China, VW power electric vehicle surge - Axios
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China, VW power electric vehicle surge

Illustration: Lazaro Gamio / Axios

A startling convergence of auto industry and government policies suggest that electric cars could begin seriously challenging petroleum-powered vehicles far sooner than experts believed only recently.

  • Volkswagen said yesterday that it will market 300 electric cars by 2030.
  • China said over the weekend that it is getting ready to outright ban the old gas vehicles, although it has not set a date.
  • And we now have three new longer-range, mainstream-priced electric vehicles on the market: the 150-mile Nissan Leaf, and the GM Bolt and Tesla Model 3, both exceeding 200 miles of range.

Why it matters: These developments help provide much more of the critical mass that's been missing in the EV equation. If consumers begin to buy these electrics in large numbers, they will hasten the global peak in oil demand, shaking up oil companies and petro-states alike. And EVs can help cut carbon emissions, acting as one part of the complex puzzle to prevent runaway global warming.

Driving the news: On Monday, Volkswagen announced plans to invest $24 billion to significantly expand its fleet of electric and hybrid vehicles.

Ahead of the Frankfurt auto show, chief executive Matthias Mueller laid out plans to offer electric versions of 300 vehicles across VW's brands by 2030, and 80 by 2025—50 pure electric and 30 hybrids, per Bloomberg and other outlets. Monday also brought new EV pledges from German rival Mercedes.

Eyes on China: Over the weekend, a top official with China's Ministry of Industry and Information Technology said Beijing plans to eventually ban the sale of petroleum-powered cars.

  • China is by far the world's biggest auto market, with sales of roughly 28 million vehicles last year. When the world adds 1 billion cars to the global fleet over the next two decades, most of them are expected to be bought in China. That means Chinese policy affects the industry worldwide.
  • "It is increasingly more important for each individual automaker's sales and profits," Michelle Krebs, a senior analyst at Autotrader, tells Axios.

China's pledge follows announcements in recent months by France and the United Kingdom that they, too, will phase out sales of gasoline and diesel cars by 2040. And India has set an "aspirational" target for having all car sales be electric by 2030.

Yes, but: For now, EVs represent just a tiny portion of the global light duty vehicle fleet — less than 1%. And it would take a massive increase in deployment to make a big dent in oil use. Consider these forecasts from Shell, via The Financial Times:

  • "A rise in electric car sales from less than 1% of the world market next year to 10% by 2025 would displace less than 800,000 barrels per day of world oil demand, or about 0.8% of total consumption."

The back story: VW's electric push is an attempt to recover from a two-year-old scandal over a defeat system that it installed in its diesel-powered cars to confound emissions tests. VW has incurred $25 billion in costs over the scandal.

What to watch: One question is when China will release a timeline and policy specifics for how it will implement its phase-out. BNEF analyst Colin McKerracher tells Axios that he does not expect those details until next year at the earliest, but that even the vague announcement provides a clear signal for automakers looking to the massive Chinese market.

In the near term, he's expecting Chinese officials to announce within days how they will structure an escalating quota system for so-called new energy vehicle sales in the coming years. China hopes to have electric and plug-in vehicles represent a fifth of its vehicle sales by 2025, according to Reuters.

U.S. headwinds: Analysts say that the Trump administration plans to review—with an eye toward relaxing—Obama-era fuel efficiency and vehicle greenhouse gas mandates for model years 2022-2025, and that that could act as a drag on U.S. EV expansion.

"The U.S. does look quite uncertain right now, and CAFE is still a really big driver of automakers' plans around electrification in the U.S.," McKerracher said, referring to Corporate Average Fuel Efficiency, or CAFE, standards.

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Trump claims people only watching NFL for protests

From the president's tweets this morning: "Ratings for NFL football are way down except before game starts, when people tune in to see whether or not our country will be disrespected!... The booing at the NFL football game last night, when the entire Dallas team dropped to its knees, was loudest I have ever heard. Great anger...But while Dallas dropped to it knees as a team, they ALL stood up for our National Anthem. Big progress being made - we all love our country!"

Go deeper: The Cowboys took a knee as a team last night

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Venture firm IVP raises $1.5 billion for new fund

Illustration: Lazaro Gamio / Axios

Institutional Venture Partners has raised $1.5 billion for its sixteenth fund, Axios has learned. The final close came last Wednesday, although it's possible that IVP won't actually begin investing the money until early 2018.

Why it matters: IVP is one of Silicon Valley's most active late-stage venture firms, with a portfolio that includes such companies as Dropbox, Domo, Pindrop Security, The Honest Company, Slack and Tanium.

Scale: The firm has wide latitude in check sizes, able to go as small as $10 million and as large as $150 million. That means it can supplement later-stage deals with some earlier opportunities, like it did for Snapchat (where its cost basis was just $0.98 per share).

Exits: 37 year-old IVP has had more than 100 portfolio companies go public, but partner Dennis Phelps acknowledges that the overall pipeline is currently gummed up a bit. "A number of companies that planned to go public in Q4 of this year have paused, partially because there is still plenty of ability to raise capital in the private markets and partially because of the performance of high-profile companies like Snap and Blue Apron."

