Earlybird Magazine - New Mobility

Volume 06 | January 2011 New Mobility

W E L C O ME | C O N T E N T

The partners of Earlybird (from left to right): standing: Wolfgang Seibold, Roland Manger, Hendrik Brandis, Christian Nagel, Matias Collan, Thom Rasche seated: Rolf Mathies, Jason Whitmire

“Welcome to EARLYBIRD Magazine.

We would like to share our insights on technology segments relevant to our industry.

This issue focuses on our activities in the cleantech sector.”

03 _ State of mobility The rewards of investing in companies aiding new mobility concepts 04 _ Work in progress When it comes to powering e-bikes, Clean Mobile is ahead of the game 10 _ Panorama For urbanites who choose not to own a car, mobility alternatives abound 12 _ Industry Earlybird Magazine meets with three key players in Asia’s booming auto sector 16 _ Vision Why Paul Gao, CEO of Chery Quantum Auto, wants to create the Apple of the car industry 18 _ New kids on the block Ubitricity’s vision for how e-car batteries will be charged in the future 22 _ Up close and personal Earlybird Partner Wolfgang Seibold 2

STATE OF MOBILITY | E D ITO R IA L

Bucket wheels for gold diggers

WOLFGANG SEIBOLD Partner, Munich

Everyone hopes to find a goldmine.

At Earlybird, we believe it’s just as rewarding to invest in the companies that are leading the diggers to their nuggets

“THERE ARE NINE MILLION BICYCLES IN BEIJING. That’s a fact, it’s a thing we can’t deny,” sings Katie Melua in her 2006 hit record.

Although I love the song, I would not subscribe to her lyrical claim. Nobody could ever say how many bicycles there are in China’s capital, let alone the country as a whole. What I would claim, however, is that people, no matter where they live, love the freedom to move from A to B on their own terms.

Since Gottlieb Daimler and Carl Benz invented the automobile 125 years ago, we have made tremendous progress on our dreams of unfettered mobility. Today, there are about 600 million passenger cars in use, which means that roughly one person in 11 has a car. In the US, there are over 800 cars per 1,000 inhabitants, in Germany, over 500. In China, however, this figure is less than 20. Yet demand is growing such that the number will have doubled in six to seven years. What does that mean for the world?

Will our oil reserves dry up even faster? Will our atmosphere choke on the additional carbon dioxide emissions? Many entrepreneurs are addressing these and related questions. Their aim is to come up with new, sustainable mobility concepts. Some might ask why one of Germany’s leading venture capital firms is devoting its resources to this issue. After all, the industries affected do not seem to be a natural point of interest for us.

Some venture capital funds seem to believe that the industry is going to change so fundamentally that it is worth investing directly in the players bringing new types of vehicles to the road. The enormous interest in electric vehicle pioneer Tesla with its flashy roadster e-car is a case in point.

That’s understandable; everyone hopes to find a goldmine. At Earlybird, though, we believe it can be equally rewarding to invest in the companies leading the diggers to their nuggets. They offer the bucket wheels needed to explore the mines. Instead of betting on just one mine, they can spread their risk and cooperate with a number of diggers. A good example is our investment in Clean Mobile, a company that designs and delivers drive trains for e-bikes (pp. 4-9).

Equally fascinating are novel infrastructure technologies and services that accelerate this paradigm shift. The founders of Ubitricity have come up with an infrastructure concept for e-cars that is more compelling than the current plans by the big utilities. Read more about their vision on pp. 1821. In our Panorama section on pp. 10-11, we provide an overview of mobility models aimed at making better use of existing vehicles.

Some experts believe that the real gold rush isn’t happening in Europe, but in Asia. It can’t be denied that countries such as China and India are at the epicenter of surging demand. And who wouldn’t be inspired by the vision of Paul Gao (pp. 16-17) who is building a new type of carmaker in Shanghai? Yet neither he nor two other influential players in Hong Kong and Mumbai believe that Germany must relinquish its leadership role, as you can read in our industry story on pp. 12-15. As Paul McAlinden from the Center for Automotive Research put it, “If the Germans keep up their tremendous investments in research and development, I don’t see how they can do wrong.”

3

WORK IN PROGRESS

Clean Mobile founders Bernhard Gutmann, Werner Gruber, and Rudi Hoebel (from left to right) take a spin on bikes fitted with their firm’s electric drives

WERNER GRUBER

4

BORN: April 3, 1960 NATIONALITY: German FAMILY STATUS: Married, two children EDUCATION: Electrical Engineering (University of Munich) WATCH: Citizen Eco-Drive Solar CAR: Audi A6 FAVORITE ENTREPRENEUR-ALIVE: Bill Gates FAVORITE ENTREPRENEUR- ALL TIME: Bill Gates

CASE STUDY | C L E A N MO B IL E

Back to the future Electric bikes look set to become a new urban status symbol; Clean Mobile plans to equip them with its efficient electric drives. US late-night TV legend Jay Leno is one of the stars who’ve been impressed by their power

BY MARY LISBETH D’AMICO

IT WAS A SUNNY DAY IN OCTOBER 2010 when Sascha Reckert pedaled his way to victory in the world’s first-ever championship for light electric vehicles in Cologne, Germany.

Eight riders, atop vehicles of varying strengths and constructions, competed to manage the most rounds in an hour on the roughly 1-km-long track. Riding a racy-looking eSpire bike from German bike maker Third Element, Reckert managed 41 rounds on the curvy track with an average overall speed of 36.8 km per hour, far outstripping second-placed Dietrich Lohmeyer, who completed 35 rounds on a three-wheeler.

Reckert’s head start over his rivals was more than just good news for him. The founders of Clean Mobile, who created the technology that powered the electric bike, are tickled pink. “This was clear proof that we have a technological advantage over our competitors,” crows Rudi Hoebel, co-founder and chief technological officer at the company, based in Unterhaching, near Munich. The former Formula One engineer and his team have spent the past 18 months developing what they claim is the most efficient electric drive on the market. Clean Mobile hopes it will power a new generation of electric cargo vehicles and electronic bikes. It could become a significantly sized market. While sales of electric bikes and scooters have been modest in the past, the market has started to gain traction,

BERNHARD GUTMANN

BORN: July 17, 1959 NATIONALITY: German FAMILY STATUS: Married, two children EDUCATION: Business studies (Nuremberg University) WATCH: He owns several CAR: VW Passat CC FAVORITE ENTREPRENEUR-ALIVE: Steve Jobs FAVORITE ENTREPRENEUR- ALL TIME: Steve Jobs 5

WORK IN PROGRESS

mula One and Formula Three engineer for almost doubling in size from €23 million in BMW, Hoebel was a frequent technology 2009 to €40 million in 2010. And, there’s consultant to various firms. When Startthe star factor: when Jay Leno, host of the Gate came across him, Hoebel was help“Tonight” show is filmed test driving an ing Munich-based Sun & Cycle to develelectric bike in Los Angeles, it’s likely that op an electric vehicle based on fuel cell a new trend is on the horizon. technology, in which a device converts Clean Mobile stands to benefit the chemical energy of a fuel such as hygreatly. But high-quality German engidrogen or methanol into electrical energy. neering alone won’t guarantee success for Electric vehicles generally suffer from isthe company. Fortunately, it can also rely sues such as low power, short reach, long on co-founders Werner Gruber (CEO) and charging times, and high cost due to dyBernhard Gutmann (COO) to provide sales ing batteries. Hoebel, who held severand marketing savvy, garnered over several al patents, was looking at how fuel cells decades at companies including Procter & E-bikes are finding favor in Hollywood. could be employed to address those issues.

