Sustainable development may ultimately be about the environment, but it is perhaps about economics first and foremost.

Electric vehicles are not new. They were first marketed in the early 1900s and then revived unsuccessfully in the 1990s. However, the situation at that time was very different: oil was cheap and abundant, and the downside costs of environmental impact largely ignored or unknown. Thus the internal combustion engine vehicle (ICEV) emerged as the dominant technology, since it was less expensive and not limited by battery capacity or recharging times. A century of infrastructural development based around the ICEV has created ‘lock in’, which has enabled the incumbent suppliers to prevent all disruptive technologies from emerging. No wonder then that nine of the ten largest corporations in the world are either oil companies or automotive manufacturers.

Time has changed and now that economies are committed to win the war against global warming, reduce foreign dependency and increase national security, industries are reconsidering the model.

Two huge industries are transforming: power and auto industries; a global new one is emerging. At crossroads of these trends, there are energy storage, smart grid, and electrified vehicle.

This vehicle electrification movement is relevant when you realize that whether the starting point is crude oil, natural gas, coal, or biomass, electric vehicles will emit fewer CO₂e emissions per kilometre travelled than their conventional mechanical rivals. The business case for electric vehicle is yet hard to play with. A TCO advantage is prerequisite for the mass production of electric vehicles. With a barrel at 80-100$ and a battery cost around 240€/kWh, TCO can be attractive but to reach the scale effect of mass production, industries need:

• Strong incentive from the government,
• Bold entrepreneurship skills like those found in the Better Place project (Israel), at BYD (China) or Elektromotive (UK),
• Consumer’s behaviour change.

Within a decade, the cost of energy for a single year of fuel supply for a combustion car should cost more than the cost of energy for an electric car’s entire life. Then, the electric mobility operator can be invented somewhere between France, Israel, US, China or Denmark. The hypothetical operator would sell e-mobility mileage instead of selling car or fuel. Electric car, like mobile phone will not be driven on our road without an infrastructure to connect, sustain and recharge it. Another value chain step will be created with the huge investment required in infrastructure.

The impact will be deeply felt for utilities. Energy suppliers should decarbonise their energy supplies and add value into their electricity-fuel offer, with a subscription-based business model, including battery leasing or after sales service.

Afterwards, utilities will take into account the emerging role of hybrid and electric vehicles in personal transportation, and will integrate this into their case to build smarter grid.

Auto makers will need to integrate in their portfolio the new deal of the vehicle electrification long term trend.  Competition pressure will force them to build cheaper car, with reduced vehicle maintenance, standardized to plug in different countries in the world.

Another important goal is to improve the cost and quality of battery technology. Advances in material technology, experimenting with different chemicals, and the use of nanotechnology may all play a role in this. Battery makers will need to seal global partnership with OEM’s and power companies, to move backward to ensure the raw material supply leading to a new geopolitics of resources sharing. They need to ensure the residual battery value and warranty in order to create a more credible business model.  

Government will take a predominant part in this new sustainable capitalism in establishing attractive schemes to attract investment and build competitive industries. If the government makes a significant commitment to a program of electric miles, the venture-capital industry would likely respond to this signal. The overarching aim should be to develop an equivalent to Moore’s Law in battery technology, and therefore the policies framework would revolve around these topics:

• R&D of basic research regarding materials and battery chemistry,
• Preparation for validation fleet tests: to ensure durability, convenience, environmental effects in real use,
• Arrangement of codes and standards, and/or other framework to accept new type of vehicles
• Financial support of early market introduction, e.g., tax exemption according to environmental loading, support for investment to decrease financial risk
• Arrangement of infrastructure
• Public education of environmental effects for broader market
• Other incentive creation for users, to reduce barriers
• Encourage new service business regarding battery maintenance.

Extensive international partnership will be the key success factor for this emerging industry. If China decides to take on the challenge of leading the new clean electron economy on a global scale it will inevitably create massive production capacity for all critical elements of the solution: electric drive trains, batteries, EV / PHEV, charging infrastructure. Locally China will benefit from its direct central direct economy and its need to drive for change at scale due to the urgency of a country running out of fuel and cities running out of breathing air. The most likely scenario is one where China starts by both supplying the needs of its immense local market needs, but will in parallel leverage its market size and scale to create multiple massive export industries.

We are approaching the inevitable decline of oil availability. Today, countries with richer natural resources have a strategic advantage but tomorrow the geopolitical spectrum in all likelihood will change drastically. The automotive ecosystem is in the midst of significant change, with increasing challenges in consumer demands, technology development, globalization, integration and collaboration. A new era is rapidly approaching in which the very definition of personal mobility will change.  

The best way to predict the future is to create it. 

Nietzsche’s Twilight of the Idols opens with 44 aphorisms. Four “Questions of Conscience” as an illustration of my favourite 2008 thoughts I wrote this year:

You run ahead?  Are you doing it as a shepherd?  Or as an exception?  A third case would be the fugitive. First question of conscience.

