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Electric Vehicle Companies Tap Silicon Valley Cash

Tesla Motors plans to use a former Toyota-GM joint venture factory in California to build its Model S electric sedan. (AFP/Getty Images)

Last of a three-part series

Detroit has been at the center of the country's auto industry ever since Henry Ford rolled his first Model T off the assembly line in 1908.

But as hard times have fallen on America's Rust Belt, there's a new region hoping to give Detroit a run for its money. Clean-tech entrepreneurs in Silicon Valley are investing in the emerging electric car industry.

Tesla Motor's battery factory in Palo Alto, Calif., is so clean that it looks more like a sterile biotech lab.

"There's a lot of secret stuff going on here. Generally, we restrict access pretty carefully," says JB Straubel, the chief technical officer for Tesla Motors and one of the founders.

The company is best known for its Roadster sports car, which does 0 to 60 miles per hour in less than four seconds -- making electric cars seem sexy. A range of over 200 miles has made Tesla's batteries the benchmark for electric vehicles.

But it all comes at a price: A stripped-down Tesla Roadster starts at $109,000. Each battery pack looks like a big black box and weighs about 1,000 pounds.

Batteries For Sale, New Hiring

Tesla builds its own battery packs in California and sells them worldwide. The company has plans to ramp up its manufacturing: This spring Tesla took over a shuttered joint venture Toyota ran with General Motors called New United Motor Manufacturing Inc., also known as NUMMI. Tesla plans to use the facility to build a more affordable electric vehicle -- the cheaper, longer-range Model S sedan.

In the midst of high unemployment in Silicon Valley, Tesla is hiring with the goal of expanding from 800 to 2,000 employees in the next few years.

Tesla has received an infusion of cash from Elon Musk, the company's co-founder and CEO, who made his fortune helping to start PayPal. Other venture capitalists are also chipping in, including Google.

Google Dollars

"We think EVs offer so many advantages in terms of environment, economy and security that we thought we should put some of our investor dollars into those kinds of companies," says Dan Reicher, the director of Google's climate change and energy initiatives.

Google has EV charging docks on its sprawling campus in Mountain View, Calif.

"We've built a fleet of plug-in cars," Reicher says. "These are Toyota Priuses and we converted them after market."

Google has essentially turned the hybrid Prius into a plug-in so that employees can charge their cars at work. It's this kind of garage-startup mentality that has given Silicon Valley its innovator reputation.

"What's exciting here at Google is just some very, very smart engineers who say, 'Well, we can do that. You got a problem, we'll figure out a way to solve it. You got an opportunity, we'll engineer a way to take advantage of it,'" Reicher says.

Government Investment

It's not just venture capital that's flowing into EV-related companies. The Obama administration is spending $2.4 billion to revitalize electric cars.  The company ECOtality has received $100 million in federal funding to help invigorate the market by giving away free chargers in major cities.

"These are no longer your father's chargers, so to speak," says Jonathan Read, CEO of ECOtality. "These chargers are very intelligent. They have all the telecommunications capability in them. And all of this is based on a big network of chargers being interconnected talking to each other and being able to talk to the utilities."

New Jobs In The EV Sector

ECOtality just moved its company headquarters from Arizona to San Francisco to be closer to the action. And like many other companies in this sector, ECOtality is hiring. The company just announced a deal to install its charging docks at some BP gas stations.

Of course, plenty is happening outside of Silicon Valley, including advanced battery research in Boston and Wisconsin. But the new automobile of the 21st century is likely to benefit from the culture of Silicon Valley, where people are used to taking a chip, a cell or an idea and working on it until it becomes something big.

Copyright 2014 KQED Public Media. To see more, visit http://www.kqed.org.

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Transcript

LINDA WERTHEIMER, host:

Another reason why corn prices are at new highs: ethanol. The low-carbon fuel is added to gasoline to power cars. But increasingly, electric cars seem like the future of the industry, and it's not clear what that means for Detroit. The city has been at the center of the American auto industry ever since Henry Ford rolled his first Model T off the assembly line in 1908. Now some high-tech companies in Silicon Valley want their region to become the hub of the emerging electric car industry.