Gamble, Bosch, and Microsoft. It was their Celebs such as Jay Leno (top) and “There was a lot of money going into separate decisions to leave the corporate cleantech,” recalls Gutmann. “The enthuenvironment that first brought the Clean Orlando Bloom (bottom) are fans of the Blacktrail from PG Bikes, which siasm for green businesses was high, but Mobile founders together, or more accu- work with Clean Mobile on the drive we saw that there was not a lot of business rately, back together. The two had known each other since their days in the German army in the 1970s, sense out there.” Gruber agrees, adding: “We felt we could adbut hadn’t been in touch for decades. In the late 1990s, howev- dress what was missing.”

The two didn’t actually believe there was a market in er, they reconnected. Gruber was then head of Robert Bosch’s Asia-Pacific mobile phone business in Singapore and was slat- making a bike from scratch, but they did see the possibilities ed to be transferred to Stuttgart, while Gutmann was the mar- in developing their own fuel cell drive for electric vehicles. keting director for paper, beverages and food, Benelux, at For his part, Hoebel was excited to join a venture based on his technology and devoted to developing it further. “I am an engiP&G. Both wanted out. neer with my heart and soul. I was always developing patents, and here was a chance to do something myself.” He also knew Getting off the corporate roundabout “When you first start up the corporate ladder, you are he was ready to pack in his Formula One work, which had him responsible for a product or a unit, which is satisfying,” re- working 270 days of the year away from home. In 2006, he flects Gruber. “But the higher up you get, the more it is about joined up with Gruber and Gutmann to found Clean Mobile. politics, rather than the success of a company. If that kills you Sun & Cycle was eventually sold to Accell Group, a Netherpsychologically, you need to get out. Both Bernhard and I had lands-based maker of bicycles and bicycle parts. reached that point.”

It was 1999, and dot.com mania was in full flour- Fuel cell to drive trains Yet as with most startups, the company founders were ish. The two went in with several other investors to co-found a company called Friendlyway, which specializes in solutions in for a learning experience that would require them to adjust for touch-screen kiosks and digital signage. While the compa- their vision to the realities of the markets. With €500,000 in ny quickly achieved annual revenues of about DM 10 million, seed funding from the government-funded High Tech Gründer Gruber says a disagreement with another shareholder over its Fonds (HTGF), Clean Mobile set out to integrate their fuel cell future direction led him and Gutmann to sell their stakes in the technology with the other components necessary to make such company. They decided instead to found StartGate, a consul- a light vehicle run, such as the transmission, battery and motor. tancy to help mid-sized European companies gain a foothold They soon discovered that there was no one company offering in Asia. At the same time, the two were scouting to see wheth- those things. Moreover, the components they found worked toer any of these companies would provide them with the chance gether poorly, if at all. “We realized you cannot just take a fuel cell and integrate it into a drive. There is little power output. to run their own venture.

Rudi Hoebel – who Gruber describes as “a brilliant The components are not efficient,” says Gruber.

Armed with this realization, the team devoted the next technical guy, but no expert in sales and marketing,” – seemed to be the answer to those prayers. Besides his work as a For- 18 months to working on an electric drive train. They devel-

RUDI HOEBEL

6

BORN: August 12, 1956 NATIONALITY: German FAMILY STATUS: Married, three children EDUCATION: Mechanical engineering Munich Polytechnic WATCH: Aldi CAR: VW Bus FAVORITE ENTREPRENEUR-ALIVE: Adrian Newey FAVORITE ENTREPRENEUR- ALL TIME: Thomas Alva Edison

CASE STUDY | C L E A N MO B IL E

When its target market of light electric vehicles for postal services was slow to take off, Clean Mobile demonstrated exibility, switching its focus instead to the burgeoning market for cool, fun electric bikes

Clean Mobile’s drive trains gain efficiency due to gears that are switched automatically through the main controller based on payload, acceleration, and road conditions, allowing the system to generate a very high torque

EMPLOYEES A year after its inception, Clean Mobile had 10 employees, including its three founders. By 2010, this number had tripled, and the company predicts further growth

20 3 2006

10 2007

30

45

40

11 2008

2009

2010

2011*

2012* *estimates

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WORK IN PROGRESS

WORLDWIDE SALES OF E-BIKES IN 2009 In 2009, 22.6 million e-bikes were sold, according to the Electric Bikes Worldwide Report (EBWR). Over 90 percent of these bikes were sold in China. Europe is ranked second and is growing very fast EUROPE 750,000

JAPAN 300,000 USA 150,000 CHINA 21,000,000

PENETRATION OF E-BIKES IN EUROPE Europe is seeing a steady, significant increase in the number of e-bikes being sold. From 2007 to 2008, sales doubled, and they doubled again in the two years between 2008 and 2010, when sales reached the 1-million mark

500,000 2008

750,000 2009

1,000,000 2010

oped a battery, for example, that they say loses 80 percent less energy during charge and discharge than regular battery management systems, increasing battery life by four to five times.

The transmission gains efficiency with gears that are switched automatically through the main controller based on payload, acceleration needs, and road conditions, thus allowing the system to translate a very high torque (120+ NM or Newton Meters) into forward movement and to seamlessly shift gears.

And Clean Mobile says its engine efficiency is greater than 90 percent, due to a reduction in the revolutions per minute from as much as 4000 RPM down to 70 RPM. An early prototype showed, for example, that a vehicle could go as far as 200 km using only 1 liter of methanol using the Clean Mobile drive – eight times the reach of a combustion-driven vehicle. For cargo vehicles, there is a fuel cell component that serves as an independent on-board power supply.

“The way they have constructed their drive technolo-

REVENUE While focusing sales efforts on the postal sector, revenue remained minimal. But after striking deals with bike makers, Clean Mobile saw significant growth starting in 2009, and is predicting an explosive upward trend 8

2006

€0.02m

2008

€0.35m

2009

€1m

2011* 2012* *predictions

gy is highly efficient,” says Prof. Reinhard Müller, an expert on electrical drives at the Munich University of Applied Sciences, and also an outside consultant to the technology team.

Indeed, VCs soon began to take notice of Clean Mobile’s achievement. In March 2008, the company attracted the interest of Earlybird, which in conjunction with the Silicon Valley Technology Group and the High Tech Gründer Fonds, invested €3.3 million in Clean Mobile to further develop its products.

Burgeoning e-bike market But there were other surprises in store for the founders – and their investors. The market that they initially planned to focus on for early revenues – electric vehicles for postal services – was slower to materialize than they predicted. In 2007, Clean Mobile struck a deal with Accell, to develop and manufacture such vehicles, under which Clean Mobile would pro-

0

2007

2010

1,350,000 2011

€1.5m €10m €30m

Photo: Christrian Schmid / www.christianschmid.com

250,000 2007

Electric bikes powered with Clean Mobile drive trains in use: as a convenient way to transport heavy crates of drinks (top) and an efficient means of avoiding traffic congestion and parking headaches in crowded urban centers (below)

CASE STUDY | C L E A N MO B IL E

vide its fuel-cell based drive and Accell would provide the frame. Developing the vehicles took longer than expected.