Consistency: $1.5 billion is only a slight increase over the $1.4 billion IVP raised for its fifteenth fund in 2015, and the new vehicle features the exact same group of general partners. Per Phelps: "If it ain't broke, don't fix it."

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VC: Not enough startups are building self-driving car software

Rebecca Zisser / Axios

Venture capitalist Reilly Brennan believes that self-driving cars are coming faster than most people expect, but that his peers aren't necessarily making the best funding decisions.

Too much: Companies selling dongles for car data. "There are 100 of those and there should probably be three," says Brennan, who last year co-founded transportation-focused Trucks Venture Capital. There are also too many "Uber for freight" companies, he adds.

Not enough: Startups working on decision-making systems. "There's around 24 of those companies; I would suggest there should be 125 to 200 of those companies."

Also, driver monitoring: "There's a lot of people focused on external sensors that are shooting laser beams out, and trying to make a map of what's outside the car, and I would suggest that there's a huge opportunity for taking that same type of thinking but doing it inside the cabin."

More Q&A with Brennan, who co-founded Trucks Venture Capital last year and previously was executive director for Stanford's automotive research program:

What is the most likely exit for these companies? Are they all going to be $1 billion exits? IPOs?

Some of these technologies that are directly related to the supply chain are probably in line for acquisitions by other large supply chain companies like Tier 1 suppliers or manufacturers. I would suggest those exits are measured in the $50 million to $300 million range.

Those tech commodities, which are related to decision making, vehicle-to-vehicle kind of communications and things that are super important in keeping a fleet in high utilization — those are really valuable to a fleet owner which might be sort of a higher level of M&A or potentially a small IPO.

And then you have companies that are trying to build new categories of business in autonomy, for example [Trucks VC portfolio companies] Starsky or May Mobility, I think the idea for those companies is they would become public companies."

Does that affect how you invest?

For some companies that have the opportunity to be really category-defining, we are less price sensitive.

What will most impact the adoption of self-driving cars?

Policy is really important in this space and there's a lot of enthusiasm from lawmakers. There's probably not as much knowledge as there is enthusiasm so some of the lawmakers are actively engaging with startups. Sen. Thune being one, Jeff Brandeis in Florida who puts on his own autonomous vehicle conference.

A lot of the narrative has been "Silicon Valley is gonna win this one and Detroit just doesn't know what it's doing."

I think people underestimate and overestimate unfairly on both sides. If you actually want to deploy a self-driving vehicle, the vehicle piece of it is really important for a number of reasons: People want to feel safe. Also, in the world of automating vehicles, utilization is really important. Kind of like with a Formula 1 car, you don't wanna waste time in the pits, you always want to be out on the road earning money. So vehicles that can execute on a really high-duty cycle, that are always on the road, are super durable, are really for the passengers make the experience really safe — that's an incredibly valuable part of an autonomous vehicle system.

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Software jobs grow at fast clip

Jacquelyn Martin / AP

The software industry directly accounts for 2.9 million jobs in the U.S., a 14.6% increase since 2014, according to a report out today by Software.org, the research arm of the software industry's trade group BSA. The average annual salary for software developers is $104,360, which is more than twice the annual average wage for all U.S. occupations, according to the report.

Why this matters: The software industry is growing as new technologies like artificial technology, self-driving cars, augmented reality and the internet of things — all of which rely heavily on software — continue to advance. Software-related jobs continue to be among the more lucrative jobs requiring STEM skills, a shortage of which puts such workers in high demand.

Just yesterday the Trump administration announced an initiative to expand students' access to computer science and STEM education. Increased training in these areas, particularly in the K-12 setting, is one way experts think students can be better prepared for the modern economy that is increasingly leaving many communities behind.

Go deeper: Silicon Valley no longer has a lock on software developer jobs.

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Puerto Rico in crisis

A man looks at the horizon early in the morning after the passing of Hurricane Maria, in Yabucoa, Puerto Rico. Photo: Carlos Giusti / AP

Puerto Rico remains without power and short on supplies after being slammed by Hurricanes Irma and Maria. Officials are having difficulty even communicating with outlying towns that were devastated by the storm, and the humanitarian crisis is growing.

After focusing for days, at least publicly, on NFL protests and other matters, President Trump tweeted about the crisis in Puerto Rico on Monday night — and seemed to blame Puerto Rico in part for its own misfortune.

Trump's tweets: "Texas & Florida are doing great but Puerto Rico, which was already suffering from broken infrastructure & massive debt, is in deep trouble....It's old electrical grid, which was in terrible shape, was devastated. Much of the Island was destroyed, with billions of dollars....owed to Wall Street and the banks which, sadly, must be dealt with. Food, water and medical are top priorities - and doing well. #FEMA"

What Puerto Rican officials have said

From Governor Ricardo Rosselló: "We are U.S. citizens that just a few weeks ago went to the aid of other U.S. citizens even as we're going through our fiscal downturn and as we were hit by another storm…Now, we've been essentially devastated. Complete destruction of the power infrastructure, severe destruction of the housing infrastructure, food and water are needed. My petition is that we were there once for our brothers and sisters, our other U.S. citizens, now it's time that U.S. citizens in Puerto Rico are taken care of adequately, properly."

