Who's marketing the electric car?

When I got an e-mail out of the blue inviting me to a “Blogger’s Roundtable” with a Vice President at General Motors because he was “very interested in hearing my thoughts and questions,” I thought it was a joke. A joke, or perhaps some new version of the Nigerian e-mail scam asking for my help getting oil fortunes into the US.

But it was actually legit. Robert Lutz, the Vice Chairman of Product Development for GM, was in Seattle and he wanted to have an on-the-record conversation with some local bloggers. I was there because a public relations firm had found my blog after the Seattle Film Festival when I rode to the premiere in a new hybrid Yukon.

I didn’t know what exactly to expect when I arrived at Seattle's Edgewater Hotel for dinner. Half the attendees were car bloggers. They had sales figures for the 1969 Camaro, they knew production numbers, they cracked jokes I didn’t understand about the quality of British cars. They were gear heads. The other four bloggers were: husband and wife bloggers Chris and Ponzi Pirillo; Mike Davidson, President and CEO of Newsvine; and myself.

I spent a little while just trying to get a lay of the land. What exactly did GM want from this dinner? As I listened, it became clear they had two main goals: 1) to generate buzz about their new cars and 2) to get out the message that GM was going green. And both of these goals were intimately tied with a single vehicle--the Chevy Volt.

So. What is the Chevy Volt? It’s a plug-in electric car that GM calls an “extended range vehicle” rather than a hybrid. A single charge of its electric battery gives 40 miles of gas-free driving—a little more than the average American’s daily commute. After that, when the internal combustion engine kicks in, the engine will also recharge the battery. Alternating back and forth, the Volt will have a 600 mile range before needing to be recharged and refilled.

The first Volts are targeted for release in November 2010, with about 10,000 vehicles produced the first year and possibly up to 60,000 vehicles the next. According to Lutz, extended range vehicles are the future, along with “mild hybrids, strong hybrids, and fuel cells.” He apparently liked hybrids and energy-efficient vehicles so much that at one point he referred to himself as “Carbon Footprint Bob.”

This is not to say that Greenpeace is going to praise him as one of their own. “There is a segment of the environmental movement that is in some sense against personal mobility,” he said at one point. Later he said, “If we had a car that eats CO2 and spews daisies out the tailpipe, we would still be criticized for killing insects on the windshield.”

Lutz, and the rest of the executives at the meeting, also spent some time discussing what they saw as contradictory federal regulations. On the one hand, one federal agency is mandating more strict safety standards and “practically want an armored car.” All those safety features add weight, however, making it harder for manufacturers to produce small lightweight (and thus more fuel efficient) cars, which is mandated by another federal agency.

At one point I asked whether the auto industry would skip over biofuel and go right to electric cars after some of the unintended problems with corn ethanol.

Lutz thought the best choice for an alternative fuel was cellulosic ethanol, a kind of ethanol fuel derived from garbage that would normally go into a landfill. With proper funding, “by 2012 it could replace 32% of the petroleum we use in this country,” he said. “It would cost $1.50 a gallon, and the nice thing is, we could buy the Camaros and the SUVs and the stuff we want.” (I thought the phrase “the stuff we want” in there was telling … )

I’m not sure if cellulosic ethanol is a pipe dream--certainly the alchemist who proposed a plant near Tacoma to create cellulosic ethanol (in just 3 minutes!) was a scam artist--but I did read later that GM has invested in Coskata, a company that aims to produce cellulosic ethanol at a high volume.

And then we got to the big topic (at least for me)--gas prices and gas tax. Someone (I don’t remember who) asked if the price of gas went down, would production of the Volt stop.

Lutz answered, “No, that would be the worst thing that could happen. People would want big SUV cars we couldn’t by law build. I’ve said for years, maybe 15 years, that trying to raise fleet fuel consumption rates without high gas prices is like trying to fighting obesity with low food prices.”

Falling gas prices would be the worst thing? And so I asked whether the US should have implemented a higher gas tax when fuel was cheaper. Lutz’s answer was very interesting and Chris Pirillo recorded it. It’s worth watching (at least the first few minutes) below.



