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Never Forget – “Freedom is Not FREE”.   Please read this article and HONOR those who have served, are serving and will serve their country.

Proud American

Memorial Day: Reflections of an Army widow

Bauguess family

“Freedom is never more than one generation away from extinction.

 We didn’t pass it to our children in the bloodstream. It must be fought for, protected, and handed on for them to do the same.”

—President Ronald Reagan

May is traditionally a month of delight and expectation. Summer is drawing near, the school year will end soon, pools begin to open, maybe a beach trip is planned. I look forward to all of that. But, for me and my family, an underlying twinge of pain, sadness and loss invades our hope and anticipation of an otherwise joyful month.

On May 14, 2007, my world flipped upside down. My husband, Army Major Larry Bauguess, was serving in his dream job, deployed to Afghanistan, as an operations officer in the 82nd Airborne Division. Larry was a warrior and a gentleman and, true to his roots, he was participating in a peace meeting in Pakistan.

By all accounts, the historic meeting was successful. The Afghani, Pakistani and U.S. leadership had reached an agreement. The leaders from all three sides shook hands, exchanged coins and posed for pictures. A short while later, a uniformed Pakistani Frontier Guardsman, who had the mission to provide security for our troops, instead raised his rifle, took aim and opened fire. Larry stood between the shooter and his men. On his feet, he protected his men and took the brunt of the assault.

Our tiny daughters Ryann and Ellie and I were in our home at Fort Bragg, North Carolina, when the notification team came to deliver the heartbreaking news. The sound of the doorbell startled me. I remember walking to the door on that beautiful May afternoon expecting to see a little one on our front porch wanting to play with my girls. When I looked through the peephole, I saw something entirely different.

Through the tiny glass tunnel, I saw a man dressed in army greens. As I pushed away from the door, blood rushed to my face and a cold chill raced up my spine. When you’ve been in and around the Army for as long as we have, you know what it means when a man dressed in an army-green suit with a chest full of ribbons comes to your house during a time of war.

Since that day, my daughters and I have had quite a journey of heartache and pain, but we have had joyful moments, too. We work very hard to strike a balance. We lean on our faith. We follow Larry’s example.

We miss him. Every. Single. Day. We feel his void in everything we do, even 10 years later. But, we have chosen to drive on in a manner that, we hope, has honored him. If we didn’t do that, if we had quit, if we had given up on life or felt sorry for ourselves even for a minute, Larry Bauguess would come down here and say, “I didn’t give my life so you could stop living yours.” He would tell us to drive on. He would say, “Live your life. The best way to honor me is to get back out there and continue to live.”

I know he would say that to me, and I would say the exact same thing to him. So, we drive on. We live our lives, and we live in a way that we hope brings honor to him.

So, this Memorial Day, enjoy the pool. Enjoy the beach trip. Relish in the fact that the school year is almost over and summer is right around the corner. But, please, remember those intrepid Americans who, for decades and decades, have given that last full measure of devotion. Remember those who have given their lives to provide the blanket of freedom that allows us to live free. Never forget their sacrifice. Pray for the families left behind. And always remember that, though it absolutely is worth fighting for, freedom isn’t free. 

Wesley Bauguess is an Army veteran and widow. Her book, God, Country, Golf: Reflections of an Army Widow, releases from Westbow Press on May 14, 2017, the 10th anniversary of her husband Larry’s courageous sacrifice in service.

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 “Corporate Governance”, “Early Warning Signs” and “Maximizing Value” for under-performing/distressed venture backed Intellectual Property companies that I presented at Stanford University. This video will be used in the Stanford Engineering School via STVP (Stanford Technology Ventures Program) and SCPD (Stanford Center for Professional Development).                      by Steven R. Gerbsman

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San Francisco, May, 2017
Below is a video taped  presentation on “Corporate Governance”, “Early Warning Signs” and “Maximizing Value” for under-performing/distressed venture backed Intellectual Property companies that I presented at Stanford University.  This video will be used in the Stanford Engineering School via STVP (Stanford Technology Ventures Program) and SCPD (Stanford Center for Professional Development).