“The design was too special for the Chinese framemakers. This was not a standard bike,” says Gruber, explaining the delay.

While a number of European postal companies, as well as Japan Post and the U.S. Post Office, are field testing the vehicles, few have actually signed on the dotted line for a large order. “We wanted to be in larger volumes by now but we overestimated the speed of our customers,” says Gutmann, pointing out that the company has made the most of the delay by improving its design.

Just as there can be bad surprises, however, there can also be good ones in the life of a startup. In the case of Clean Mobile, the burgeoning demand in the electric bike market has played to its advantage. In its first business plan, for example, Clean Mobile predicted a market volume of only 300,000 electronic bikes in Europe in 2010, whereas the growth has been much faster. The Light Electric Vehicles Association, an industry trade group, says there are already as many as a million such vehicles on the market this year in Europe, and predicts they will number 5 million by 2015.

Bike makers appear eager for Clean Mobile’s technology. The company has already struck deals to provide drives for high-end electric bikes at PG Bikes, Ghost, KTM, Merida, Third Element and Cannondale. One of the first out of the gate was PG Bikes. “Technically, they have the best drive on the market, in terms of performance, range, you name it,” says Manuel Ostner, co-founder of the Regensburg-based company. Since September of this year, PG Bikes has been marketing models with Clean Mobile drives, ranging in price from €5,000 to €20,000. Ostner expects to sell several thousand such bikes in 2011. His company’s high-end “Blacktrail” model (the one tested by Jay Leno), which retails at €60,000, features PG Bikes’ custom drive, designed in conjunction with Clean Mobile.

Clean Mobile is predicting it will achieve €7 to €8 million in revenue from e-bikes in 2011. The main focus is on sporty electric bikes, rather than vehicles to transport the elderly. “This market is about urban mobility. These bikes have a cool image and are fun to drive,” says Gruber. Meanwhile Hoebel and his team, which now numbers 30, are fine tuning the technology for mass production and looking into even more powerful, long-lasting drives for vehicles to be distributed by the motorcycle industry.

The high-stakes journey has already entailed a steep learning curve, long hours by staff, and many obstacles. Clearly there will be more challenges ahead for Clean Mobile, with large corporate competitors entering the market and pressure to keep prices down. But if they can hang on for the ride, Clean Mobile hopes to be first over the finish line.

Bird’s-eye view

WOLFGANG SEIBOLD Partner, Munich

To make it in this market, you need to have a significant jump on the competition

What excites you about Clean Mobile?

Wolfgang Seibold: Their drive technology is more efficient and better performing than anything else on the market. Vehicles equipped with their technology are two to three times more efficient, so although bigger competitors are entering the market, we’re confident that Clean Mobile is sufficiently ahead of the game.

How did you first encounter the company?

Seibold: I met the founders in 2006.

At that time, they only had a crude concept for Clean Mobile, with no finished prototype, no customers, and no vision yet for the market. It was too early for us to invest, but they got off the ground with seed funding from the High Tech Gründer Fonds. By 2008, they had overcome a lot of these obstacles and we got on board.

What do you think of the founders?

Seibold: They’ve impressed me not only by building an extremely innovative technology from scratch, but by focusing on selling their products internationally from Day One. This sets them apart from a lot of European companies who first try to make it locally before going international.

Also, they haven’t been afraid to adjust their business model to market demands.

What has that entailed?

Seibold: First came the decision not to focus solely on fuel cell technology, as that’s not efficient for smaller vehicles. Second, they adjusted their market focus. We thought the first market to open up would be postal vehicles.

While that’s still out there, Clean Mobile has successfully focused on the growing e-bike market.

9

PANORAMA

For car-less consumers, mobility alternatives abound With the one person, one-car mentality quickly becoming passé, younger urbanites in particular are latching on to cleaner, more sustainable transportation alternatives. Fortunately, their options are expanding

BY KYLE JAMES

HELEN GROUMAS needs to be mobile, but she doesn’t want to own a car. “They’re expensive. You’ve got car taxes, gas costs, and all the upkeep,” she said. And she lives in central Cologne, where free parking spots can be as elusive as Bigfoot. The 40-year-old professional takes the local train to the office, but sometimes needs four wheels for shopping trips.

That’s not a problem since she’s signed up with Cambio, a carsharing company. On its website, she reserves a car for an afternoon IKEA run, then walks the five minutes to the Cambio station around the corner, and holds a chip card up to a reader behind the windshield. The car unlocks, she hops in, and is off.

“I have a car when I need it, but don’t have the frustration associated with owning one,” she said.

She’s joined a growing number of people who are thinking differently about transportation. Many are moving away from the one person, one car mentality that has led to congested streets and polluted skies – not to mention road rage. Passenger cars belong to the most underutilized consumer goods. “On average, they’re in use only three percent of their lifetime,” said Earlybird Partner Hendrik Brandis. “Any business concept helping to optimize their use therefore has huge potential.” Car sharing is one of the most widespread models.

“A new generation is coming up that doesn’t see a car as an important status symbol anymore,” said Birger Holm, managing director of the car-sharing company Greenwheels Germa-

ny. That’s good news for the environment, since car sharing results in fewer vehicles on the road and lower emissions. A 2010 study by Frost and Sullivan found that car-sharing membership is expected to grow significantly over the next five to 10 years, reaching 5.5 million in Europe by 2016 and 4.4 million in North America.

Yes, things are even changing in the United States, where a car on the open highway is a beloved symbol of freedom and independence. Germany’s Daimler, one of several carmakers getting in on the car-sharing trend, debuted its car2go service to the general public in the US in Austin, Texas at the end of May 2010. And even though drivers in the Lone Star State are generally more partial to outsized pick-up trucks and SUVs, car2go’s tiny Smart two-seaters have been a hit. In just over four months, car2go signed up 10,000 members and registered more than 80,000 rentals. “As more people move into urban centers, creating more roads and parking spots just isn’t possible,” said Nicholas Cole, CEO of car2go North America.

“I think things have to change, to be frank.”

Whereas car sharing companies still have to acquire a fleet of cars to operate, German startup and Earlybird portfolio company Mikini (see case study in the Earlybird Magazine on Consumer Service 2.0) goes a step further. As Europe’s leading online ride share service, the company ensures that existing cars are used more efficiently by increasing the number of

The history of the automobile reaches back to the late 18th century with the rise of steampowered vehicles.

Since then, inventors have sought to take us further, faster. Now though, concerns for the world’s climate are driving innovation 10

In 1807, Swiss inventor Francois Isaac de Rivaz invented the internal combustion engine and mounted it on a carriage. It used a mixture of hydrogen and oxygen to generate energy

In 1888, Bertha Benz used her husband’s gasoline-powered car, the Patent Motorwagen Nr. 3, to drive 106 km from Mannheim to Pfortzheim to visit her mother

The first modern taxi company was formed in Stuttgart in 1897. Paris followed suit in 1899, London in 1903, and New York – now famous for its ubiquitous yellow cabs – in 1907

In 1900, Ferdinand Porsche presented the first hybrid automobile at the Paris Exhibition. The car ran on gasoline and electricity, and achieved a top speed of 61.2 kmh (38 mph)

Fotos: Shutterstock

Key milestones in motorized movement

OVERVIEW | MO B IL IT Y A LT E R NAT IV E S

From car sharing to e-vehicles, people in congested urban centers are thinking about cars in a greener way

bikes, into Berlin’s public transport network. The goal is seamless mobility that’s easy to use and easy on the environment.