I was very surprised. He argued that an 18 cent gas tax was a fool’s paradise that harmed the country in a number of ways, giving us some of the worst roads in the world (I’m guessing he means the developed world) and urban sprawl ... one solid development of "half acre single family ranch homes from sea to shining sea."

It’s interesting to contrast Lutz’s argument here to GM’s recent history. In 2006, GM offered to guarantee $1.99/gallon gas for a year if you bought some of their bigger gas-guzzling cars. (This year that’s actually been outdone by Chrysler, offering to guarantee $2.99/gallon gas for three years on certain vehicles.)

But maybe GM has learned a thing or two since then. When Mike Davidson asked, “What’s the worst thing about GM?” Lutz replied that they were going through a transition from mechanical to electrical cars with a dependence on trucks, sales of which have been particularly hurt by high gas prices.

In many ways, the difficulty of the transition is what I took away from the dinner. GM has experimented with electric cars before (as it happens, I sat next to Dave Barthmuss, the spokesman for GM who appeared in the movie Who Killed the Electric Car?). They need to make that transition “from mechanical to electrical” because of both consumer demand and legislation.

In the process, I think they also want to emerge with the brand of “The Green Car Maker” in the same way that Volvos have the safety brand and Lexus has the service brand. Laying the foundation for the green brand was what the blogger roundtable was about. Making sure the Volt is hailed as the best thing to happen to cars since the wheel is part of that too, and that involves starting the buzz now.

Along those lines, I asked if a transforming Volt would appear in next year’s Transformers 2: Revenge of the Fallen (no kidding, that’s the name), Lutz was noncommittal, but I did get a large nod from another executive at the table. I believe they really do want this thing to go big.

I’ve been pretty critical of GM in the past on my blog, especially in 2006 during the $1.99 gas guarantee and when Hummers started showing up in Happy Meals. But I think Lutz’s vision of the auto’s future is right on: mild hybrids, strong hybrids, extended range vehicles, and fuel cells. Maybe it's no accident they are considering selling the Hummer brand (Lutz would not comment on Hummer or any GM brand at the dinner).

Will they actually grab the green brand? Will they not only grab the green brand but actually be green? We'll see how things look in late 2010 when the Volt's ready to come off the assembly line.

But I do think that one of the central arguments against GM in Who Killed the Electric Car?--that they didn't market the car effectively because they didn't actually want the car to sell--is definitely not true this time. They're working very very hard to make the Volt a success, and they're starting 29 months early.

GM VP Bob Lutz on the gas tax

As I mentioned before, last week I went to a "blogger's roundtable" with Bob Lutz, the Vice President of Global Product Development at General Motors. I asked him whether we should have had a higher federal gax tax.

One of the bloggers at the table managed to get the last part of my question and then Bob Lutz's answer.

The video is six minutes long, but the first couple minutes are the most interesting. Keep in mind as you watch this who the speaker is.



Jamie at Thrice All American, Erik at the Tacoma Urbanist ... this is right up your alley. Thoughts?

I'm still working on my write-up of the night. But this is one of the highlights.

My Dinner with Bob Lutz

So. I had dinner tonight at the Edgewater Hotel in Seattle with four General Motors executives--including Vice Chairman of Global Product Development Robert Lutz--and seven other bloggers as part of a "blogger's roundtable" set up by GM.

Now there is a perfectly legitimate question to ask at this point. "What exactly, Erik, were you doing in a room with bigwig executives of GM?" I wish I fully knew the answer.

Apparently I was spotted thanks to a post on ZestyEnterprise, when we went together to the Seattle Film Festival Opening Night in a hybrid GM Yukon. And I guess I've written enough about transit/energy/the environment that I got invited to the dinner.

Interestingly, when I got there I discovered that most of the other bloggers there were "gearheads" who ran car blogs or social networking sites about cars. So while they were talking about the 1969 sales of the Camaro, I was asking about the national gas tax, recycling cars, corn ethanol, and movies. (Specifically Transformers, which featured transforming GM cars, and Who Killed the Electric Car?)

I'm still trying to put my thoughts together on the night, my questions, his answers, and what exactly it is I want to write about it all. So I think I'll leave it at that for now. But it was a fascinating dinner and everything was entirely on the record, so you can bet I'll be getting something up soon.