Aside from Gerbsman Partners core business of maximizing value utilizing its proprietary “Date Certain M&A Process”, Gerbsman Partners has been assisting equity and senior lenders “Identifying the Early Warning Signs & Maximizing Value for Underperforming and Distressed Portfolio companies”.

By background, since 2001, Gerbsman Partners has focused and been involved in maximizing enterprise and Intellectual Property value for 98 venture capital/private equity backed and /or senior lender financed, technology (software, mobile, telecom, optical networking, internet, digital commerce, cyber-security, etc.), life science, medical device, solar, fuel cell and low tech companies through Gerbsman Partners proprietary “Date Certain M&A Process”. Gerbsman Partners has also terminated/restructured over $ 810 million of prohibitive real estate and equipment leases, sub-debt and creditor issues. Gerbsman Partners also assists US, European and Israeli technology, digital marketing, and medical device companies with strategic alliance development, M&A and licensing and distribution of proprietary content.

Gerbsman Partners has offices and strategic alliances in San Francisco, Orange County, McLean, VA, New York City, Boston, Europe and Israel.

Identifying Early Warning Signs & Maximizing Value of Distressed Portfolio Companies – Presentation at Stanford University by Mr. Steven Gerbsman.

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Please visit the attached link to view the program. Click here.
I also was the moderator for a panel on the same subject that consisted of Marc Cadieux, Chief Credit Officer of Silicon Valley Bank, Peter Gilhuly, Esq., Partner at Latham & Watkins and Michael Scissions, Entrepreneur/CEO and former head of Facebook Canada.
Please review and hopefully the information will assist in “Identifying the Early Warning Signs” and provide “food for thought”.

GERBSMAN PARTNERS 415 505 4991
Email: steve@gerbsmanpartners.com
Web: www.gerbsmanpartners.com
BLOG of Intellectual Capital: blog.gerbsmanpartners.com

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The NY Yankees retired the “Catain’s” number today.  As always, he handled it with class, professionalism and demonstrated his love for NY fans and the Yankees.

I have said previously, I saw DiMaggio, Mantle, Ford, Rizzuto, Berra, Maris, Richardson, Munson, Mercer, etc. play the game.  They were the heroes of my youth.  However, none were the leader, all around player and overall good person like the “Captain”.

So here’s to a true champion.  With respect.  Always a New York Yankee

 

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San Francisco May, 2017

Gerbsman Partners – Maximizing Enterprise Value

Gerbsman Partners focuses on maximizing enterprise value for stakeholders and shareholders in under-performing, under-capitalized and under-valued companies and their Intellectual Property, as well as maximizing value for Intellectual Property Patents. Since 2001, Gerbsman Partners has been involved in maximizing value for 98 technology, medical device, life science, solar, fuel cell, cyber security and digital marketing companies and their Intellectual Property and has restructured/terminated over $810 million of real estate executory contracts and equipment lease/sub-debt obligations. Since inception in 1980, Gerbsman Partners has been involved in over $2.3 billion of financings, restructurings and M & A Transactions.

Gerbsman Partners has offices and strategic alliances in San Francisco, New York, McLean, VA/Washington DC, Orange County, Boston, Europe and Israel.

Technology – IP

Software

  • Emergent Game Technologies, Inc. – Licensed and supported 3D/game software.
  • Capital Thinking – Enterprise Risk Management (ERM) platform, a credit and risk management software solution for the financial services industry.
  • Cesura – Web and on demand business software.
  • Conformia Software Inc. – Software solutions for highly regulated process industries – Life Science.
  • deNovis – Enterprise softwa re for government health and health insurance industry.
  • Aperion Inc. – Software.
  • Gentiae Inc. – Real-time fully automated processing of cardiac safety input and core lab operations. The system offers a comprehensive, real time web portal for sponsor and site access.
  • Banquet – Interactive sports entertainment.
  • ID Engines Inc. – Role-based access control (RBAC) across enterprise networks.
  • InDplay Inc. – Online, B2B video content distribution (monetization) platform, deployed on enterprise-quality software components, served in the SaaS (software-as-a-service) model.
  • Metreo Inc. – Pricing software for manufacturers and distributors.
  • Neohapsis Inc. – IT management services platform. Zone4Play – Interactive game technology.
  • Roots Web, Inc. – Geneology software.
  • StreamSearch, Inc. – Multimedia aggregator that has created a unique solution for indexing, locating, promoting, and distributing rich media on the Internet.
  • Technion University – Technology patents
  • Teranode Corporation – Business intelligence and lab automation solutions for the Life Science market.
  • USA Democracy, Inc. – Direct, verifiable, credible communications between elected representatives and their constituents through its non-partisan legislative-based website.
  • Utility.com, Inc. – Multi-utility eCommerce/eCRM technology, Web-based energy management technology.
  • Vcommerce, Inc. – Developed, deployed, and operated fully integrated, end-to-end supply chain execution systems and direct fulfillment infrastructure.
  • Intelectron, Inc. – Commercial lighting technology.
  • Skunk Technologies – Java based software
  • Bell & Howell – Information Intellectual Property/Patents