“People travel differently today than they did in the passengers on a given ride, which is currently bepast and they need flexibility. We allow people to pick the low 1.5 on average.

While car sharing and car transport option best for them at one particular moment or pooling can plug the mobility leg of the journey – from trains to go between cities to bikes gaps between public transit to go between neighborhoods,” said Frank Wolter, BeMobiland private ownership, and ity’s project coordinator. In a historic industrial park in Berlin, lower the number of cars on some of those options for the near future are on display. There congested roads, it’s not the are electric cars and electric-gas hybrids along with charging only up-and-coming mode stations which will be appearing on Berlin streets this spring. of cleaner transportation to Other transport systems stress getting off the ground all todo so. Actually, one of the gether, such as the gondola systems made by Doppelmayr. most popular is not that new at Thought by many to be limited to ski resorts, aerial ropeways all – the good old bicycle. Ped- are opening up a new level of transit and traffic. “In cities, it’s al power has come back into vogue hard to widen city streets for new transport modes, so we’ve and more than 100 European cities have taken it into the air,” said Ekkehard Assmann, the company’s launched rent-a-bike projects. Even fashion-con- spokesperson. In Portland, Oregon, a cable car system conscious Parisians took to their city’s bike-shar- nects the university campus to the city center. In Caracas, Vening program, Vélib’, like they take to a good ezuela, gondolas connect a slum to the capital’s public transBordeaux. They’ve clocked 50 million trips port system.

Still, while there’s a plethora of interesting transport in three years, Hermès scarves flapping in the wind. Vélib’ is the world’s biggest bike-rental developments on the horizon, many experts agree that in the near future at least, the automobile will dominate. “The system and has served as a model car will still be king for a while,” said Kenneth Harfor cities from Montreal to Melris, who looks at transportation issues for the bourne. Going a step farther, MIKINI World Future Society. “But we will see difGermany’s Deutsche Bahn rail www.mikinimedia.de ferent automotive technologies become company has begun adding elecRide share Internet portal based in Germany widespread, like electrics, hybrids and tric bicycles, or pedelecs, to DOPPELMAYR www.doppelmayr.com fuel cells, along with different ways its own bike-sharing scheme.

Gondolas as an alternative public transport method of using the car.” On top of that, the The pedelecs are zero-emisGREENWHEELS www.greenwheels.de whole perception of getting from A sion vehicles that, besides One of Berlin‘s first car-sharing programs to B is gradually shifting. “It’s not being fun to drive, provide CAR2GO www.car2go.com easy to change people’s thinking motorized help for those Car sharing from Daimler about transport overnight, but it is longer trips or hilly routes. slowly happening,” said mobility exVÉLIB’ www.velib.paris.fr They’re a part of the comWildly successful bike-rental program in Paris pert Wolter. “Especially in urban arepany’s BeMobility program as around the world, transport is going to which aims to integrate elecZIPCAR www.zipcar.com get a lot more interesting.” tric vehicles, including cars and America’s biggest car-sharing company with some 400,000 members

In October 1908, Henry Ford introduced the Model T, an assemblyline produced car that sold for just $825. Over 10,000 sold in its first year, and over 15 million were manufactured

Joe Saunders is credited as the first rent-a-car entrepreneur; he started renting cars for 10 cents a mile in 1916. He went bankrupt, but Walter Jacobs and John Hertz followed in his footsteps

The first car-sharing program identified in print was the Selbstfahrergenossenschaft that got underway at a housing cooperative in Zurich, Switzerland, back in 1948

In 1959, a converted Allis-Chalmers tractor became the first vehicle to run on a fuel cell.

Equipped with 1,008 individual cells, it was tested on a field in Wisconsin

In the 1990s, research started to produce more “energy-rich” lithium-ioncells, replacing lead-acid and nickel-metal hybrid batteries in electric vehicles, addressing travel range concerns 11

INDUSTRY

East meets West The Japanese were the first to sell their vehicles in the West; then came South Korea.

Now, carmakers in China and India are eyeing EU and US markets. Earlybird Magazine went to Hong Kong, Shanghai, and Mumbai to visit three very different players.

What they have in common: deep respect for German engineering

BY THOMAS CLARK

its Hong Kong headquarters. Despite this, HONG KONG IS KNOWN for being CEO Sin-Ling Chung suggests meeting at an international harbor for the financial the Polytechnic’s campus in the Kowloon world. It is an important hub for the lodistrict. The seasoned executive – she has gistics and construction industry. Howevmanaged research and development center, the island and its surroundings have no ers in consumer electronics and telecomtradition whatsoever in engineering cars. munications – seems to enjoy a startup Some eight years ago, a group of innovaatmosphere with a whiff of college atmostion-driven people within the Hong Kong phere. “We had two major investors, one government and the Polytechnic Universiin plastic plating, and the other from the ty felt compelled to change that: they started a project to develop a micro-car. The “One can manufacture a metal stamping industry,” explains Chung.

While setting the specifications and manresult is called MyCar. It comes in bright car almost anywhere in aging the car creation directly from Hong colors, is smaller than a Smart, and was the world; the challenge Kong, the team looked for a manufacturdesigned by legend Giorgetto Giugiaro, ing facility on the mainland and found it the father of Volkswagen’s Golf 1. is the engineering” just 100 kilometers away in Dongguan.

Above all, MyCar is a purely elecCarl-Peter Forster, CEO, Tata Motors For the launch of the commercial version tric car. “We started building a prototype of MyCar, however, the team travelled to with a diesel engine, as almost all existing micro-cars on sale ran on diesel. After more and more people the British International Motor Show in London. Two months asked us whether we also had an electric version, we decided later, in September 2008, MyCar was voted “Electric Car of the Year” at the prestigious Green Fleet awards. to switch and go electric,” remembers CEO Sin-Ling Chung.

At the time, many members of the British automotive Leaning on Europe’s long tradition of building microcars (once upon a time, even BMW produced one, called the industry were still reeling from much bigger news: the fact that Isetta), the Hong Kong startup called itself EuAuto Technol- two iconic British brands, Land Rover and Jaguar, had just ogy. Today, the company employs over 150 people, has offic- been taken over by an Indian company. Tata Motors had pures in the US and a production facility in China, in addition to chased their operations from struggling US giant Ford for $2.3

TOTAL PASSENGER CAR SALES Worldwide car sales dipped with the global economic crisis, but forecasters J.D. Power predict an upward trend starting in 2012

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FEATURE | A S IA’ S AU TO MA K E R S

EuAuto’s CEO Sin-Ling Chung steps into her company’s MyCar, a purely electric micro-car produced in China

13

INDUSTRY

CAR KINGS

From the outside, the colonial building in a narrow street seems a more appropriate setting for an old-fashioned bank than a modern industrial group.

