Your Business: Independence from foreign oil just got stymied

By HAROLD GOLDMEIER
December 4, 2013 00:06

Israel’s dependence on foreign energy imports is particularly alarming... Oil imports leave the country vulnerable as the number of cars on the roads increase.

3 minute read.



Better place car charging

Better place 311. (photo credit: Better place)

Last June, I wrote in The Jerusalem Post about the darkening future for electric vehicles. Fisker in the US and Better Place in Israel declared bankruptcy. “Current owners are left with near worthless vehicles, closed charging stations, repossessed batteries, bank loans still in force and buyers scarred by the experience.”

Now Tesla Motors, the largest independent electric-car manufacturer, suffers from technical, image and financial problems, setting back the movement for energy independence from foreign oil many more years. “The electric car (plug-in electric vehicle, or PEV) is not just another green-tech project; it is a weapon in the fight for global security with the potential to free industrialized nations from fossil- fuel dependence.”

Be the first to know - Join our Facebook page.


Seventy percent of petroleum consumption in the US feeds cars, trucks and buses; 95% of petroleum imported into Israel is for consumer consumption. Israel’s dependence on foreign energy imports is particularly alarming.

Natural-gas prices jump every time there is an attack on the Sinai pipeline. Israel’s new-found gas fields might ease that problem. Oil imports leave the country vulnerable as the number of cars on the roads increase.

A new report for the Transportation Ministry shows a 20% decline in use of buses and railroads between 1995 and 2008, while there are 15% more cars; 79% are passenger cars, yet there is a deafening silence from Israel’s government to PEVs reducing Israel’s foreign oil dependence.

A commix of environmentalists and national-security right-wingers welcome the potential of PEVs to free nations from oil imports. Government officials in league with a cabal of private powers prefer spending money searching for and extracting shale-rock oil. This policy requires great financial expense and sacrifices to environmental safety, giving short shrift to new types of energy sources powering vehicles.

Recent events are major blows to PEV development. First, Better Place assets recently sold for pennies after the government refused to back a bailout. New owners reportedly paid $450,000 for assets valued at $2 billion about two years ago. Investors such as General Electric, HSBC Holdings and the European Investment Bank lost upwards of $800 million. Confidence in the industry for future investment is shaky. Innovation and commitment to oil-free transportation are stymied.

Second, and most disheartening, are new problems facing Tesla Motors. Their batteries caught fire three times in six weeks, sparking an investigation by the National Highway and Traffic Safety Administration. John Broder castigated the battery holdout in a New York Times article. Superstar George Clooney criticized the roadster he previously owned, further setting the company back; playing defense tarnishing the company’s most valuable asset, its reputation.

In April, the NHTSA awarded a Tesla car a five-star rating, placing it in the top 1 percent of all cars tested. Tesla received Motor Trend’s 2013 “Car of the Year” award. Consumer Reports said Tesla’s car “performed better or just as well overall” as any car it’s ever tested. Tim Sullivan praised the company in Harvard Business Review, saying, “Tesla is run by visionary engineers.” According to Arthur Wheaton of the Western New York Labor and Environmental program, “Tesla is an image car; people want to be seen driving them because they have a positive environmental image.”

Adding to troubles is confusion over Tesla earnings reports. The stock price dived from $195 per share and now hovering in the $120 range. Jonathan Weil of Bloomberg Business said, “Sometimes Tesla acts like it doesn’t know what it’s doing when it comes to financial reporting.”

Their figures might be off as much as 40% with disparities between reporting $16m. in net income for the third quarter and a $38m. loss in the same period, in the same report, using different accounting measures. It is backed by a $450m. loan from the US government. Some believe federal investigations may initiate for protection of investors and the government loan.

Perception in marketing is nine-tenths of the consumer decision-making process. Bad press hurts not only Tesla, but also the entire PEV market development and global security. These problems especially hurt because Tesla is the leader in the industry.

Hybrids and new electric cars from major brands are shortstop measures not yet benefiting from heavy investments in marketing to sway public perceptions and decisions about car buying. They also have to lower the prices, make serious structural changes in the industry and overcome oil-lobby interests. Hopefully, 2014 will be a better year for electric-car reputations. Dr. Seuss left good advice for PEV makers: “Why fit in when you were born to stand out?”

Dr. Harold Goldmeier is the managing partner of Goldmeier Investments LLC and an instructor of business and social policy at the American Jewish University, Aardvark Israel Gap Year Program, Tel Aviv.


Related Content

The Teva Pharmaceutical Industries
April 30, 2015
Teva doubles down on Mylan, despite rejection

By GLOBES, NIV ELIS

Israel Weather
  • 9 - 19
    Beer Sheva
    10 - 19
    Tel Aviv - Yafo
  • 9 - 15
    Jerusalem
    11 - 17
    Haifa
  • 13 - 22
    Elat
    11 - 21
    Tiberias