Thursday, 8 May 2008

Business Opportunity – The Mobility Value Chain - New Consumer & Industrial Structures for New Challenges & New Solutions

At the dawn of the electric car appears to break, 100 years after a previous false dawn, an array of new vehicles and business models have emerged. The banking community will be scoping the ‘electric terrain’ to identify specific opportunities, those debuted new-carmakers that offer most promise.

But beyond the singular world of new-energy cars, investment specialists should also look to the ‘inter-dependability’ of all mobility devices served electrically, and possibly construct a world of new, expanded functionality and associated business models.

The new green auto-makers are staking their plots across the vehicle segment and powertrain type landscape. Early ventures that we’ll witness either grow, fade, willingly consolidate or perhaps (as seen with the Tesla-Fisker IPR legal battle) hostile takeovers of product line and asset-base. [It could be postulated that Tesla seeks to use a legal win to gain a speedy route - via Fisker’s premium saloon – to realise its own WhiteStar proposal. Based on BMW platform it would provide Tesla with the massive key technologies alliance with a respected, advanced VM]

This is just one example of the dynamic new world, whether from engineering, organisational, M&A or IPR litigation standpoints. As the stable of emerging new-energy cars demonstrate, the once scoffed political, entrepreneurial and corporate will is gaining traction and more and more plots on the ‘electric car landscape’ will be claimed by minnows, populating the once barren region. Theoretically, the hussle and tussle of product and venture growth will attract the interests of traditional VMs (as we’ve seen with R&D companies becoming swallowed) and possibly additional interest from a new crop of brand-centric, multi-sector, multi-activity Brand Enterprises (eg Virgin to to Apple to….perhaps even a Chinese name like Lenovo). The VC & PE backers would be happy to see their exit from what should be sizeable value-creation exercises, no doubt with post-sale retained interests, whether via trade sale, onward PE interests, newcomer brands or eventual latter-day IPO.

If that’s the basic picture for electric vehicle companies, what of the conjecture that these enterprises (one or more) could act as a central link in a new ‘electric-mobility-framework’, with an inherently meshed value-chain?

investment-auto-motives believes that if transportational aspect of the CO2 challenge is taken to a natural conclusion, that a full spectrum of electric mobility solutions would be the sine quo none of a forward thinking company; whether a reborn industrialist like GE (General Electric), a lifestyle brand group like Virgin, perhaps Sony looking for electrical device extensions or complete ambitious newcomer like Project Better Place. Indeed the optimum route could well be an amalgamation of 2 or more parties.

Given present-day and future forecasts of economic, geo-political and energy price/security conditions there are very good micro and macro reasons to see the emergence of the electric car against a bigger mobility backdrop, and the context for a conceptual electric mobility network at consumer level and relative framework at the industrial level.

This high-impact wave of change could be argued as invisibly underway, if indeed investment/commercial/academic decision-makers open their mindsets to see the inter-linked solutions base (or value chain) slowly emerging if one puts the electric mobility jigsaw together – from the personal through private and into mass transit: from the innovative Segway, to electric wheelchairs & buggies for the infirm, to electric assist bicycles, to e-mopeds, e-motorcycles, e-trikes, e-cars, e-trucks, e-buses, e-trams and e-trains….[but e-planes maybe on the distant horizon!]

Now at first glance, this may conjure-up images of a centrally planned, clinically sanitised, homogenius ‘Logans Run’ transport environment, but reactionary (and plainly unrealistic) populist ‘sci-fi’ visions apart, such a mechanically interlinked and functionally inter-meshed transport solutions would be the ideal for meeting the CO2 challenge.

However, from the current state of mobility fragmentation such theoretical idealism looks far off but that thought would be nirvana for progressive, ‘Silicon Valley-esque’ technology industrialists. From his/her viewpoint a singular electro-mechanical solution would provide massive opportunities for a raft of new customer products based on a technological & industrial convergence and massive economies of scale. Indeed the ‘mobility landscape’ could be exactingly cultivated.

As to whom the spoils of such a revolution could go depends greatly on those who seek a way forward in devising a plan and critically moulding the right technical basis (whether L-ion, Polymer-based or even advanced Ethanol packs) merged with manufacturing scale-ability for massive output. (Such a specific ‘electric energy’ start-point would obviously have major implications for the range of vehicle designs).

But nevertheless, it begs the question…”could an Elephant like General Electric jump to create inter-vehicle segways with the vision of finding a Better Place?”