Sichuan Earthquake:

Billions of Yuan were donated just after the terrifying event. For the first time, this money came not only from government support, traditionally compelled to protect its citizens from cradle to grave but from private donors for the majority, companies include. Sign that an emerging middle class, less controlled, is cultivating a more self conscious public opinion independent from the State. Sign also that information is less controlled by the system, more twittered, flowing through alternative canals, and more directly impacting the local Chinese awareness.

For me, the Wenchuan event is the turning-point in the start of reform mindsets that are overly focussed on economic development. More energy will be put into changing society. Disasters do not lead to improvements in themselves, but they can raise awareness and encourage reform.

Are you genuine?  Or merely an actor?  A representative?  Or that which is represented?  In the end, perhaps, you are merely a copy of an actor.  Second question of conscience.

Financial Crisis will get the banks into their genuine jobs: assessing risks and financing activities.

The logic of capitalism remains the same: Those who take the biggest risks should be the controlling owners and receive the residual profits for reasons of both ethics and competitiveness.
But today individual shareholders are so diversified that they rarely bear substantial risk in the individual firms in which they invest. If one of the countless businesses in which you invest through your pension plan or mutual funds loses 50% of its market cap, there is a good chance you won’t know about it.

In today’s firm, labour and real risk takers bears the most risk and provides the competitive advantage. Labour and entrepreneurial capitalism, therefore should make the decisions and get the residuals.

Are you one who looks on?  Or one who lends a hand?  Or one who looks away and walks off.  Third question of conscience.

Obama election:  means that Steven Chu is the head of the Green New Deal that America and the world need. GM can be bailed out, yet what they need is to build green cars.

Will we see innovation coming out of Detroit? In 1908, the Ford Model-T got better mileage — 25 miles per gallon — than many Ford, G.M. and Chrysler models made in 2008. But don’t be surprised when if innovation comes out of somewhere else. It can be done and it will be done. Who will win the battle for Car 2.0?

For example, from Tel Aviv, The Better Place electric car charging system involves generating electrons from as much renewable energy — such as wind and solar — as possible and then feeding those clean electrons into a national electric car charging infrastructure. G.M. sells cars. Better Place is selling mobility miles.

Do you want to walk along?  Or walk ahead?  Or walk by yourself?  One must know what one wants and that one wants.  Fourth question of conscience.

China Olympics: prove to the world that it’s the nation of the 21^st century.

It was a night made of red and mystic yellow. An extraordinary and profound clamour from Beijinger hearts succeeded to the hypnotic opening ceremony. This night of 8^th of August, 2008, Beijing is holding in its arms joy that doesn’t need any heirs or children. Joy that just want to be itself, it wants eternity, it wants the eternal return.

China enters now a trying year of anniversaries: the 50th of the suppression of an uprising in Tibet; the 20^th of the quashing of the Tiananmen Square protests; the 60th of the founding of the People’s Republic itself. It may be worth remembering that the winter of 1978-79 saw not only a party Central Committee plenum but also the “Democracy Wall” movement in Beijing. It was a brief flowering of the freedom of expression, quite remarkable after the xenophobic isolation of the Cultural Revolution. China still needs it the “fifth modernisation” as Wei Jingsheng, the most famous wall-writers called the movement.

Il y a dans la récente annonce du plan de relance économique chinois la filiation de stratégie de guerre économique à la Sun Tzu.

Chapitre VI, Vide et Plein : Qui excelle à la guerre dirige les mouvements de l’autre et ne se laisse pas dicter les siens. [...] Je l’oblige à dévoiler ses formations sans jamais trahir ma forme ; je concentre mes forces, l’ennemi disperse ses hommes ; je forme un corps unique, il est fractionné en dix endroits.

Le plan de relance économique, qui est constitué d’investissements qui étaient de toute façon prévus de longue date dans le cadre du 11ème plan quinquennal a différents buts :

- Proposer un rapport de force en faveur du camp chinois lors du sommet du 15 Novembre. Avec des européens qui arrivent en ordre dispersé, des américains qui n’ont plus de légitimité à donner des leçons, ce sont les pays émergents qui sont restés largement hors du mouvement de financiarisation du monde (voir ici) qui vont pouvoir peser dans les négociations.

-Envoyer le signal clair que pour la première fois depuis 30 ans, la Chine se donne les moyens de se concentrer sur le moteur de la consommation intérieure pour soutenir sa croissance. La politique keynesienne d’investissement dans les infrastructures mais aussi les importantes réformes dans le système de santé et d’éducation ont pour but de faire baisser la taux d’épargne des ménages qui pourront ainsi réinjecter dans le circuit économique une plus grande partie de leurs salaires grimpants.

Les gouvernements européens ne sont certes pas en reste avec le désir de N Sarkozy de construire un budget d’investissement et la création d’un fonds souverain français, ou le green new deal proposé par Obama. Pourtant ce sont bien les importantes réserves chinoises en bons du trésor américain ainsi que le taux de change Yuan-Dollar qui seront au centre des discussions lors du sommet du 15.

Voir le communiqué ici.