Number of produced cars* Inside, it displays the charm of the 13,790,994 1970s, with old carpets, bad lighting, and many small cubicles in an open 7,934,516 plan office. The only thing that signals 5,711,823 luxury is parked directly in front of 5,209,857 the entrance: a shiny, brand-new Jag3,512,916 uar XJ with champagne-colored leath3,182,617 er interior. Jaguar sedans have certain2,632,694 ly injected some glamour into Tata’s 2,170,078 otherwise down-to-earth product port2,049,762 folio. But it is another car in Tata’s ros1,557,290 ter that symbolizes the transforma61,714,689 tion taking place on India’s famously chaotic streets: Tata’s Nano. When it was released in March 2009, it created a worldwide buzz. What sparked the attention was not so much the small size, but the even smaller price tag. At a cost of 100,000 rupees – around € 1,500 – it quickly become India’s version of a people’s car. “The Nano is often misjudged as just being cheap,” says Forster, “yet in reality, it offers tremendous value for money. It is amazingly spacious, safe, and has good fuel economy.”

YEAR 1999 Position Country 1

USA

Number of produced cars*

YEAR 2009 Position Country

13,024,835

1

China Japan

2

Japan

9,895,476

2

3

Germany

5,687,590

3

USA

4

France

3,035,731

4

Germany

5

Spain

2,852,389

5

South Korea Brazil

6

South Korea

2,843,114

6

7

Canada

2,735,257

7

India

8

United Kingdom 1,976,260

8

Spain

9

China

1,804,500

9

France

India

728,370

10

Mexico

Total

54,455,953

15

Total

*both passenger and commercial vehicles Source: International Organization of Motor Vehicle Manufacturers (OICA)

billion. It was the hitherto biggest symbol of the shift in powers in the automotive industry from West to East. A confirmation of this trend came in August 2010, when Chinese carmaker Geely completed the acquisition of Volvo for $1.5 billion.

And it was compounded again in November 2010, when the Shanghai Automotive Industry Corporation (SAIC) bought 1 percent of General Motors (GM) for $500 million to coincide with the US carmaker’s comeback on the New York Stock Exchange. Many experts believe that these acquisitions are just the beginning.

A people’s car for India Chinese and Indian carmakers are, however, not just interested in brands and operations from the West. They also try to bring engineering talent and experienced executives to their home turf, luring them with good pay and the excitement of doing pioneering work. One of the best examples embodying this trend is Carl-Peter Forster, who became CEO of Tata Motors at the beginning of 2010 after his resignation as head of GM Europe. Asked during an interview in his new, very modest office in Mumbai whether, at the turn of the century, he could have imagined working for an Indian car company, Forster shakes his head. “The world has changed quite considerably over the last 10 years,” states the 56-year old, who also previously held a number of senior positions at BMW. “The growth in the Chinese and Indian auto industry has surprised everybody in terms of its magnitude. It sort of shifted the center of gravity a few hundred kilometers further to the East.

That shift is somewhat difficult to detect when entering Tata’s administrative headquarters in central Mumbai.

Aiming for global appeal Hong Kong based EuAuto Technology and Tata Motors can hardly be compared with each other in business terms.

One is a tiny startup that, so far, has produced about 200 ecars. The other is part of an enormous industrial conglomerate (Tata Group) with a history of more than six decades, thousands of employees, and annual revenues close to $20 billion.

What is similar, however, is their effort to create a car that is not only attractive for the domestic market, but has the potential to be exported to the West. The board of EuAuto actually made a conscious decision to sell to Europe first, and has found distribution partners in the UK, France, the Benelux countries, Austria, and Poland. The Nano is not on sale in Europe yet. But Carl-Peter Forster wants to change that. “In a few years, the Nano will come to Europe and I think it will be the brand ambassador there,” he predicts.

To date, none of the new players from China or India have been successful in selling their products to the West.

“The few who have tried have failed spectacularly,” says Paul Gao, who was a former automotive expert at McKinsey before he left in 2008 to build a new car company based in Shanghai, backed by Chinese car manufacturer Chery and Israel’s

“The Chinese auto industry still has 75 years to make up for when it comes to the mechanical parts of a car” Paul Gao, CEO, Chery-Quantum

14

Photo: Cornelis “Kees” Metselaar; Getty Images

The 10 biggest car-producing countries in the world, yesterday and today

FEATURE | A S IA’ S AU TO MA K E R S

And Paul Gao bebiggest industrial conglomlieves that the complexity of erate. While Gao has high the auto industry does not alambitions for his own autolow knowledge to shift to motive startup (read more Asia as it did in the telecomabout that on pp. 16-17), he munications and consumer does not believe that China’s electronics industries. “It’s a new domestic carmakers – complicated, highly sophisamong them Chery, Geely, ticated process,” he says. He and BYD Auto – are anyfreely admits that he might where near ready to go glohave chosen a place outside bal. Yet with their domestic China to set up his company markets exploding, it can onif regulations had not forced ly be a matter of time before him to locate here in order to they become serious comtap into the Chinese market. petitors in the global arena.

Gao also does not The economics of believe that the deck is bescale are certainly on their ing completely reshuffled side: China overtook the US with the advent of e-cars. “If as the biggest car market in an e-car were just a battery 2009, and demand for cars in on four wheels, this might India is now twice as high as be the case, because we’re in Germany. Both countries all starting from scratch in have also expanded their A brand-new Nano rolls off the assembly line. Nicknamed the “peoterms of battery research and production infrastructure ple’s car” because of its affordability, the Nano initially cost 100,000 management. But the Chienormously (see graphics). rupees, (€1,500) a price that made it a media sensation nese auto industry still has Being a totalitarian state, China is also thought to have the strongest muscles to force 75 years of experience to make up for when it comes to the radical changes in engine technology. The country has already mechanical parts of a car,” Gao explains.

Sean McAlinden, chief economist at the Ann Arborannounced its intention to invest tens of billions to support the based Center of Automotive Research has had to observe the sale and further development of electric vehicles. decline of the United States’ auto industry on his own doorstep: the factories of Detroit’s “Big Three” carmakers are European expertise remains relevant Given such an outlook, should investors even both- all situated nearby. Despite developments in the US, however with Europe’s automotive industry anymore? Hasn’t War- er, he remains upbeat in his predictions for the future of the ren Buffett shown investors where to put their money when he German car industry. “They invest a tremendous amount in took a 10-percent stake in battery expert and automaker BYD? research and development in Germany. Even mid-sized and Interestingly, none of the three executives visited during Early- small suppliers have their own R&D department, and there are bird Magazine’s three-stop Asian tour believe that Europe will new startups constantly being fostered in the country’s technecessarily lose its ground. And there’s a particularly large nology centers,” he explains. “Germany is at the forefront of amount of respect for the motherland of the modern car. “Ger- compressed ignition technology, which is very important for many invented the car and has a tradition of 125 years of lead- diesel engines. And the Germans are the global leaders when ing the industry,” explains Sin-Ling Chung of EuAuto. “We it comes to the use of advanced materials in cars, from carbon and fiber to aluminum and plastics. These materials will are not only the followers, but the followers of the followers.”

Carl-Peter Forster stresses that the density of know- reduce the weight of vehicles significantly. This might not how in Germany, for example, is still enormous. “One can sound as sexy as electric vehicles but it is certainly as impormanufacture a car almost anywhere in the world these days. tant.” For his part, McAlinden hasn’t seen any weakening in The challenge is the engineering,” he explains, “The key is to German auto engineering whatsoever. His conclusion: “If the make sure that you keep a good engineering base in your coun- Germans keep up their research efforts, I don’t see how they can do wrong.” try. The Germans always understood that.”

