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Feb 28, 2012

RMI Spinoff Bright Automotive Dies, But the Ideas Behind It Remain a Force

 

The regrettable demise of RMI spinoff Bright Automotive is an old business story—the struggles of start-ups in tough economic times—far more than it represents a failure of Bright’s innovative business model or technology.

Bright drew interest from companies ranging from Google to General Motors, weathered the market crash of 2008, and lasted 39 months through a Department of Energy loan process before deciding to shut down. Bright, which said Tuesday it opted against private capital from China, said it received four “near final” conditional commitment letters from DOE during that time, once being told in 2010 that it would get its loan “within weeks, not months.” This loan never materialized.

Bright, with roots in RMI and Chief Scientist Amory Lovins’ principles embodied in the award-winning Hypercar concept of the 1990s, spun off from RMI in 2008. It aimed to make a lightweight plug-in hybrid fleet vehicle and to spread a revolutionary approach to making superefficient autos. The IDEA service van achieved more than 30 miles of all-electric range and 35 miles per gallon in standard hybrid mode, saving companies 18 cents per mile.

John Waters, former vice president of transportation at RMI who played a key role in starting Bright, said the business plan was firmed up in 2007 through a consortium that involved Google, the Turner Foundation, Alcoa, Johnson Controls and RMI. “As Bright began to come together, it just seemed to crystallize through RMI’s incredible connections to get enough interested parties to rally around changing the world” through a strong, innovative business plan, Waters told me last week in a conversation about RMI’s upcoming 30th anniversary. “Amory’s vision in lightweighting and electrification in transportation … (as a) solution to U.S. oil use was now embodied in a solution set for the U.S. market.”

Bright launched in January 2008. “Until September ’08, we were carrying out the mission,” said Waters, who was the company's first CEO. Investor interest was on track. Then U.S. markets crashed and credit froze as the housing bubble burst and the country entered its worst economic slump since the Great Depression.

In Detroit, where I at the time was the editor overseeing business and political coverage for the Free Press newspaper, the auto industry was in a deep tailspin even before the market crash. When gasoline prices topped $3.50 a gallon that May, operators in General Motors’ OnStar tracking center realized that many owners were simply not driving their gas-guzzling SUVs and pickup trucks. Auto sales hit a 16-year low that July and would continue falling for months. Desperate for cash and likely seeing the writing on the wall that led to bankruptcy a year later, GM executives approached both Ford and Chrysler about possible mergers.

In short, it was a tough time to be starting an auto company. Yet on the power of its innovative approaches, Bright survived. With private capital largely frozen, it applied for a $450 million loan from the DOE. It won a $1.4 million U.S. Army contract. In 2010, it won a $5 million investment from post-bankruptcy GM’s new venture capital arm—and kept waiting for the DOE loan. That loan program has been a disappointment—and DOE financing of clean energy of all types has come under partisan political scrutiny since last summer’s bankruptcy of solar equipment maker Solyndra, which had a DOE loan guarantee under a different program.

Bright executives wrote Tuesday in a letter to Energy Secretary Steven Chu that the advanced auto technology loan program “has executed under $50 million of transactions since October of 2009. Going back to the creation of the program, only about $8 billion of the approved $25 billion has been invested.” Earlier this month, Chrysler expressed frustration with the program and withdrew its application. Bright wanted domestic backing, company executives wrote.

“We made it clear we were an American company, with American workers developing advanced, deliverable and clean American technology. We unfortunately did not aggressively pursue an alternative funding path in China as early as we would have liked based on our understanding of where we were in the DOE process.” Bright, based in Anderson, Indiana, with research facilities in Rochester Hills, Michigan, had hoped to employ about 200 people in Michigan and 1,000 more at the production site in Indiana.

The principles and technology behind the Bright IDEA tracing back to RMI’s Hypercar are gaining traction in the industry. In 2010, three automakers—BMW, Volkswagen, and Audi—announced volume production by 2013 of the kinds of carbon-composite electrified autos RMI and Lovins have long advocated. Other automakers, including General Motors and Ford, are pushing weight savings in their vehicle offerings, which also include electric and hybrid models. A coalition of suppliers and researchers has been formed at the Center for Automotive Research at the University of Michigan to push lightweighting even further.

This kind of advancement is critical to moving the U.S. away from its oil addiction—the use of 13 million barrels of oil a day for transportation at a cost of $2 billion. That oil dependence also incurs hidden costs totaling roughly $1.5 trillion a year, or 12 percent of GDP—plus untold costs to human health and the environment.

Bright’s technological breakthroughs were intended to shift the transportation sector toward efficient and economical solutions as soon as possible. That is why the company offered advanced battery packs, plug-in hybrid and electric vehicle conversions, hybrid system development consulting, and alternative powertrain modeling simulations in addition to the IDEA.

RMI’s spinoff still will have an impact. Bright’s legacy is a disruptive business model, technologies, and integrated design in automaking. Other enterprises inevitably will seize the opportunity in the emerging new energy economy and changing auto industry.

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Showing 1-2 of 2 comments

February 29, 2012

Based on the fact that Global Warming is a worldwide phenomenon, it is a pity that the Chinese did not take over. They are rapidly increasing their fleet and very entrepreneurial. In China, this approach should fly - and the benefits from reduced pollution would benefit the entire world.
So, RMI, let the Chinese build this wonderful car and lead the world into the future.


February 29, 2012

DOE just isn't bright enough.

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