From Manati mayor Jose Sanchez Gonzalez: "Hysteria is starting to spread. The hospital is about to collapse. It's at capacity," he said, crying. "We need someone to help us immediately."

The scale of the crisis

  • Government officials said Sunday a dam on the Western part of the island "will collapse at any time." Eastern areas, which were hit by the eye of the storm, could take years to recover.
  • Officials estimate it could take up to 6 months to restore power to the whole island.
  • Federal agencies have cleared the Port of San Juan for daytime operations, but accessing Puerto Rico is pretty difficult right now — airports and harbors are severely damaged and the whole island remains out of power. 11 ships have delivered 1.6 million gallons of water, 23,000 cots, dozens of generators and food, per the AP. Many hospital patients are being flown to the U.S. mainland for treatment.
  • The death toll is at least 10 in Puerto Rico, and 31 if you include other Caribbean islands, per the AP.
  • 1,360 of the island's 1,600 cell towers are down. 85% of phone and internet cables were knocked out.

Personal experiences

  • When locals see outsiders, the first thing they ask is "Are you FEMA?" per The Washington Post.
  • "Nothing's working, we don't hear from anyone…We feel abandoned," Toa Baja resident Johanna Ortega told USAToday.
  • Food at local grocery stores is "VERY LIMITED," San Juan resident Claudia Batista messaged Axios. Batista described the situation in San Juan as "desperate times," saying because of "all the material loss, people are losing control and patience and are stealing in other homes and assaulting people on the streets."
  • Some local responders in Juncos cleared streets with machetes since the town doesn't have enough chain saws. People are riding bikes and walking for miles to get to gas stations

What FEMA is doing

  • FEMA teams were in Puerto Rico earlier this month following Hurricane Irma, and as soon as Hurricane Maria's winds died down they launched search-and-rescue missions, per USAToday.
  • All of the 28 task force teams around the U.S. have been recruited to help, which is rare, per Karl Lee, a FEMA Incident Support Team member.
  • FEMA responders are using a San Juan hotel as a command center.
  • 4,000 U.S. Army Reserve members have also been deployed to the island. The Army Corps of Engineers dispatched the 249th Engineer Battalion, per CNN.

What Trump has said

Trump declared a major disaster in Puerto Rico and said all of the U.S. government is behind the relief efforts. White House adviser Tom Bossert and FEMA's chief are heading to Puerto Rico Monday, although a trip from Trump isn't expected for a while, per CNN.

  • Rosselló thanked Trump on Monday for having federal emergency assistance provided, per the AP, noting FEMA has done a "phenomenal job."

Trump's most recent tweets about Puerto Rico, from last week:

Take a look

How to help

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Trump goes after McCain over health care vote

President Trump tweeted at Senator John McCain, who is currently in treatment for brain cancer, over his decision to oppose the latest Republican health care plan:

The back-and-forth: McCain was more subtle in critiquing Trump during a 60 Minutes interview Sunday. He said the two had very different upbringings, after noting that Trump had not apologized for saying he was not a war hero.

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Entire Cowboys team takes a knee

Photo: Matt York / AP

Prior to the national anthem at their Monday Night Football matchup with the Arizona Cardinals, the entire Dallas Cowboys team, including owner Jerry Jones, took a knee. They then stood for the anthem.

Go deeper: How NFL teams have reacted to Trump's comments.

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Several current and former senior Trump administration officials occasionally used private email to conduct government business, the NY Times reports. The officials named: Steve Bannon, Reince Priebus, Ivanka Trump, Gary Cohn, Stephen Miller and Jared Kushner (Politico had previously reported Kushner sent or received about 100 emails about White House matters using his private address).

Why it matters: Trump railed against Hillary Clinton incessantly during the campaign for her use of private email as Secretary of State. Government officials are supposed to use their government accounts so their communications will be stored, and failing to do so can cause security risks.
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President Trump lashed out at CNN on Twitter Monday evening, calling them "Fake News" for reporting that John Kelly was opposed to his comments at Friday's rally calling for NFL players who protest during the national anthem to be "fired." CNN reported that Kelly "was not pleased" with Trump's remarks, later updating the story to reflect Kelly's conversation with CNN reporter Jeff Zeleny, during which Kelly said he was "appalled" by the lack of respect for the flag.

"I believe every American, when the national anthem is played, should cover their hearts and think about all the men and women who have been maimed and killed," Kelly told Zeleny. "Every American should stand up and think for three lousy minutes." However, Zeleny noted that Kelly declined to say whether he felt Trump should have weighed in.

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Sen. Susan Collins said she opposes the Senate's health care plan. (AP Photo/Robert F. Bukaty, File)

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Why it matters: It would only take three "no" votes to kill the bill. And Collins' opposition makes it a total of four Republicans who say they won't vote for the bill — two moderates (Collins and Sen. John McCain) and two conservatives (Sens. Rand Paul and Ted Cruz).