“I haven’t seen any weakening in German auto engineering whatsoever. If the Germans keep up their research efforts, I don’t see how they can do wrong” Sean McAlinden, chief economist, Center for Automotive Research

15

VISION

A Steve Jobs for cars China has become the manufacturing center of the world, yet branding and marketing are still domains of the West. Paul Gao wants to change that.

As head of a new Shanghai-based car company in the making, Chery-Quantum, his focus is all on the customer experience

BY THOMAS CLARK

So you really have to be an early bird to avoid traffic jams in Shanghai, right?

Gao: (smiles) That’s right.

You arrived in Shanghai around 15 years ago. What has changed in terms of the transport and traffic situation?

Gao: In 1995, there were far more bicycles than cars. Today, it is exactly the opposite. Plus, a lot of bikers have upgraded to ebikes. There was also no subway when I came here. Today, we have one of the largest subway systems in the world.

Paul Gao used to be a partner at McKinsey, where he became an automotive industry expert. In 2008, he left the consultancy to set up CheryQuantum, a joint-venture by Chinese car manufacturer Chery Motors and the Tel Aviv-based conglomerate Israel Corp. with a funding commitment of about $900m. Gao’s vision is to create a new car company following the “Apple approach.” Currently, the startup employs 140 people, many of them engineers and marketing experts from Europe, almost all of them based in Shanghai.

16

Photo: Qilai Shen

Paul, your office is in a skyscraper in downtown Shanghai.

My hotel is less than half a mile from your headquarters, but it still took the cab over half an hour to get here, as we were stuck in terrible traffic. How did you get to work?

Paul Gao: I drove, which is what I normally do and it took me only 20 minutes. But I tend to leave home very early. Today, for example, I was in the office at 7:20 a.m. If I were to leave an hour later, it would take me twice or even three times as long to get to the office.

INTERVIEW | PAU L G AO

What does that mean?

Your personal experience seems to reflect the gigantic changGao: It means that we focus on consumer needs and not on es in China, both in individual and mass transportation. Yet building up engineering and production assets. We want to get this is still just the peak of the iceberg as the density of car detailed consumer insights, so that we can define what the car ownership is still quite low, isn’t it?

Gao: Yes, country-wide it is less than 20 cars per thousand of the future should look like. Our vision is to control the whole brand experience, but carefully look for ways to outsource cerinhabitants. tain engineering parts. We are also looking very hard to see And with a current annual growth rate of 10 to 15 percent of whether we can outsource the production of our vehicles. car sales in China, this means that the amount of cars will That does not sound all that new: car manufacturers have double… been using suppliers in an increasing way for a plethora of Gao: …in about six to seven years, exactly. products and services. And obviously, every car manufacturer Do you think that by then, you will still be able to avoid traffic looks very carefully at customer needs and desires. on the way to work by leaving very early?

Gao: (laughs) I hope so. I believe that the majority of future Gao: It depends on how deep you think about the customer growth will not so much be in big cities like Shanghai or Bei- experience, even after the sale. The experience of car owners jing, but rather in China’s second and third-tier cities. This is going to be the key to your success. Our role model is Apis where the massive urbanization will happen. You will also ple. We want to become the Apple of the car industry. When most likely see changing patterns in how the Chinese use their you look at Apple, you will find out that the core technology of their products is not all that new. It is the decars. Like in Tokyo, people in big cities will sign, the package, which makes the difference. own a car, but use it mainly on the weekend.

Can you provide some insight on how you “reOn weekdays, they’ll use public transport. package” a car?

In that case, wouldn’t it be economically more “We want to Gao: Yes, here’s a very simple example. Dursensible to rent a car over the weekend? become the ing the Chinese New Year we put cameras in Gao: It might be, but for Chinese people of my Apple of the four vehicles and monitored what was happengeneration, owning a car is a status symbol - a ing inside for a week. It became quite obvious sign that they have moved away from the lifecar industry” that the owners used them not just as transporstyle of the old China of our parents where the tation tools, but as places for social gatherings sense of personal freedom was limited to as far with friends and family members. There was a one could get by bicycle. You pedaled for an hour and that brought you to the suburb of the city you lived in, lot of food consumed, people enjoyed snacks, and even ate full meals. But where could they put the garbage? So far, I have but that was all. Buying a car means: now I can go anywhere. not seen a Chinese passenger car design that includes garbage Given the demand for cars as a means of freedom and stabins. tus in your generation and the likely changing attitude of your Any other examples of change? children, what do you predict for the Chinese car market?

Gao: Right now, selling cars in China is enormously profit- Gao: Well, Chinese people in their 20s and 30s tend to be able. If you look at the balance sheets of General Motors or heavy users of electronics, they always want to have the latVolkswagen, you will find that China makes up a dispropor- est state-of-the-art gadgets. Thus, we believe they want their tional part of their overall profit. This is why every global car to always be compatible with the latest generation of eleccar company is so excited about China. The current environ- tronic devices. ment of fast growth also explains the emergence of new local You mean having the right chargers for their smartphones, bechampions such as Chery, Geely or BYD. But in the next 10 to ing able to upload music to a device in the car and so on?

20 years, as the industry matures, you will see some of these Gao: It has to go deeper than that. I believe the interface becar manufacturers disappear or merge. There will be a much tween the machine and the driver has to be completely re-engineered. smaller number of brands.

So when will we find out what the name of your car is going to What does this mean for the strategy of the car company be and when it will be on sale? you want to build, currently incorporated under the name of Gao: We plan to announce the brand name in February 2011 Chery-Quantum?

Gao: We do not believe that it makes sense to become just an- and want to sell the first cars at the beginning of 2013, initialother traditional car manufacturer. Our aim is to develop a very ly in China. We might enter the European market at the beginning of 2014. asset-light approach to develop a car from scratch.

17

NEW KIDS ON THE BLOCK

Feeling stifled in their careers as lawyers, Knut Hechtfischer (left) and Frank Pawlitschek (right) sought greener pastures. Following their passion for electric vehicles, they founded Ubitricity in 2008

Charge me if you can In anticipation of the age of electric vehicles, two lawyers from Berlin have developed a game-changing vision to set up a ubiquitous battery charging infrastructure for e-cars B Y JA N E PAU L I C K

FRANK PAWLITSCHEK

18

BORN: Oct. 20, 1974 NATIONALITY: German FAMILY STATUS: Married, one child EDUCATION: Law (University of Mainz, University of Auckland) WATCH: Tissot CAR: Volkswagen Golf FAVOURITE ENTREPRENEUR – ALIVE: Steve Jobs FAVOURITE ENTREPRENEUR – ALL TIME: Werner von Siemens

CASE STUDY | U B IT R IC IT Y

SOMETIMES, CREATIVITY HAPPENS in the unlike- phone booths became increasingly obsolete. Mobile phones, liest places. The ideas underpinning the fledgling electricity in contrast, ultimately turned into something much grander service provider Ubitricity, founded in mid-2008, were fleshed than a simple backup for fixed-line telephony. They became out in the Berlin offices of the international law firm Baker & a standard means of making calls, with many additional feaMcKenzie two years earlier by a couple of hotshot young at- tures. Hechtfischer and Pawlitschek are determined to create torneys who’d started to realize they were in the wrong pro- a business with an equally huge potential for the new world of fession. “We were both feeling dissatisfied with our work,” e-mobility.

