Mario So Funny

Are EVs a black swan in alternative energy?

Vinod Khosla and the Black Swans of alternative energy

When it comes to venture capitalism, there is a unique similarity between Vinod Khosla of Khosla Ventures and Elon Musk of Tesla. Instead, of thinking of the next incremental step in technological evolution, both project far into the future.

Thus, while the mainstream auto industry pursues 100 mile EVs, Elon Musk builds 300 mile EVs.

Unfortunately, Khosla believes those 300 mile EVs — as well as the 100 mile ones — are just “toys” for rich people, which is a somewhat accurate description of Tesla’s electric cars and electric car buyers thus far. Consequently, if the future of the auto industry is “Chindia”, Khosla believes that means $10,000 cars, not cars with $10,000 batteries.

“One of the fundamental problems is environmentalists keep pushing solutions to the press, such as solar cells and electric cars that make no economic sense. They defy the laws of economic gravity. I keep saying we need to produce products at the ‘Chindia’ price–the price at which people in India and China will buy it–without subsidies. You can’t subsidise energy on a large scale. It would bankrupt any government. Every government that did that would end up like Greece.”

Ironically, China is seen by many as the key to electric car success, although in recent months, China’s focus on EVs has faltered.

Anyway, Khosla has never been much of a fan of hybrids and EVs. Instead, he’s focused on biofuels. Still, considering the global recession — and the probability that it will last for years — coupled with the fact that ‘Chindians’ will be the world’s biggest new vehicle consumers, I’d also bet $10,000 cars will also fare better than EVs until prices decline drastically.

Of course, is it possible that cars like GM’s EN-V, for instance, could result in $10,000 offerings that would be accepted in emerging Chindian markets? Certainly, while stuck-in-their-box Americans will balk at such offerings, those buying their first car ever might be more receptive to entirely new automotive boxes.

Maybe its time for Mr. Musk to start conceptualizing a $10,000 Chindian EV?

Check out the Economic Times for more on the Vinod Khosla interview.