BUYING A SMALL BUSINESS

Chris Paine on Revving Up the Auto Industry

The director of Who Killed the Electric Car? and Revenge of the Electric Car talks about the changing face of car manufacturing and sales—and how Detroit can stay afloat by going green.

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Chris Paine’s first electric car inspired his two documentaries.

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Call it the comeback car. After production stopped and vehicles were destroyed a decade ago, the electric car is back and redefining the auto industry. Chris Paine, director of Who Killed the Electric Car? and Revenge of the Electric Car, has documented its bumpy ride. In 2006, Who Killed the Electric Car? explored the creation and premature destruction of these vehicles. Revenge of the Electric Car continues the saga as electric vehicles, specifically the Chevy Volt, Nissan Leaf and Tesla Roadster, return to production. This documentary, which premieres in New York City on April 22, features four characters within the auto industry: former GM executive Bob Lutz as the veteran car man, Tesla Motors' CEO, Elon Musk, as the enterprising entrepreneur, Nissan's CEO, Carlos Ghosn, as the shrewd businessman, and independent car converter Greg "Gadget" Abbott as the jack-of-all-trades. Paine, too, is a true believer in the electric car. As a child, he played with Hot Wheels and saw the battery-operated lunar rover drive on the moon. Today, he has a unique perspective on the growth in the automobile industry and the electric car's role in its future. Paine recently shared his insight with Inc.'s Drew Gannon.  

What inspired Revenge of the Electric Car?
Who Killed the Electric Car?
was about how corporations can make some very bad decisions and get in the way of progress when it threatens vested interest, and I didn't want that to be my whole message. When I saw electric cars coming back I thought, let's make a film about how entrepreneurs within and sometimes outside of the system can make change possible. The second film is about how change can happen when there's enough people willing to take the risk.

Lutz, Musk, Ghosn, and Gadget each face obstacles in the film. Do you think these challenges represent the difficulties the car industry faces today?
These are difficulties facing any entrepreneur and anybody who is working to bring a new technology to the mass market. It's just very difficult. 

Was there one entrepreneur or company you especially wanted to succeed?
I really wanted everyone to succeed. I wanted the big car companies—GM and Nissan—to be able to bring electric cars to the mass market. It's very difficult to switch from such an entrenched technology to a disruptive technology like an electric car. If they could succeed, this meant that this technology really has a chance. And, I was rooting for Elon Musk and Tesla, because sometimes renegades can be the real revolutionaries. He was taking some huge risks. The last person I profiled, Gadget, is a friend of mine and when he ran into a lot challenges I really wanted him to be able to overcome them. 

In doing these documentaries, you immersed yourself in the auto industry and witnessed the last few years' hardships. What do you think are the main problems facing Detroit, and do you think the auto industry has the capacity to overcome them?
The main problem with the auto industry is that it's been locked on very old technology for a very long time. Expecting the auto industry to adapt is kind of like asking the railroad companies from the nineteenth century to become the car companies of the twentieth century. It's not easy to do. It's a different kind of product. So, for the mainstream car companies to shift away from their moneymaker, big engines, to start making motors that run on batteries is a fundamental shift. But, I think the combination of high oil prices and the restructuring of these companies have given Detroit and the rest of the car companies a rare opportunity to change the game. 

Do you think there is a place for small businesses like Tesla to succeed in the auto industry?
Yes, there is a huge place for companies like Tesla. This is a time of huge reinvention, so having new companies coming out of the gate. It's a good time for that, but they've got to have enough money. Barriers to entry for a new car company are huge. You've got to have a ton of money, you've got to have a certain degree of patience, and you've got to have a great idea. There have been hundred of corporate car companies in the course of United States history, and there's only two or three of them left today. If you just do the math, the barriers to entry are significant. But, I think small companies still can succeed.