Food and Beverage Industry

  • Vigilistics, Inc. – Manufacturing analytic software

Telecom

  • Dialpad, Inc. – Web-to-phone service.
  • Simpler Networks, Inc./Hercules Technology Growth Capital – Telco software – a matrix switch platform that sits within the Telco’s central office (CO) or street cabinets. Developed to allow for universal access to any service, the system’s protocol-transparent design allows it to be placed in front of any existing or future access gear that delivers services over the local loop

Storage

  • Cornice Inc. – Storage and flash controllers.
  • PhaseMetrics Inc. – Storage systems manufacturer.
  • Plasmon, Inc. – Data archival storage technology

Networking/Optical Networking

  • CipherMax, Inc. – Storage networking.
  • Private Networks, Inc. – Broadband multicast delivery system utilizing digital satellite technology. The technology has universal applicability to many industries for distribution of high-band data and video.
  • Teak Technologies Inc. – Internet switching and gateway networking products.
  • Zeus Communications, Inc. – Hardware architecture of 10 Gbps IPSec VPN and firewall in a single board.
  • Optivia, Inc & Hercules Technology Growth Capital – Optical transport systems.
  • Princeton Lightwave, Inc. – Optical networking technology
  • T-Networks, Inc. – Optical networking components.
  • Transparent Networks, Inc. – Wavelength Selective Switch, a high performance large scale Photonic cross-connect functional prototype, detailed design and simulation validation of a Light Path Exchange with integrated DWDM, an HDTV display mirror array high level design and simulation, proprietary and unique MEMS design and validation engineering tools.
  • Network Photonics, Inc.
  • Cambridge NanoTech, Inc. – Materials Science company that developed high Performance turnkey equipment for Atomic Layer Deposition (“ALD”).

Mobile

  • eBiz mobility – Mobile business payment
  • YPS Software – ASP and software vendor for the PC and mobile phone industries, Mobile Entertainment Centre.
  • Teleflip – Mobile messaging.

Media/Advertising/Internet

  • Active Response Group Inc. – On line marketing company.
  • Akimbo Inc. – Monitizing on line media.
  • Competition Accessories, Inc. – Online direct marketing.
  • Gallery Player Inc. – Provider and distributor of high-value, rights managed high definition imagery for high definition televisions.
  • MeMedia Inc. – Online advertising solutions provider and ad network that delivers contextually and behaviorally targeted advertisements across a multi-modal network of websites and desktop applications.
  • MyWire Inc. – Paid content and advertising.
  • NebuAd, Inc. – Online advertising model. Next-generation digital media technology and solutions.
  • Syncapse, Inc. – Provider of technology-enabled social performance management services for global enterprise clients with multiple B2C brands.
  • Optify, Inc. – Software-as-a-Service (SaaS) provider of digital marketing suites company, its Assets and Intellectual Property.

Holographic & Biometric Technology – Laser Manufacturer

  • Aprilis, Inc./Dow Corning – Holographic Data Storage Drives and Biometric Security
  • Raydiance, Inc. – Manufacturer of precision solutions laser technology

Security

  • NeoScale Inc. – Storage encryption and key management solution for organizations securing information stored on tape and disk media.
  • Oviso Inc. – Semi conductor manufacturing equipment.
  • SciCortex, Inc. – Manufacturer of high performance computers.

