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All of a sudden, the auto industry's movement toward electric vehicles (EVs) has become a stampede. Toyota's (NYSE: TM ) plan to invest $50 million in Silicon Valley's Tesla Motors got a lot of attention when it was announced last week, but there's much more going on. This is clearly a moment when established global players, emerging-markets powers, and brand-new startups are all rushing in to what seems more and more likely to be a historic shift to electrified transportation.
They're rushing to claim more than just market share -- governments around the world are dishing out subsidies, hoping to speed the transition to a less-oil-dependent future. Here in the U.S., House and Senate leaders, accompanied by representatives from battery maker A123 Systems (Nasdaq: AONE ) and start-up EV maker Bright Automotive, just introduced an $11 billion plan intended to speed the development of infrastructure needed to support the mass adoption of EVs.
As drafted, the bill would provide up to $1 billion for as many as eight "deployment communities" -- cities and regions that pledge to use the funds to establish public charging stations and other EV-specific infrastructure. Few such stations exist now, but they're seen as key to mass EV adoption, and their development -- along with other infrastructure, such as beefed-up power transmission networks -- is becoming a priority.
A global shift
The U.S. government has been offering alt-fuel-related incentives for years, but they're not alone. Japan's clean-car incentives program has driven Toyota's Prius to the top of that country's sales carts, and China is widely expected to offer incentives to clean-car buyers in the near future.
That latter expectation is probably behind the joint-venture deal that Mercedes-Benz's corporate parent Daimler (NYSE: DAI ) just announced with Chinese battery-and-auto-maker BYD. The two companies are expected to release a jointly developed car in the near future, likely a Daimler-enhanced version of BYD's all-electric e6.
BYD, which is partly owned by Warren Buffet's Berkshire Hathaway (NYSE: BRK-B ) , has previously said that it will launch the e6 in the U.S. by the end of this year, joining a long list of automakers promising new EVs by late this year or early 2011.
A whole lot of Leafs
Speaking of EVs due in late 2010, Nissan (OTC: NSANY.PK) on Thursday announced a $1.7 billion investment in a new lithium-ion battery factory in Smyrna, Tenn. When it opens in 2012, the plant will be able to supply battery packs for up to 200,000 vehicles annually -- and right next door is an assembly plant that will be able to produce up to 150,000 all-electric Nissan Leafs a year.
While Nissan probably isn't expecting those kinds of volumes initially -- CEO Carlos Ghosn recently said that the U.S. allocation of 2011 Leafs is already sold out, at 13,000 -- 150,000 Leafs a year is an ambitious number. Nissan is clearly counting on volume to make a reasonable profit at its announced $33,000 price for the Leaf. And they're counting on more than that -- the size of the new battery plant suggests that the Leaf will be joined by other Nissan EVs in the not-too-distant future.
Nissan wasn't the only automaker announcing a battery-plant investment this week -- Ford (NYSE: F ) and start-up CODA Motors announced smaller, but similar, investments in plants in Detroit and Ohio, respectively. CODA is a southern California-based start-up that is planning to bring a Chinese-made electric four-door sedan to the U.S. market. When? You guessed it -- late this year.
Whether CODA delivers or not, it's clear that EVs are about to hit the mainstream in a big way.
But will any of these cars be fun to drive?
Just in case you horsepower fiends were starting to despair, imagining a future of shoebox-sized cars that sound like sewing machines and look like they were designed by Birkenstock, take heart: According to a report in the U.K.'s Auto Express, Volkswagen's super-mega high-end Bugatti division -- builders of the $1-million-plus 250-mph-plus Veyron supercar, a leading over-the-top status symbol among car-mad hedge fund managers worldwide -- has built an 800 horsepower electric sports car prototype.
It is unclear whether the car, said by someone close to the project to have "absolutely unbelievable" acceleration, will ever see production -- but if it does, expect drop-dead styling, mind-blowing performance ... and a seven-figure price tag.