumbered from its cave on Tuesday and tossed its Stratoliner hat into the electric-vehicle ring. What was old is new again, and Detroit Electric might just breathe new life into an ailing city and an uncertain industry.
A rose by any other name …
It’s hard not to glance at Tesla Motors to see her reaction, considering that Detroit Electric showed up to the party wearing basically the same dress. Detroit Electric‘s first product to market will be a limited-edition, two-seater sports car that will cost “in the neighborhood” of $135,000. That sounds a lot like Tesla’s now-discontinued Roadster!
But the similarities don’t end there. Detroit Electric will use Lotus platforms for at least its first two vehicles. What other car was based on Lotus’ Elise platform? That’s right: Tesla’s Roadster.
So on the face of things, it looks as though Tesla’s dominance of the high-end EV market may have just come under serious threat. Interestingly, though, Tesla’s shares are trading noticeably up since Detroit Electric‘s announcement. Investors seem encouraged, not panicked. Why might that be?
While Detroit Electric is starting with a sexy new sports car, it plans to offer a “diverse family of all-electric production cars,” which seems to suggest that the company won’t confine itself to the expensive top of the pyramid. EVs’ success will live and die on the development of a battery-charging infrastructure to support them, and such development will be spurred only by broad adoption of EVs. Investors may be betting that high-end purveyors like Tesla will be buoyed by Detroit Electric‘s potential offering of more affordable vehicles.
Pistols or swords?
Detroit Electric plans to announce “a major partnership with a global carmaker” at the Shanghai Motor Show on April 20. The company’s CEO of North America operations, Don Graunstadt, said this mysterious partner is a “much larger Chinese OEM,” or original equipment manufacturer.
I can’t help speculating that the obvious suspect is BYD. If that were the case, it would constitute Warren Buffett‘s indirect throwing down of the gauntlet to Elon Musk. Pistols at dawn, gentlemen! Still, as my colleague John Rosevear astutely cautions, “There are probably several other possible candidates, and one should be prepared to be surprised.”
The economic ecosystem
It’s worth pulling back a bit for a broader view. In a brilliant recent article, Bloomberg New Energy Finance Chief Executive Michael Liebreich laid out his case for analyzing our energy future in terms of a complex ecosystem. As I mentioned, EVs are dependent on infrastructure development. They’re also complementary to renewable-energy deployment, particularly solar. As Liebreich observed in his article, “The value of a solar rooftop in a world of electric vehicles is very different from the value of the same solar rooftop in a world without.”
Tesla has a partnership with SolarCity — another Elon Musk vehicle — to provide Tesla drivers with solar-fueled battery-recharging stations. SolarCity also announced a deal …read more
Source: FULL ARTICLE at DailyFinance