Refuel: Tesla’s Lesson in Building a Market for New Automotive Technologies

by Jim Lane (Biofuels Digest) E85 ethanol? Been stuck with low sales for years – with producers pointing to “no market access”. Yet, Tesla was faced with “no market access” — and built its own market. What lessons can be learned?
...
In terms of alternative fuels technology, you have to salute their achievement. They’ve taken a long-mentioned problem with all-electrics — the absence of rapid recharging stations that shuts down the effective range of the vehicles — and turned it in to a product advantage.
...
Turning to liquid alternative fuels such as E85 ethanol — it goes without saying that the Renewable Fuel Standard would be intact if the ethanol industry had been so intrepid and built a network of E85 stations that addressed that fuels’ challenges as adroitly as Tesla addressed theirs.
It is a different challenge, of course. It’s not about extending range, since there are already 3,000 stations in place — nor about repaid fill-up, since E85 fills up rapidly. The issue with E85 is cost. 85-cent E85 gets them lining up around the corner. $3.00 E85 is a non-starter that has been failing ever since it was brought to the market.
In the case of Tesla, they correctly concluded that oil companies were not going to build a network for them — thereby handing a new market Government funds are sometimes available, but grants are unreliable in size and scope. Your friend at the state or national capital might just be as likely to build something you don”t really need, at a cost you can’t afford. Consider, for example, the $1 million per outlet that California is spending on building a hydrogen fueling station network.
According to the Digesterati, who provided some figures on the subject this week, there are now more than 15 million flex-fuel cars built in the US, with 5 million new vehicles on the street just last year. Detroit has done a good job.
Now, the world does not need blender pumps, it needs low-cost fuels — low enough to induce people to make a switch. Which is to say, more than a 50-cent discount to conventional fuels. In fact it needs an 85-cent discount – available every day.
Who’s going to provide that? Ethanol producers, via their own network. One corridor of, say, 20 stations coast-to-coast, saving drivers 85 cents per gallon and providing a lesser, but still notable, reduction in cost per mile. Backed by meaningful promotion.
That’s the kind of publicity that drives market awareness, market acceptance. Makes a flex-fuel vehicle something worth having, something worth understanding. Sure, early adopters care about carbon, but the mass market cares about price and performance. READ MORE