Martin Eberhard is considered one of the godfathers of electric vehicles after he and Marc Tarpenning co-founded Tesla Motors, now known as Tesla Inc., in 2003.
Back then, the industry viewed EVs as a fool's errand. Gas-guzzling trucks and SUVs have never loosened their grip on U.S. consumer demand, and 2003 was also the first year of the Hummer H2. Fifteen years later, most major automakers have committed to electrifying their lineup, or introducing a range of electrified vehicles, within the next five years, but there are still serious concerns over whether consumers will embrace electric fleets.
Eberhard, who still drives a Tesla Roadster as his primary vehicle, stepped down as Tesla CEO in 2007, and began working with Volkswagen on an internal EV project. In 2016, he launched a startup, Inevit — short for "inevitable" — working on EV battery systems.
SF Motors, a Chinese EV startup Eberhard had been advising since September 2016, acquired Inevit in October. He is chief innovation officer at the startup.
Eberhard spoke with Staff Reporter Katie Burke in December.
Q: Your startup, Inevit, didn't make too much noise before it was acquired. How did it get started and what were you hoping to accomplish?
A: We were deliberately keeping a low profile, there was no real reason to say anything publicly about what we were doing. Our website is just a picture of a business card. We were developing some pretty deep technology for how to architect an EV with the idea of making the battery system as cost-effective and safe and reliable as possible.
My general argument for some time has been that the battery on the electric car can be the most expensive, most dangerous, least reliable, heaviest component of the car, because you're not engineering the car around that component.
With that philosophy we've been thinking pretty hard about not just how a battery ought to be built, but how your car can be built to take a battery in the best possible way.
How did your role as an adviser to SF Motors work while you were running Inevit? Will you work with other automakers under SF Motors ownership?
When I first met the SF Motors team, we talked about a lot of stuff. I would be a general adviser for EV stuff, and I was an adviser before I came here for everything except batteries; that was the agreement I had with them. My team will be continuing to work with other automakers, that's ongoing right now.
At Inevit, a good piece of the company is in Germany. We were in Silicon Valley and then near Stuttgart.
After I left Tesla, I spent a couple years working for Volkswagen, working on an EV program, an internal program for them. In the course of that program, I got to know a couple of engineers in Germany that I had a really high regard for, and they persuaded me to join them and to start Inevit.
Why did you decide to join SF Motors?
When I started hearing about the Chinese car companies, I thought of them as one big group. And quite a few of them had reached out to me. But, ultimately, there's kind of four different groups these Chinese car companies fall into.
The first group is the loudest group, some Internet billionaire wants to be the next Elon Musk. You can look at Faraday Future as something like that.
Then the next group we don't see here too much are the little mom-and-pops in China that probably won't survive. The next group are the EV program of one of the big state-run enterprises in China, I think about Beijing Auto or SAIC.
The final group, which SF Motors is, is an EV effort from an independent Chinese car company. Their parent company, Sokon, is not a state-run enterprise. There isn't government investment in the company.
To me, that fourth group has the highest chance of success for a lot of reasons. These guys actually know how to make cars. On top of that, they have more independent thinking because they aren't quite a state-run enterprise. This is the group I find to be most interesting.
A batch of Chinese EV startups, including SF Motors, has cropped up in the past year. Will these new entrants have an effect on the global EV market?
You can't have this discussion without considering the different perspective of various governments.
One government says the EV is the future and puts a lot of pressure on this auto industry to move that way as quickly as possible. Another country says global warming is a Chinese fraud and should be ignored. The good news for those of us who care about global warming is the pressure the Chinese government is putting on their own auto industry is being felt not just by Chinese companies but all of them.
For Volkswagen, and many of the other automakers, their biggest market, full stop, is China. If they want to continue to be a player in that market they've got to move in the direction that the government is pushing. Despite what comes out of Washington, most people working at European and American car companies recognize that this global warming thing is real. And the example we set with Tesla, they recognized you actually can make a decent car with an electric drivetrain.
How do you think Tesla has matured since you left, and will SF Motors and companies like it be able to compete?
Unlike a lot of what happens in Silicon Valley, the auto industry is not a winner-take-all business. The stronger ones survive side by side. There isn't just one kind of car being made.
Smartphones all start to look the same and there are only a couple players, but cars aren't like that. Tesla chose a particular path for entering the EV market, and they chose based on what the world looked like at the time.
When I started Tesla, there was nobody making electric cars, the public opinion of what an electric car could be was a terrible thing. So we set down on a path to rewrite how people considered EVs and enter the marketplace in a way that made sense in that world.
Today it's different, the opportunities for entering the car market are a lot broader. First of all, the technology has come a long way. Tesla has staked out a certain zone in the space, and there are all kinds of other places to build cars. In China, you can expect the Chinese government to give preference to Chinese companies; the American market might be the same way in reverse. Both companies are doing the same thing to protect themselves: Tesla's talking about building a manufacturing facility in China; SF Motors just bought a plant in Indiana. They're becoming international players.
In the end, for the majority of OEMs, the biggest trouble they have is the innovator's dilemma.
They have a difficult time being the company that invents the product that makes their core business obsolete. It's why none of the old mainframe computer companies exist anymore. None of them became Apple.
All the money they make comes out of the big cars; all EVs are sold at a loss. That was the environment into which I launched Tesla. SF Motors has that same opportunity.
Do you think battery technology will be able to keep pace with automaker plans for an EV ramp-up?
You see these charts from various companies like Deutsche Bank, that are predicting what the cost of batteries are going to do into the future. They've had to rewrite their predictions every year because prices were coming down faster than they imagined.
The prices have done better than my own optimistic predictions when I started Tesla. Then, lithium ion batteries were just used for consumer electronics, and that price was just fine, there wasn't that much price pressure on them.
And the result of that was not much investment in new technology. The results of the EV revolution is there's been a dramatic uptick in the amount of investment into innovation of batteries today.
Couple that with a massive increase in manufacturing capacity, the only possible path this will take is the price coming down. I predict the EV will be cheaper or as cheap as a competing gas car within five to 10 years.
What are the obstacles to achieving this five- to 10-year timeline?
The only obstacle is time.
Today you can buy batteries for $100 a kilowatt hour; that was the pipe dream of the most enthusiastic EV proponent 10 years ago. We nearly tripled that on the Tesla Roadster — that's a huge deal.
At Inevit, our business was the "rest of system" cost — how do you make the car more cost effective once you've got the cells. It's no longer how much cells cost but how much does that cost me to bundle all that up into a battery system and put it into a car. On the high end, it's probably equal to the cell cost. At the low end, it's about 15 percent above the cell cost, approximately.
EV sales make up less than 1 percent of global auto sales today. Even if the cost of technology comes down, will there be sufficient consumer demand?
That number cracks me up. We had this dream of hitting 1 percent one day. We've achieved something already amazing in my opinion.
With the prices of EVs today, there's an aspirational aspect; a lot of people would like to have a Tesla but can't afford it. It comes down to cost.
On that day, when you go to the car lot and the EV is actually cheaper than the gasoline car, in an honest, real, feature-to-feature comparison, on that day the gasoline car is over. The ramp is in that direction.
To be appealing to a bunch of people, you'll need a spectrum of cars. The guy who buys an F-150 will still want a pickup truck. There's no reason at all someone couldn't make a darn good electric pickup.