Medical Device

Cardiovascular, Vascular, Endoscopy

  • Cardiomind Inc. – Stent delivery platform.
  • OmniSonics Medical Technologies Inc. – Vascular disease IP.
  • InnerPulse Inc. – Cardiac rhythm management (CRM) medical device company.
  • Myocor Inc. – Developing innovative cardiac reshaping devices to treat functional mitral regurgitation (FMR) and left ventricular (LV) dysfunction, both of which are significant in the progression of congestive heart failure (CHF).
  • NDO Surgical, Inc. – Flexible endoscopy technologies that enable surgical procedures through the body’s natural openings.
  • Viacor Inc. – Cardiac implant device for the treatment of functional mitral regurgitation.
  • XTENT Inc. – Customizable drug eluting stent systems for the treatment of cardiovascular disease.
  • GluMetrics, Inc. – Glucose monitoring medical device company
  • NeoGraft Technologies, Inc. – Acquired Vascular Patents from Kips Bay Medical
  • Palmaz Scientific, Inc. – Medical technology company
  • InterValve, Inc. – Medical devices for structural heart market

Spine

  • Applied Spine Technologies Inc. – Screw based dynamic stabilization system validated with Class 1 clinical data
  • AxioMed Spine, Corp. – Developed Freedom technology, with the goal of restoring spinal function to patients by adhering to the natural biomechanics of the spine.

Respiratory

  • Emphasis Medical Inc. – Endobronchial valves for the treatment of heterogeneous emphysema.
  • Uptake Medical, Inc. –  developing innovative, therapeutic bronchoscopic devices to treat advanced heterogeneous emphysema and lung cancer.

Orthopedics

  • NovaLign Orthopedic Inc. – Long bone fracture, intramedullary nail technology.

Opthomology

  • Optobionics – Retinal degeneration.
  • Refractec, Inc. – Radiofrequency (RF) device called ViewPoint CK System, used to perform NearVisionSM CK (Conductive Keratoplasty) treatment

Obesity

  • Satiety Inc. – Obesity product

Life Science

  • Pluristem, Inc. – Stem cell research – Israel company
  • Igenica Biotherapeutics, Inc.. – harnessing the natural tumor microenvironment to deliver a pipeline of high-impact antibody-based cancer therapeutics
  • Pegasus Biologics Inc. – Developed and is commercializing a revolutionary bioscaffold comprised of highly organized collagen, sourced from equine pericardium that encourages the healing process by addressing the demands of a challenging biological environment.
  • Radiant Medical, Inc. – Endovascular therapeutic cooling.
  • Valentis, Inc. – Biotechnology company with small molecule, antibody, protein, gene and manufacturing assets.
  • Relypsa, Inc. – Acquisition of BioPharmaceutical Patents and Intellectual Property

Energy – Solar & Fuel Cell

  • Nanosolar
  • AQT Solar
  • SVTC Solar
  • Clear Edge Power, LLC – sold to Doosan in Korea

Steven R. Gerbsman
Principal
Gerbsman Partners
steve@gerbsmanpartners.com

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Steven R. Gerbsman, Principal of Gerbsman Partners and Kenneth Hardesty, a member of Gerbsman Partners Board of Intellectual Capital announced today their success in maximizing value for the assets and Intellectual Property of Igenica Inc.  Igenica Inc. focused on harnessing the natural tumor microenvironment to deliver a pipeline of high impact anti-body-based cancer therapeutics.

Gerbsman Partners provided Financial Advisory leadership to Igenica Inc., through    its proprietary Date Certain M&A Process, facilitated the sale of the business unit’s assets and its associated Intellectual Property and closing of the sale. Due to market conditions, the board of directors of igencia Inc. made the strategic decision to maximize the value of the business unit and Intellectual Property. Gerbsman Partners provided leadership to the company with:

  1. Business Consulting and Investment Banking domain expertise in developing the strategic action plans for maximizing value of the business unit, Intellectual Property and assets;
  2. Proven domain expertise in maximizing the value of the business unit and Intellectual Property through a Gerbsman Partners targeted and proprietary “Date Certain M&A Process”;
  3. The ability to “Manage the Process” among potential Acquirers, Lawyers, Creditors, Management and Advisors;
  4. Communications with the Board of Directors, senior management, senior lenders, creditors, vendors and all stakeholders in interest.