Tacoma Presidential Donations

The information age has struck home.

The New York Times has assembled a list of donors who gave $200 or more to a Presidential campaign into a single searchable database. I could spend a lot of time talking about how unprecedented this is (and it is an incredible amount of access to what has been very nebulous in the past) but I won't. Instead let's just get to the good stuff.

According to the NYT, 23 Tacoma residents gave at least $200 to one of the Presidential candidates in the first 3 months of 2007. Those donations totaled $27,190 dollars. Of those, 2 people gave $4,600, the maximum amount allowable to give to a candidate for both the primary and the general election (one gave to Clinton, the other to McCain).

Here are the Tacoma rankings:

1. John McCain: $7,575 from 4 donors.
2. Hillary Clinton: $6,450 from 5 donors.
3. John Edwards: $6,350 from 8 donors.
4. Barack Obama: $3,115 from 4 donors.
5. Mitt Romney: $2,100 from 1 donor.
6. Dennis Kucinich: $1,000 from 1 donor.
7. Rudy Giuliani: $500 from 1 donor.
8. Tom Tancredo: $100 from 1 donor.

All in all, $16, 915 went to Democrats, $10,275 went to Republicans. 16 donors gave to Democrats (one donor gave to three D. campaigns) and 7 donors gave to Republicans.

This data is just for Tacoma proper, not for the suburbs, just so you know.

Without knowing how many people gave to the campaigns below $200, I don't know what kind of totals you can draw from the data. But if what we see here is indicative, Tacoma keeps its reputation as a blue town, but having McCain on the top of the list was a bit surprising.

If the NYT puts more data up I'll update it here.

Until then, you can have fun with the list by typing in celebrities. Spielberg gave $2,300 to Edwards, Obama, and Clinton. Adam Sandler gave $2,100 to Giuliani? Really? Jerry Springer gave $4,600 to Hillary Clinton? SayWA? Donald Trump gave $4,000 to Clinton? Ivanka gave her $1,000?

Since I've gotten started talking about national politics, I may as well mention that I've started a fun website in support of Obama. It's called www.leftiesforobama.com. And by lefties, I--of course--mean people who are left-handed. Like me!

I want to help make Obama the 8th left-handed President. So many of our Presidents have been right-handed, I think it's about time to get another lefty in the White House. If you're a lefty (either in politics or handedness) you should definitely check it out. I've even started an official Lefties for Obama group at BarackObama.com.

Politics should be fun again. And choosing a candidate based on which hand they will sign bills into law with seems like a fun way to get involved.

I'll keep watching Tacoma's political donations as the year moves along.

The Empty "Empty Space" - Part IV

You can view their official press release here. The title is "Final Press Release." I had at first thought they were regrouping, but this looks pretty final. It's hard to really judge what all happened, and drawing conclusions from a single theater is tricky. But there is some information in the public domain that certainly puts a context around the issue.

Every non-profit must file a 990 form with the IRS. Many current 990s are available on-line at Guidestar. They are cumbersome documents, and don't really tell the full picture. But here's what they show about The Empty Space Theater.

On 10/1/2000, the Empty Space had $407,000 in assets.

They lost $187,000 of it by 9/30/2001.

They lost another $50,000 the next year.

They lost $198,000 the next year (leaving them with just 20K in 2003).

They lost another $196,000 the next year.

So by 9/30/2004 The Empty Space was in debt $175,000. (As a point of reference, it was just two months later that TAG announced they had accrued twice that amount in debt when they shut their doors--temporarily--when the $350,000 debt suddenly seemed so looming.)

The 990 database on-line doesn't give me the 2005 picture, but the Board President of the theater was quoted as saying the debt was only $75,000.

Google News has some pieces from the Seattle papers that round out the picture. By the time the theater closed, the Empty Space had only 8--count 'em, 8--board members. And their recent home at Seattle U was their 6th since they opened in 1971.

And then there is this in the PI:

The demise of the Space is part of a two-decade trend that has seen the extinction of a number of midsize theater companies with budgets of less than $1 million. Among the theaters that have succumbed after presenting important work are the Bathhouse Theatre, Alice B. Theatre, Center Stage, Group Theatre, Pioneer Square Theatre, Northwest Asian American Theatre and Skid Road Theatre.