Their research showed that they did not need to reinrecalls Knut Hechtfischer. He had other things on his mind.

“Instead of writing memos about phase-two merger control vent the wheel to achieve that. Instead, they could build on exdecisions, I was spending most of my time researching stor- isting technologies. By mid-2007, they felt ready to make the leap, and gave up their secure lawyers’ salaries to start a comage technologies for fluctuating energy sources,” he explains.

Engineering and energy were always the topics closest to pany. “We did wonder if we were doing something completely irrational – moving from transaction fiHechtfischer’s heart. “It probably all startnance and mergers and acquisitions to a ed when I was a kid, and my father would technology start-up for a future market,” show me what the back of the fridge looked says Hechtfischer. So did other members like,” he says. “He was a university physiof their law firm. “In spring 2008, when cist. Electricity prices, metering, water enwe told our colleagues that we were leavergy – these were the things we discussed ing and going into electric vehicles, they at the family dinner table. thought we were mad,” says Hechtfischer.

When Hechtfischer met Frank But just months later, German weekly Der Pawlitschek, a fellow lawyer at Baker & Spiegel ran a cover story entitled “A World McKenzie, he recognized the same unWithout Oil.” “They asked us if we’d paid rest. The two soon discovered a shared pasthe magazine,” he laughs. sion for electric cars, a topic that dominated their increasingly longer chats. It was Searching for the right partners not so much the construction of these cars Having spent months mulling over that intrigued them, but rather the question a concept for transforming ordinary powerof how to set up a ubiquitous charging inoutlets into charging stations for e-cars(see frastructure that would make using e-cars the sidebar on p. 20), the partners satdown more efficient.

The partners no longer need to shut and drafted a patent application –a highly They were well aware that the big the door when hashing out plans to unusual move, as this is normallydone by utilities had started plans to set up charging change the way e-cars are charged people with a technical background. When stations for e-cars, similar to the traditional filling pumps. Yet they were convinced that this was the wrong they handed it to an expert, however, he was so impressed that way to go. Whereas a gas tank on a car can be refilled in min- he made only a few minor changes before filing the applicautes, an e-car takes hours to recharge. Ideally, drivers would tion. The patent was recentlygranted. With 30,000 euros of like to charge them at places where they can do other things: capital earmarked for the first year, they settled into their new at home, at the workplace, at friends’ houses, shopping cent- headquarters, which are housed in premises linked with major ers, and so on. But setting up enough stand-alone charging sta- industrial success stories of the early 20th century. The sprawltions at such places would be enormously expensive. Instead, ing red brick former factory in Charlottenburg, Berlin, was the two lawyers’ vision involves establishing a kind of “mo- built by Siemens in 1898 and later became the headquarters bile” system, so users can tap into the grid at numerous plac- of Osram, one of the world’s leading lighting manufacturers. es and be charged for their total energy consumption at the end The company’s first major task was to prove that their concept could be turned into reality. To do that, they needed qualified of the month.

An analogy with the telecoms industry helps to illustrate the partners. The two lawyers made themselves known within the magnitude of their endeavor. For decades, phone booths were energy industry, attended conferences, and presented their vithe main option for people wanting to make calls on the go. sion of “mobile metering” to industry partners. It was not unThat, however, was inconvenient and expensive, both for til early 2009, however, that they managed to form the consorthe user and the provider. With the advent of mobile phones, tium they were looking for.

KNUT HECHTFISCHER

BORN: May 19, 1971 NATIONALITY: German FAMILY STATUS: Married, two children EDUCATION: Law (FU Berlin), Business Administration (University of Hagen) WATCH: Junghans Max Bill CAR: Mercedes A-Class FAVOURITE ENTREPRENEUR – ALIVE: Warren Buffett FAVOURITE ENTREPRENEUR – ALL TIME: Thomas Edison 19

NEW KIDS ON THE BLOCK

UBITRICITY’S “TANKSTROM” CONCEPT STEP 7

CONTROL CENTER

Infrastructure partner gets reimbursed for power consumed from its socket

STEP 2

Identification and transmission of security code of “Tankstrom” subscriber

STEP 5

Transmission of electricity consumption data via GSM / GPRS STEP 6

“Tankstrom” subscriber plugs charger into socket of infrastructure partner; readout of socket-ID

SYSTEM SOCKET

STEP 3

Charging begins after clearing

THE ISSUE Like a mobile phone, e-cars have to be charged. People who own a house might do this at night, in their garage.

But for people living in apartments in urban areas, this might not be an option. And when going longer distances, e-cars also need to be charged en route. The question is: who is going to provide the charging infrastructure? Utility companies such as RWE or Vattenfall in Germany have already started setting up charging stations that operate like gas stations. It’s not only time-consuming, it’s expensive: one charging station is estimated to cost between €500-5,000.

THE SOLUTION Ubitricity offers a vision for a charging infrastructure that is much faster to install and less cost intensive. Instead of charging stations, they’ve developed a simple addition to an ordinary power outlet: a special socket that only costs about € 50 to install. With such an easy addon, anyone can become a Ubitricity partner. Initially, they won’t have to pay for the socket conversion, plus they’ll be reimbursed with a premium for the power consumed from their outlets. For e-car drivers to use these outlets, they have to subscribe to Ubitricity, paying a monthly base fee as well as for the actual energy consumed at partner’s outlets. Ubitricity plans to offer different subscriptions, from a “base plan” costing as little as € 1-5 per month to a “power-user plan” for € 10-12 per month, with additional variable costs of 25-50 cents per kilowatt hour consumed. The company will track energy consumption via a meter installed in each e-car, which transfers data over-the-air to Ubitricty’s central IT. Customers will be charged accordingly, and infrastructure partners reimbursed. Ideally, the on-board meters will one day be pre-installed by the e-car manufacturers.

“Tankstrom” subscriber gets billed CUSTOMER HOUSEHOLD

STEP 4

On-board-meter with mobile communication facility, ideally preinstalled by car manufacturer, reads energy consumption from socket

For the task of collecting and processing the metering data, they attracted Voltaris, based close to Ludwigshafen. In order to ensure that they would meet all the specifications to be certified to officially use the metering system, they also partnered with the main authority in this field, the German national metrology institute (PTB). While these two partners would help to monitor the energy consumption from the outlet to the car, they still needed a third partner to assist in securely transfering the collected data to a central point. With the Bavarianbased ITF Fröschl, they managed to win the market leader in control center technology and software for mobile metering data collection: a company that counts not only the big three German utilities among their customers, but also manages the “on-train metering” system to provide power outlets to passengers in Deutsche Bahn’s high-speed ICE trains.

With these three partners on board, Hechtfischer and Pawlitschek applied for a grant at the German Economics Ministry. In July 2010, the consortium was granted €3 million. Meanwhile, the two lawyers had already raised €250,000 from a business angel in 2009, followed by €1.8 million of Series A funding from Earlybird in June 2010.