About Gerbsman Partners

Gerbsman Partners focuses on maximizing enterprise value for stakeholders and shareholders in under-performing, under-capitalized and under-valued companies and their Intellectual Property. Since 2001, Gerbsman Partners has been involved in maximizing value for 98 technology, medical device, life science, solar, fuel cell, cyber  security, consumer and digital marketing companies and their Intellectual Property and has restructured/terminated over $810 million of real estate executory contracts and equipment lease/sub-debt obligations. Since inception in 1980, Gerbsman Partners has been involved in over $2.3 billion of financings, restructurings and M&A transactions.

Gerbsman Partners has offices and strategic alliances in San Francisco, Orange County, Boston, New York, Washington, DC, McLean, VA, Europe and Israel.

email – steve@gerbsmanpartners.com

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The Black Swan Pushes Events to the Tipping Point-

Maximizing Enterprise Value in the upcoming Crisis

This article was published by Steven R. Gerbsman and Robert Tillman in May, 2007

and again in August, 2015.    It appears it may be “that time again”.

Please read, enjoy and “be prepared”.

Best regards,
Steve Gerbsman – Principal Gerbsman Partners

We are currently in one of the best economic times in our country’s history. The stock market is at all time highs, unemployment is at all-time lows, interest rates are low, money is plentiful and deal valuations are high and getting higher. There are, of course, many worrisome trends: terrorism, excessive government spending, trade deficits, high oil prices, immigration and over the longer term, such issues as an aging population and (possibly) global warming. Although problems and worries always exist, in historical terms, times are very good indeed.

The big questions for us as specialists in maximizing enterprise value are:

Will it end?

Yes. Of course. Even fundamentally healthy economies experience frequent and often violent corrections. The current world economy has evolved in many ways over the past decade. All large businesses are international. The primary economies of the world are very tightly linked together. Money is far more liquid and moves around the world with far less “friction” than it did in the past. The pace of technical change continues to increase. Nevertheless, we do not believe that the laws of history, and especially, the laws of human nature, have been repealed.

As always, “The more things change, the more that they remain the same.”

When will it end?

Unfortunately, no one knows the answer to this question. In historical terms, the current economic expansion has continued for a very long time and has survived numerous shocks, including war, a doubling of energy prices, natural disasters and localized economic downturns, such as the bursting of the sub-prime mortgage bubble. It appears to be “ripe” for a downturn. On the other hand, inherently unstable situations often persist for far longer than anyone could believe possible. During the 2000 Internet bubble, it seemed to us for quite some that the old rules of business no longer applied and that 25 year-old CEOs knew something us old guys did not know. When the crash occurred, we were relieved to find out that we were not so obsolete after all.

We did, however, underestimate the staying power of technically insolvent companies with broken or non-existent business models. Many of these companies had significant cash on the balance sheet (offset, of course, by significant liabilities) and investors who continued to infuse more cash far beyond the point of reason. Today, there exist immense pools of uncommitted cash, much of it in the hands of entities, such as private equity funds and hedge funds that are subject to minim al regulatory scrutiny and whose operations are obscured from the public view. In addition, the weakness of the dollar against both the Euro and the Pound Sterling makes U.S. assets a relative bargain. These factors tend to mitigate against an economic downturn. For how much longer they will continue to do so we do not know (and if we did know, we would certainly would not tell).

How will it end?

Fast, hard and unexpectedly. Two recent books shed a great deal of light on the process:

The first book, The Tipping Point by Malcolm Gladwell describes how human behavior causes events to cascade rapidly once a certain critical mass (the “Tipping Point”) has been achieved. Examples in the business world include periodic economic ?panics? and the spread of certain technologies and products, such as personal computers, iPods, cell phones, etc. It is very difficult to predict in advance when the ?tipping point? in any situation will be reached, but history has shown that, once it has been reached, events proceed very quickly.

