Jan
17
Why Can’t I Buy It?
January 17, 2008 | 3 Comments
“Nobody ever got fired for buying XXX,” a famous phrase indeed. One late story is the battery sets bought by AT&T from Avestor. With 17,000 of these lithium metal polymer backup sets in hand you would think the AT&T guys knew what they were doing. But it turns out that when one exploded Avestor was locking the doors and closing up shop as they hadn’t attracted enough investment and customers to get to critical mass as a long-term business. Since then more of the Avestor battery sets have ignited or exploded. Much to AT&T’s chagrin Avestor isn’t there to help diagnose and solve the problem. It seems that 85% of Avestor’s batteries were sold to AT&T.
These situations are what keep executives awake late into the night and wondering what career damage will fall on them. This makes them as a group quite risk adverse, and understandably so. While the rest of us potential customers hope and wait, “Nobody ever got fired for buying lead acid batteries!” This helps us understand why things seem so slow. Now imagine the risk an automobile company is checking when they look at the various hybrid and electric drive designs that use Lith-ion technology. Add to that the matter of the unknown of a super capacitor or combined battery capacitor design. With live people as the passengers in your latest (capital intensive) design the prospect of a battery or capacitor popping or igniting its surroundings is very unsettling. What ever we see in the coming years will take real guts to choose and go for it in the new technology race.
One approach is the deal between Visionary Vehicles, a Malcolm Bricklin enterprise and Electrovaya a small manufacturer of Lith-ion super-polymer batteries. The deal is to set up a joint venture to produce the batteries with joint work in research and management systems. A lesson learned from the AT&T experience. With royalties or license fees included to Electrovaya and stock options working both ways the deal looks to insulate the risks and provide a captive organization that can respond to any problems.
This leaves Electrovaya free to continue the marketing of its technology. It isolates much of the risk where Visionary Vehicles can manage the risk. It an innovation that can help bring those scary new technologies to us sooner.
The lesson could reach far and wide, with customer pressure to get “green,” answer the CO2 siren and for getting in front of the fuel price curve the urge to make risky decisions is as high now as we’ve seen in a long time. That makes the case for answering with taking a little more time to get it right much more important.
I’m likely one of the most guilty for “Go Faster!” So today, I’m saying “Slow down.”
Just for today, though. Now opposite to this is the GM Chevy Volt effort, which has been seen by Lyle Dennis at GM-Volt.com. (A recommended read.) This is an example of extensive testing and hard cold business risk management. With a range of reports of what companies were invited to send in test units it comes as no surprise that the sifting process likely took out many smaller companies before lab work even began. While this method has hard experience and answers the “Nobody ever got fired” positions driving it, the hopes and possibilities for innovation is most likely just cancelled out in the early risk analysis. Fair enough, but I have to ask that we look into what technologies are being overlooked and what other business methods could be used to get those closer to market.
That brings us back to the Electrovaya matter. I extend my congratulations to everyone and Mr Bricklin for the business acumen and risk acceptance to go with a newer technology in a business model that can bring the technology to us quicker. Another hope is the Society of Automotive Engineers can get on the beam and start the standards so that battery sets can be standardized as soon as possible. Upgrades, interchangeability, and new denser batteries are coming and to be stuck with a vehicle that can’t be improved would be a terrible thing to swallow as a big part of the allure is the battery’s ability to give us economic and traveling performance. It may not be possible to sell me a non-standard battery set in a vehicle. This buyer is aware.
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Nice review. Sounds awesome.
Amazing stuff.
I appreciate the insightful post. Thanks.