Ubitricity’s first field trials are scheduled to be conducted in 2011, but even with a successful technical “proof of concept,” Hechtfischer and Pawlitschek will have a lot to do to make their vision become reality. They face a chickenand-egg problem on a number of fronts. Before they can start advertising their service to customers, they have to attract the infrastructure partners where customers can charge their ecars. Yet these partners might only agree to have their sock-

A UBIQUITOUS SOCKET SYSTEM Ubitricity’s concept depends on a critical mass of e-cars and charging outlets being equipped with the company’s specially-designed sockets. To get the ball rolling, the founders plan to distribute as many as 100,000 sockets for free to infrastructure partners such as parking garages, employers, municipalities, and retailers 20

Photo: Christrian Schmid / www.christianschmid.com; Cornelis “Kees” Metselaar

STEP 1

CASE STUDY | U B IT R IC IT Y

ets adjusted if they believe that Ubitricity has what it takes to achieve scale. In order to break through the gridlock, Ubitricity is considering handing out the first 10,000-100,000 special sockets for free and having them installed by certified electricians. They’re eyeing parking lot operators, retailers, municipalities, and employers as the first infrastructure partners – and are hoping the prospect of offering new services to customers (and being reimbursed for the power consumed from their outlets with a premium) will be the clincher.

At the same time, Hechtfischer and Pawlitschek have started conversations with car makers to convince them to preinstall the on-board metering system in their new generation of electronic cars. “Considering the industries we’re working in, things are now actually starting to happen extremely fast,” says Hechtfischer. “In summer 2008, we attended a conference in Hanover with all the major car companies like VW and Daimler, and they were all saying that e-mobility is just hype. But BMW recently announced their plans for a new ecar, while VW is claiming to be an e-car market leader, promising to democratize it by being the only company offering cheap platforms for new electric vehicles and so on. In the last two years, everything has changed.”

Bird’s-eye view

WOLFGANG SEIBOLD Partner, Munich

Building a reputation as a reliable partner Ubitricity promises to deliver only clean energy from renewable resources. To gain credibility as a service provider for electricity, the company has started offering “green energy” from Austrian hydroelectric power plants to households and small enterprises. “Tankstrom” is the working title for the subscription service Ubitricity plans to offer e-car owners by 2012. The founders expect the company to break even with just 10,000 subscribers – a target they plan to reach in 2013 or 2014.

In the long run, they estimate that a quarter of all e-car owners in Germany could become Ubitricity customers. The German government aims to have a million e-cars on the road by 2020. “It’s an innovative approach to take the charging and billing intelligence out of the infrastructure and into the car,” says Thomas Meißner, director of the Transport and Mobility Department at the TSB Technology Foundation – a central contact for all matters relating to technical innovation in Berlin. “If the necessary communication technology is inside your vehicle, you can charge your battery wherever you are. But if you’re reliant on an electricity service station for the intelligence, you might have compatibility problems and you’ll be tied to providers.”

“Right now, we’re still in the early stages of realizing our vision,” admits Hechtfischer. “It’s a balance between being ambitious and conservative. But this isn’t old wine in new bottles. We’re not just rethinking cars, we’re helping to rebuild them.”

Theirs is a gamechanging idea that is unique among the competition

When did you meet the Ubitricity founders, and what was your first impression?

Wolfgang Seibold: We first met at the eCarTec International Trade Fair for Electric Mobility in Munich in October 2009. They briefly introduced the concept to me and I was immediately intrigued by the depth they had gone into with their proposal as well as the technology’s wide potential use for the future. They have a very gamechanging approach, and their idea is unique to all the charging technologies that are currently out there.

E-mobility is becoming a busy playing field – are you worried about competition?

Seibold: We’re currently still in the genesis phase, when everybody believes this is about to become a very significant industry, and we will soon be seeing many competitors. But 99 percent of the players we have seen offering charging services are not really thinking outside the box: they’re not thinking about roaming, they’re not thinking about usagebased tariffs. In the long run, the Ubitricity approach is the only one that appears sustainable to us. So despite the competition, we believe that Ubitricity is uniquely positioned at this point in time.

What are your hopes for Ubitricity’s future?

Seibold: My hope is that the company soon finds automotive and infrastructure partners to endorse their approach. Once that happens, we would then soon see a very broad spread-out.

We’re currently in the set-up phase, and we only expect to enter the rollout phase late next year.

1.044.800 NUMBER OF LICENSED ELECTRONIC VEHICLES IN GERMANY In 2010, some 50 million cars were licensed in Germany: over 41 million passenger vehicles, the remainder commercial trucks. Three quarters are petrol engines, a quarter are diesel. The German government aims to have licensed over one million battery-operated cars by 2020

806.300 593.600 409.300 3.500 2012

8.400

51.500

2013

2014

137.300

256.800

2015

2016

2017

2018

2019

2020

Source: company predictions

21

UP CLOSE AND PERSONAL | WO L F G A N G S E IB O L D

A man with many facets As a student, Earlybird Partner Wolfgang Seibold pursued everything from physics to philosophy. His broad spectrum of interests continues to serve him well as an investor in future-oriented sectors such as cleantech Tell us your life’s motto in one sentence.

Wolfgang Seibold: Whatever you do, do it with respect but not with fear.

Which talent would you most like to have?

Seibold: I wish I could paint well enough to be able to capture the beautiful moments in life in a single image.

What is the most memorable thing you ever did or received that didn’t cost any money?

Seibold: In my student days, I co-managed a (no budget) conference against racism – I was blown away by the list of top people from all over Europe who contributed without compensation, and by the commitment of the participants.

If you could be reborn as an animal, what would you be and why?

Seibold: An eagle. They’re equipped with the strength to fly high for long periods of time, eyes that grasp every detail, and a sense for the right moment.

Cleantech investor Wolfgang Seibold enjoys environmentally-friendly cycling trips, like here on the Baltic island of Ruegen

If you could take one year off to help solve one of the globe’s major problems, which cause would you devote your time to?

Seibold: As an investor in cleantech companies, I have the luxury of addressing issues related to climate change, one of humankind’s key issues, while pursuing my profession.

If you could have one day without any private or professional obligations, what would you do?

Seibold: Go hiking in the Alps with my family.

WOLFGANG SEIBOLD

22

BORN: Nov. 23, 1968 NATIONALITY: German FAMILY STATUS: Married, three children EDUCATION: Physics, Mathematics, Philosophy (Ulm University, Newcastle University), Business Administration (INSEAD Fontainebleau) WATCH: Eterna-Matic CAR: Ford Galaxy family van FAVOURITE ENTREPRENEUR - ALIVE: Steve Jobs FAVOURITE ENTREPRENEUR - ALL TIME: Robert Bosch

On our blog, a recent posting featured e-bikes in a stress test

We’ve joined the blogging community.

For a “Bird’s-eye view,” go to: www.blog.earlybird.com

Earlybird Magazine Editor-in-Chief: Wolfgang Seibold; Earlybird Project Team: Daniela von Wedel, Dr. Marion Jung Editorial & Design: Ambo Media Ltd.; Managing Editor: Deanne Corbett; Contributing Authors: Mary Lisbeth D’Amico, Kyle James, Jane Paulick; Art Directors: Andreas Volleritsch, Michaela Pernegger, Neubau Editorial Design Project Supervision: Dr. Thomas Clark; Litho & Print: Druckerei Kriechbaumer, Munich Earlybird Venture Capital GmbH & Co. KG; Van-der-Smissen-Str. 3; 22767 Hamburg, Germany Tel: +49-40-43 29 41-0; Fax: +49-40-43 29 41-29, E-Mail: info@earlybird.com (responsible for the editorial content: Wolfgang Seibold) 23

don‘t be late.

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