Crystal Balls and Black Swans

By Bill Moore

Posted: 27 Apr 2011

After spending years reading other people's predictions about the future of our EV world, I thought I'd take a crack at it. Actually I was urged to do so by my friend Craig Shields, who blogs over at Craig authored Renewable Energy Facts and Fantasies. He thought people would like to know not only what I know about the past and present, but what I see is the future of the electric vehicle; specifically, who will be the "winners and losers."

Having monitored the industry now close to fourteen years this coming July, I certainly have seen any number of "losers," not in the current pejorative sense of "Dude, you're a loser," but as victims of their times: right product, wrong time; wrong product, wrong time; wrong product, right time; etc. And it affected not just those now-forgotten eager -- but under-funded -- start-ups, but even two of the world's behemoths would eventually succumb: GM and Chrysler; which unlike all the little guys who have come and gone over the years, were "too big" to let fail.

So, with some reservations about picking winners and losers, I sat down in a hotel room in Toronto during the PDAC mining conference, and began to assembly my thoughts in what would turn out to be more than 30-pages of background, foreground and "gut feelings" about many of the key manufacturers from the GMs and Nissans of the world to the Balqons and BYDs. Craig generously added his own postscript and by the time we'd spiffed it all up graphically, the resulting analysis stretched to 67-pages.

The one thing Craig insisted on if I wasn't going to go out on the limb to pick the winners and loser, was that I at least rate them someway, which as you'll read in the excerpted Executive Summary below, is heavily influenced by Nassim Taleb's 2007 best seller, The Black Swan: The Impact of the Highly Improbable." I think you'll find what I came up with an interesting, even amusing, solution to the problem, though you're certainly free to disagree with my ratings.

Finally, Shields and his publishing partner decided this report was worth charging for, so unlike most other things on EV World that are free Top Trends Shaping the World of Electric Vehicles: 2011 & Beyond isn't, but they are offering a 50% discount to EV World readers who order it before May 10, 2011. While I won't promise that it'll make you rich, I hope it will at least help you not lose a lot of money either.

So without too much more fanfare, here is an excerpt from the Executive Summary.

Outlook 2011 doesn’t attempt to pick winners or losers largely because such an exercise presumes a level of insight and business acumen that EV World lacks. Instead, the objective is to summarize where the industry is with respect to automotive-based electric-drive vehicles in North America; and in that summary may lie clues to the future fate of the industry at large and the individual players within it. Subsequent editions may look at other markets such as Europe, Africa and the Middle East, Southeast Asia and the Asia Pacific Rim, as well as technology subsets therein.

A key reason for adopting a more circumspect view of the future of the industry has much to do with 2007 best seller, The Black Swan - The Impact of the Highly Improbable, by Nassim Taleb, the main lesson of which is that we live in a world shaped by the unexpected, what Lebanonese-born Taleb calls “Extremistan,” where Gaussian curves are irrelevant and economic forecasting models useless. Two recent cases in point: the self-immolation of a Tunisian fruit seller literally and figuratively igniting turmoil across the Arab world, and the 9.0 earthquake off the main Japanese island of Honshu. Both of these highly improbable events -- a 9.0 earthquake is considered a once-in-a-thousand year occurrence -- will forever reshape the world as we know it. Precisely how it will, we simply have no way of knowing. The unfolding nuclear disaster in Fukushima may spell the end of fission-based nuclear power and the ascendency of a wide-range of distributed energy systems: wind, solar, geothermal, hydrokinetic; maybe even exotics like cold fusion or zero point energy, pick your moniker. Certainly, energy efficiency will become even more central to our future, and that will directly impact our transportation system, especially as oil prices continue their wild fluctuations and fission-based nuclear power looks less attractive economically, politically, and environmentally. This may bode well for energy storage, which is vital to compensating for the intermittency of renewable energy sources, be they utility-scale wind farms or residential-scale solar photovoltaics. Investments in energy storage may result not only in improvements in energy density and system durability and reliability, but also possible cost reductions, though supply bottlenecks and competition could mitigate potential savings with utilities and ESS manufacturers bidding against automotive manufacturers for cells. In the wake of Fukushima, the much-worried “battery glut” of 2017 may become the “battery shortage” instead, unless some other unexpected Black Swan event jolts the world off into yet another entirely unexpected direction: a breakthrough in fusion power or the appearance of proven, scalable energy extraction from the vacuum (zero point energy).

Since Black Swans -- be they good or bad -- are by their very definition impossible to foresee, much less predict; the best we can hope for is to understand where we are at the moment and keep as many options open as feasible, societally and technologically-speaking.

Want to read more, click here to get your copy of Top Trends Shaping the World of Electric Vehicles: 2011 & Beyond, which is being offered initially through 2Green Energy. Order it before May 15th and you'll get it for 50% off; and publishers are offering a full refund if you're not satisfied with it.

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