We've been watching the race among automakers shape up, and hearing
about competition among batterymakers; this page 2 Wall Street
Journal article looks at the trend for top venture capital firms to
invest in plug-in hybrid and all-electric cars.

Electric-Car Firms Get Star Investors
By NORIHIKO SHIROUZU and REBECCA BUCKMAN
January 14, 2008; Page A2
http://online.wsj.com/article/SB120027887033287745.html

DETROIT -- The race to develop an electric car is heating up and
drawing increasing interest from the same venture-capital investors
who helped build Silicon Valley.

The latest entrant is expected to be announced today at the North
American International Auto Show in Detroit when Fisker Automotive
Inc. unveils an $80,000 battery-powered luxury car it aims to begin
delivering in late 2009. The Fisker Karma, a so-called plug-in
hybrid, can go 50 miles on electricity before a small gasoline engine
kicks in to generate electricity to charge a lithium-ion battery pack
on board. The company has backing from Kleiner Perkins Caufield &
Byers, perhaps Silicon Valley's best-known venture-capital firm and a
backer of household tech names such as Netscape Communications,
Amazon.com Inc. and Google Inc.

The announcement comes at a show in which auto makers are scrambling
to offer alternatives to traditional gasoline-fueled vehicles. Auto
makers also announced plans for next-generation diesel-powered cars
and efforts to develop more ethanol-based fuels. (See related article1.)

CAPTION: The Fisker Karma is a plug-in hybrid sports sedan set to
begin delivery in late 2009.

The luxury-electric-car deal, finalized last week in Irvine, Calif.,
where Fisker Automotive is based, is one of the first deals in which
former Vice President Al Gore provided advice for Kleiner, which Mr.
Gore joined in November as a partner. Mr. Gore wasn't heavily
involved in the Fisker deal, although "he wants to order" a car, said
Kleiner Managing Partner Ray Lane.

The precise size of the investment in Fisker wasn't disclosed, but
Mr. Lane said it was more than $10 million and "one of our bigger
investments." Mr. Lane, the former No. 2 executive at software
company Oracle Corp., will join Fisker's board.

Thanks to Kleiner's investment, "we have all the capital we need to
move forward according to the plan," said Henrik Fisker, a
Danish-born former BMW AG and Aston Martin designer and now chief
executive of the company he helped set up last year. Palo Alto
Investors, a venture-capital concern, invested in Fisker in an
earlier round of fund raising. "We're still going to raise money
later in the year, but we don't see that as a big issue," Mr. Fisker said.

Mr. Fisker's vision is to sell 15,000 electric cars a year. Mr.
Fisker said the Karma is environmentally responsible and capable of
going 125 miles per hour, consistently. It can hit a speed of 60 mph
in 5.8 seconds, equivalent to the performance of a gasoline-powered
V8 sports sedan, he said.

Entrepreneurs across Silicon Valley are starting all sorts of green
companies, from solar to biofuel to geothermal outfits, because they
see a potentially vast market for alternative energy amid rising oil
prices and increasing worries about global warming.

Silicon Valley money is backing an array of green-car projects that
include little-known upstart companies such as Aptera Motors Inc. and
Phoenix Motorcars Inc., both southern California companies. Tesla
Motors Inc., the high-profile company that is close to shipping a
$98,000 electric sports car, has raised $105 million from investors,
including VantagePoint Venture Partners, Technology Partners, and
Draper Fisher Jurvetson.

Former tech executive Shai Agassi, formerly the products chief at
German software behemoth SAP AG, announced last year that he was
turning his energies toward electric cars. Mr. Agassi, who runs
Project Better Place, a start-up based in Silicon Valley, has raised
$200 million for a venture that would sell electric cars designed by
auto makers such as France's Renault SA and set up a network of
stations where drivers could charge or replace batteries.

When his company first invested in Tesla two years ago, "I think
people were really questioning, 'Would we ever have electric cars?
Would they be viable?"' said Stephan Dolezalek, a managing director
at VantagePoint Venture Partners. Now, he says, "it's no longer about
will we, it's about when." Vantage Point has invested in Mr. Agassi's
new company.

Venture-capital concerns are searching for new sources of profit as
it has become tougher to take public traditional technology
companies, such as business-software and telecom companies, after the
collapse of the dot-com stock boom. Kleiner has said about a third of
its money is going into green-tech start-ups.

Big auto makers are rushing to develop their own electric cars, and
it would be an embarrassment to them if they are beaten to the market
by a start-up. General Motors Corp. has a working prototype of its
Concept Chevy Volt and will hype its progress this week. Toyota Motor
Corp. will show its plug-in hybrid based on the Prius, while Chrysler
LLC will unveil three battery-powered concept cars.

Mr. Fisker believes his company is a couple of years ahead of bigger
rivals because the design of the car has been finalized. "The car
we're showing in Detroit is not your usual show car; it's actually a
preview of the production car you can buy," Mr. Fisker said.

The Karma, Mr. Fisker said, will use lithium-ion batteries, the
most-promising next-generation energy-storage technology for
automotive use so far. Some of those batteries, however, have been
found to overheat. In 2006 and 2007, reports surfaced that
lithium-ion batteries for laptops and cellphones were catching fire,
leading to several recalls.

Mr. Fisker wouldn't say what kind of lithium-ion battery the Karma
will use, but he said safety concerns have all been "resolved."

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Felix Kramer fkramer@...
Founder California Cars Initiative
http://www.calcars.org
http://www.calcars.org/news-archive.html
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