In the film, Gadget converts traditional cars to electric models. Do you think car conversion can become its own industry?
People worry that they won't be as much demand for car mechanics in the future because electric cars are simpler to fix, but I think there's a huge growth market in custom conversions of existing cars on the road. I think that Gadget's idea is a good one, and it doesn't take as much money as starting a new car company. 

Is there growing a demand for electric cars?
We didn't want to call a film Revenge of the Electric Car until you could actually buy these cars. We pushed the movie later to make sure these cars were for sale. Nissan's Leaf sold out, and GM's Volt may be backordered six months as well. Both GM and Nissan are ramping up their factories to make more of these for 2012. I think Tesla's sold about 1,500 Roadsters. You're not going to change the world with that kind of number, but I think electric cars will transition rather effortlessly over the next ten to fifteen years to the mainstream market. I don't think they will replace gas cars totally, but I do think it could become a huge chunk of the market in our lifetime.

Are electric cars a good investment?
For now, the price point of manufacturing these cars is still high, but as costs amortize and as battery prices come down, prices will get even more competitive. You might pay more for a electric car right now, but your maintenance costs and your costs of fuel is so much lower over five or 10 years from an ownership basis than a gasoline car. 

Does it matter who is producing these cars to you personally?
As an American, I'm interested in cars being built here, whether GM is building the Volt at the Detroit-Hamtramck plant, or Nissan is building theirs in Smyrna, Tennessee, or Tesla is building theirs in Freemont, California. All of these are great for a Renaissance in the auto industry, but more important to me even than that is that these cars represent a chance to slow down the use of oil. 

How important are electric cars in limiting the United States' dependence on oil?
I think they're hugely influential. Not only do you use less oil when you use electric cars but you begin thinking about your use of all fossil fuels. There's a mental shift in driving an electric car, and as people become more aware, their use of fossil fuels across the board will decrease. 

Our research estimates a growth in the auto industry in terms of sales for auto dealerships, parts and manufacturing, and machine shops in 2010. Why do you think the auto industry is showing a comeback?
First, I think the government's bailout worked to a certain extent. Also, people stopped buying cars for a while, so now there's a lot of pent up need for replacement cars and for cars to be fixed, as the recession eases. Finally, I think that cars are getting better. Even gasoline cars have better mileage and people are thinking, "I don't want a car that gets 14 miles per gallon anymore. If I can afford it I'm going to get a better-mileage car."

Do you think the electric vehicle has played a role in the industry's growth?
I think the electric car is helping to rebrand the car industry, to make it sexy again. The car is supposed to be a symbol of freedom and mobility, but oil has polluted this dream. Yes, it's true that some electric cars' electricity can come from coal, but the electric car helps the whole auto industry by reinventing it.

Who Killed the Electric Car was the first act of the electric car saga; Revenge of the Electric Car was the second. What's in store for the third act?
Adoption. Act Two was about the revolution. For Revenge of the Electric Car we were able to capture a really interesting moment in industrialization. Now that we've got everybody making these cars, the next step will be about the cars becoming a part of American and international society. The biggest challenge is consumer acceptance. The next few years are really important for people giving these cars a chance. If oil prices go down significantly, there's less incentive for people to try these cars. On the flip side, I think oil prices are just going up, and people are a lot more curious and more adventurous than the industry gives them credit for. 

How have the electric cars changed you?
Electric cars have made me more aware about energy. They've opened my mind up about technology and entrepreneurship, a lot of things. It's just been a great ride.

What car do you drive?
I have a Tesla Roadster, a Leaf, and a Volt. I just got the Volt on Sunday, and it's going to replace my Prius, which has been my gasoline car for eight or 10 years. Then I'll have all plug-in cars. 

What advice would you give to a business school student who still dreams of entering the auto industry?
Go for it. It's not just the carmakers. It's all the industries that support it, battery technology, capacitors, smart car technology, and so much more. Your generation is reinventing the world right now and it's a great time to get involved. 

Last updated: Apr 11, 2011




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