The second book, The Black Swan: The Impact of the Highly Improbable by Nassim Nicholas Taleb describes how highly improbable, and hence unpredictable, events periodically create massive change. The title of the book derives from the observation that the existence of even a single black swan disproves the assertion that all swans are white. Historical examples include the Fall of France at the beginning of World War II, the rise of the Internet and 9/11.

There are many obvious candidates for a “black swan” event that pushes the world economy over “the tipping point” into a downturn – a war with Iran, a nuclear terrorist attack or a worldwide bird flu or small pox epidemic, but generally, it is what you do not see that gets you. We are fundamentally optimists about the long-term prospects of the world economy. In many highly measurable ways, the wor ld really is improving, driven by technological innovation, a lowering of barriers to trade and increasing economic integration. Nevertheless, we are old enough to have lived through many “bumps” along the road and know that such discontinuities will always occur. We believe that we will see a significant economic event sometime over the next 12-18 months, either localized to a particular sector or geographic region or globally.

Our Advice?

Before such an event occurs:

As a board member, investor or stakeholder:

  1. Implement tight cash flow, receivables and inventory reporting so that you are alerted to problems early.
  2. Focus on the control, preservation and forecasting of CASH on a weekly, monthly and quarterly basis.
  3. Require “bottoms up” forecasting for all aspects of revenue and expense. Have the CEO and CFO defend ALL numbers.
  4. Hold the CEO responsible and accountable for Performance. If you are off the business plan/forecast, re-forecast based on the reality of “what is” today.
  5. Communicate frequently with all parties at interest. Check that the CEO is providing leadership, motivation and morale to the management team and employees.
  6. Review all companies in your portfolio. Identify and define action plans to fix weaknesses now.
  7. Utilize professional resources to assist in maximizing enterprise value, when appropriate.

When such an event occurs:

  1. Face up to reality and act quickly. When things are going bad, waiting seldom improves them. We have never seen a board of directors act too quickly when faced with a crisis. We have all too frequently seen a board act slowly or not at all.
  2. Call for assistance early. The earlier professionals can get involv ed in the process, the better the potential outcome in maximizing enterprise value. Many times boards request assistance only after a company has run out of cash. Many more options exist to maximize enterprise value if a company has some running room.

About Gerbsman Partners

Gerbsman Partners focuses on maximizing enterprise value for stakeholders and shareholders in under-performing, under-capitalized and under-valued companies and their Intellectual Property. Since 2001, Gerbsman Partners has been involved in maximizing value for 98 technology, medical device, life science, digital marketing/social commerce, fuel cell, consumer and solar companies and their Intellectual Property and has restructured/terminated over $810 million of real estate executory contracts and equipment lease/sub-debt obligations. Since inception, Gerbsman Partners has been involved in over $ 2.3 billion of financings, restructurings and M&A transactions.

Gerbsman Partners has offices and strategic alliances in San Francisco, New York, Boston, Orange County, VA/DC, Europe and Israel.

GERBSMAN PARTNERS
Email: steve@gerbsmanpartners.com
Web: www.gerbsmanpartners.com
BLOG of Intellectual Capital: blog.gerbsmanpartners.com

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Will Monster Electric Vehicle Demand In China Impact Oil Demand?

By Robert Rapier

A year ago Bloomberg wrote an article called Here’s How Electric Cars Will Cause the Next Oil Crisis. The gist was that if global electric vehicle (EV) sales continued to grow at 60% annually, by 2023 that could displace two million barrels per day (BPD) of global crude oil demand. Such a decline in oil demand, they speculated, could cause another oil price crash.

As someone who is keenly interested in developments in the energy markets, I took a close look at their analysis.

There were two significant problems with their outlook. The first is that it ignored the underlying annual growth rate in crude oil demand, treating it as a static number. In other words, they assumed that in 2023, EVs would reduce oil demand by two million BPD below today’s level.

In fact, since they wrote that article, global demand has risen by another 1.6 million BPD, and is forecast to rise another 1.3 million BPD this year. So at the end of this year, global crude oil demand will already be nearly two million BPD higher than in their starting assumption. So, at this end of this year, crude oil demand will be four million BPD higher than the assumption they made for 2023.

