The islands of Aloha are buzzing with tidings of green cars coming to their tropical shores. On May 6, Korean electric car company CT&T unveiled plans to build an electric car production facility in Hawaii. General Motors then announced that Hawaii would be a test site for a modest but significant fuel-cell car project using hydrogen as the fuel source.
These deals joined the ongoing Hawaii effort of Better Place, the highly touted Silicon Valley electric car startup that has raised over $300 million under the guidance of rock-star CEO and former SAP top executive Shai Agassi. While Hawaii still lags Santa Clara County (home of Silicon Valley) in its percentage of hybrid cars on the road, this troika of efforts will make Hawaii one of the new epicenters of green vehicles. Is there something in the water out there?
Actually, that Hawaii is becoming such a hotbed of green car activity is somewhat understandable. Drivers in Hawaii tend not to travel for long distances due to the relatively compact size of most of the islands, and people in the state tend to live closer to their workplaces than people on the U.S. mainland. Better Place has specifically targeted locations that are islands and peninsulas -- such as Hawaii, Japan and Denmark -- or that have island-like characteristics in terms of economy and political geography -- such as Israel -- as sites for its electric car networks.
For GM's hydrogen fuel-cell car effort, the automaker says it intends to tap into an existing gas pipeline infrastructure and deliver hydrogen through those pipes to gasoline service stations. This would dramatically cut the upfront infrastructure cost. The potential cost of building this type of infrastructure has been one of the key impediments discouraging widespread adoption of fuel-cell technology requiring hydrogen fill-ups.
CT&T's Hawaii announcement is particularly interesting. At present, there are no car manufacturing facilities in Hawaii, likely due to its high real estate prices and the high potential shipping costs of producing goods for export. Indeed, Hawaii has a very small industrial production base. Yet CT&T plans to build 10,000 cars per year there, ostensibly to serve the local market.
With roughly a million cars on the road in Hawaii, CT&T will not have an enormous market to access. That said, CT&T's extremely cost-effective two-seaters that top out at 40 miles per hour seem tailor-made for an environment like Hawaii, with its shorter commutes and limited distances. Indeed, Hawaii residents are already used to seeing similar types of cars on the road: Stripped-down electric vehicles that are basically souped-up golf carts are common sights in the state's capital of Honolulu.
Hawaii will certainly need far more of all these alternative-fuel cars if the state is going to meet its extremely ambitious goal of cutting petroleum use by 70% by 2030.
Take the first steps to building your portfolio.View Course »