I'll lay dollars to donuts that none of them had an endowment. And I'd take another bet, too. That each one of them were filling seats regularly. That's the worst part of the whole thing.

Sad day.

The Empty "Empty Space" - Part III

Which I suppose gets us back to the question my dad asked me. Why start a theater? Especially one that is not a non-profit?

First, because I believe that good theater breeds good theater, and the best way to get even more people in Tacoma going to theater is to increase their options. Good theater is habit-forming, and if the Horatio can help Tacoma reach a critical mass of theatrical opportunities we might see an explosion of opportunities.

And second, I believe there is another workable business model for theater I didn't mention earlier. The small fringe theater. A small house with high quality talent who are drawn to high quality material. Keep the production costs low, invest in the people, and reach out to an audience that is open, eager, discerning, and intellectually curious.

I firmly believe the model works and is sustainable over the long run. The Horatio Theater is founded on with that goal, and I believe will be able to deliver exceptional pieces of theater. We will be looking for founding members (more on that soon, once I can announce the location) so until then, you can sign up for the mailing list or get tickets to the first show, "It's A Wonderful Life," presented as a 1940's radio play at the Blue Mouse Theater this December.

The Empty "Empty Space" - Part II

You would think then, that there is no way theaters can make it. Theaters can't raise their ticket prices much higher because they are in a competitive market with movies, iTunes, the Internet, DVDs, and about a million other entertainment options. And it is unlikely any theater can raise enough money to beat inflation every single year.

But there are options. And the silver bullet option has got to be an endowment. In the last 25 years, the S&P500 went up 1100%. In other words, if a theater in 1981 had taken $100,000 and put it a mutual fund that tracked the S&P500, today that money would be worth $1.1 million even assuming no other donations to it were made. If donations were made on the order of ,say, $25,000 per year that endowment would be up to about $3.1 million.

Of course, theaters are going to want to take a percentage off the top every year to supplement their operating budgets, but you get the idea.

If we want to see non-profit theater 25 years from now, endowments are the best way to make it happen. Because an endowment is the only thing that will be able to beat out inflation and all other rising costs over the long run.

The Empty "Empty Space" - Part I

I should say that I have never seen a play at The Empty Space, either in its current or its former home. And I don't know the backstory or any behind-the-scenes information. But perhaps this is the opportunity to talk about what's happening to theaters around the country, but especially here.

When I told my dad I wanted to start a theater in Tacoma, he asked me, "If theaters are hurting, why would you start a theater?" It's a good question. Because theaters are hurting.

But interestingly, theater is not. Theater as an art form and a way to spend a Friday night seems to be alive and well. Every show I have seen in the last month, "Moon Over Buffalo," "Dreamgirls," "Line One," and "The Underpants" has been at least at 75 - 80% capacity. The theaters are close to full! Every show I've seen.

The trouble is the organization behind the production is fundamentally in peril. But why exactly? We all understand that ticket prices don't cover the cost of the production. That's not a surprise; that's why most theaters are non-profits. But ticket prices are covering far less than they used to.

To use a local example of the disparity, TAG makes a good reference. TAG's top ticket price in 1981 was $11. Their top ticket price today is $28. According to an inflation calculator I found on-line, that ticket price has kept pace with inflation almost exactly. Which means TAG's ticket price has not fundamentally changed in 25 years, except to keep up with inflation.

But the expenses of putting on a show have risen dramatically. Labor and material costs are higher; competition with other forms of entertainment means a higher price to get patrons in the door; the median household income has only increased 17% in the same 25 years, leaving fewer dollars for entertainment; and on and on and on. I would even add that shows like "The Producers" and "The Lion King" add a certain level of expectation for other smaller productions that force higher-cost set design to meet audience expectation.

Any way you slice it, the ticket price just can't keep up with costs whether you are TAG or any other theater. And there is no way we can expect donations to keep up, too. Think about it this way: if a theater received $100,00 in support in 1981, in order not to lose money to inflation, that same theater would have had to receive $223,000 in 2005. And that's just to keep pace, forgetting about all the other costs.