The second problem is that a 60% annual growth rate would be challenging to sustain for very long. My expectation was that those explosive growth rates would inevitably slow as more EVs hit the market.

Indeed, global sales figures for 2016 were impressive, but they failed to match the blistering pace of 2015. According to InsideEVs.com, the largest independent website devoted to electric vehicle news, global sales numbers of EVs in 2014, 2015, and 2016 were 320,713, 550,297, and 777,497 respectively. This represents a growth rate from 2014 to 2015 of nearly 72%, but that rate of increase fell to 41% from 2015 to 2016.

Global EV sales slowed even more in late 2016 and early 2017. November 2016 sales were only 29% higher year-over-year (YOY), but then December’s YOY number dropped to 19%. January’s came in at less than 13% above January 2016. So I asked Jay Cole, of InsideEVs, if he expects the slowdown to continue. He explained:

There have been a couple of short term drivers that slowed growth late in 2016 and especially in January/early February of 2017.
The first being the wait on the new/longer range Renault ZOE in Europe (huge range gain for basically the same price) which cratered Renault sales, and is just bumping February sales now; a void while waiting on the new Prius Prime, and a lack of follow-through production on some BMW models (people won’t buy the old once they know the “new” is en route); but more specifically China has played a big/the biggest role, as its sales outweigh the global registrations.
China had a lot of cheaters/fraud in 2016…and as a result it said it was going to review and replace its “eligible” plug-in vehicle and OEM list for 2017.
Naturally red tape ensued, and the result was that the “new” list didn’t actually get approved/published approved until mid-February (and if you aren’t on the list…no incentives for you)…so we saw huge declines in China (see story on January Chinese sales here,  BYD specifically had its throat cut in China in January with a 90% percent drop). The list was finally issued mid-February, so the numbers did rebound late (up 55%), but still the list is a work in progress and is only half the size it was previously.
When you are talking global EV sales, the “China effect” is too large. There are China EV sales, and “RoW Sales” (rest of world). And because China basically “tells” the market what it will buy, big gains for 2017 are mostly baked in.
For 2017, China says it is looking for 800k sales overall (passenger & buses), and a 70% gain in passenger EV sales (and even though the yearly target is always 25% or so higher than reality – it is still a lot)…so if you try to make a month-to-month line chart globally, China will shortly be dropping some 50-60k months now it has its house in order, meaning we will see multiple 6 digits months on the global level this year, and almost every month needs a (*) asterisk for ‘what is China up to’.
Depending on the pent-up demand/production arrives after the China incident, we are likely to see a “monster” number from the region shortly, meaning there will suddenly be a ~100% global increase in EV sales in one of the next 2-3 months.

In addition to providing some clarity around the seeming slowdown in sales, I think there are two more takeaways from Jay’s comments. First, EV sales are still being driven by incentives. Take the incentives away, and sales fall. So it’s still not clear what a sustainable EV growth rate may be in the absence of incentives.

Second, the type of EV sales in China is not at all what Bloomberg envisioned in its scenario. Bloomberg estimated the impact of EVs replacing gasoline engines. That is not what is taking place in China. Automobile sales are exploding across the board. Total car sales in China increased by more than three million from 2015 to 2016. Most of those were gasoline-powered. The Bloomberg scenario requires both 60% EV demand growth, while at the same time displacing demand for gasoline engines.

Thus, Bloomberg’s projections look even less likely today than they did a year ago – despite EV sales that are stronger than recent numbers suggest. As a result, there is still little risk that electric vehicles will significantly impact crude oil demand in the foreseeable future.

Follow Robert Rapier on Twitter, LinkedIn, or Facebook.


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Cash Back for your Internet Bill

I just had to send my cable company a check for $131.87.

I don’t even have a television, but I still have to pay them because I need my Internet connection.

Writing that check every month used to really burn my biscuits.

But that all changed when a construction worker friend clued my in on a virtually unknown cashback program that sends me checks every 90 days.

Now I get cash back from the cable company that keeps my Internet on. PLUS I earn money for using websites like Netflix, Facebook, and Google.

Any American citizen can sign up for this lucrative opportunity and start getting checks just like me.

Click here now to get the details on this program.

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