From member station KQED in San Francisco, Andrea Kissack has more.

ANDREA KISSACK: I'm walking through the battery factory of Tesla Motors in Palo Alto. This is the cleanest factory I've ever seen. It looks more like a sterile biotech lab.

Mr. JB STRAUBEL (Chief technical officer, Tesla): There's a lot of secret stuff going in here. Generally, we restrict access pretty carefully.

KISSACK: That's JB Straubel. He's the chief technical officer at Tesla and one of the founders. The company is best known for its Roadster sports car, which does 0 to 60 in less than four seconds, and has made electric cars seem, well, sexy. A top range of 240 miles has made Tesla's batteries the benchmark for electric vehicles. But it all comes at a price. A stripped-down Tesla Roadster starts at $109,000.

Straubel points out one of Tesla's battery packs at a nearby work station.

Mr. STRAUBEL: Looks like a big black box. It's not very exciting on the outside, but that's what powers the Roadster.

KISSACK: It's big. How heavy is it?

Mr. STRAUBEL: It's about 1,000 pounds. And we better get out of the way here. We're going to get run over by a forklift.

KISSACK: Tesla is not only building battery packs for its own cars, but selling them worldwide.

Mr. STRAUBEL: Kind of neat to be doing manufacturing here in California and then exporting overseas.

KISSACK: And the company has plans to ramp up its manufacturing. Tesla Motors has just taken over a shuttered GM Toyota plant about 20 miles from here, where it will build a more affordable EV - the cheaper, longer range Model S Sedan.

In the midst of high unemployment in Silicon Valley, the company is hiring, hoping to expand from 800 to 2,000 employees over the next few years. Tesla has received an infusion of cash from cofounder and CEO Elon Musk. He made his fortune helping to start PayPal. Other venture capitalists are chipping in, including Google.

Dan Reicher is one of the leaders of Google's Green Energy Team.

Mr. DAN REICHER (Director, Google's Green Energy Team): We think EVs offer so many advantages in terms of environment, economy and security that we thought we should put some of our investor dollars into those kinds of companies.

KISSACK: I met up with Reicher at the company's EV charging docks on the sprawling Google campus in Mountain View.

Mr. REICHER: We've built a fleet of plug-in cars. These are Toyota Priuses, and we converted them after market.

KISSACK: Google has essentially turned the hybrid Prius into a plug-in so that employees can charge at work. It's this kind of garage startup mentality that has given Silicon Valley its innovator reputation.

Mr. REICHER: What's exciting here at Google is just some very, very smart engineers who say, well, we can do that. You got a problem? We'll figure out a way to solve it. You got an opportunity? We'll engineer a way to take advantage of it.

KISSACK: It's not just venture capital that's flowing into EV-related companies. The Obama administration is spending $2.4 billion to revitalize electric cars. The company ECOtality has received 100 million federal dollars to help invigorate the market by giving away free chargers in major cities.

Mr. JONATHAN READ (CEO, ECOtality): These are no longer your father's chargers, so to speak.

KISSACK: Jonathan Read is CEO of ECOtality. He just moved his company headquarters from Arizona to San Francisco to be closer to the action.

Mr. READ: These chargers are very intelligent. They have all the telecommunication capability in them. And all of this is based on a big network of chargers being interconnected, talking to each other and being able to talk to the utilities.

KISSACK: Like many other companies in this sector, ECOtality is hiring. In fact, the company just announced a deal to install its charging docks at some of BP's gas stations. Of course, plenty is happening outside of Silicon Valley, including advanced battery research out of Boston and Wisconsin. But the new automobile of the 21st century is likely to benefit from the culture of Silicon Valley, where people are used to taking a chip, a cell, an idea and working on it until it becomes something big.

For NPR News, I'm Andrea Kissack.

WERTHEIMER: You can find out more about electric cars at our website, npr.org. Transcript provided by NPR, Copyright NPR.

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