May 9, 2019

Axios Generate

By Ben Geman
Ben GemanAmy Harder

Hello readers!

Lots of car content today after the first item, so let's rev things up: 20 years ago, TLC was atop the Billboard R&B/hip-hop charts with a classic that takes us into the news...

1 big thing: Pent-up thirst for climate policy

Lawmakers offer lots of bills every day that just vanish into the ether, but yesterday my inbox filled up with responses to a new energy proposal, and the rollout says a lot about the state of play heading into the 2020 elections.

Driving the news: 2 Democrats — Sen. Tina Smith and Rep. Ben Ray Luján — unveiled plans for a "clean energy standard" that would require utilities to supply escalating amounts of carbon-free power annually over coming decades.

Why it matters: It's a big but also detailed marker and clearly has plenty of advance organizing behind it.

  • And it shows how Democrats are starting to try and gain traction for specific ideas should a political window open in years ahead.
  • It's the latest iteration of a proposed national clean power standard, an idea floating around in some form for a decade.

By the numbers: The intricate system recognizes regional differences, but overall sponsors say it would cut power-sector emissions by nearly 80% in 2035 (relative to 2005 levels) and get close to net-zero by mid-century. Modeling by the nonpartisan think tank Resources for the Future concludes it would...

  • Boost renewables to 56% of total generation in 2035 and avoid retirement of 43 gigawatts of nuclear capacity by that date.
  • Cut fossil fuel generation to 26% of the nationwide total by 2035, while increasing average retail electricity rates by 4%.
  • Of note: RFF helped with technical analysis during the development of the legislation.

Between the lines: The rollout and early support (more on that below) suggests advocates of an approach that backs a suite of zero-carbon technologies are gaining the upper hand over calls on the left for a renewables-only vision.

The big question: Whether there's any chance of GOP support. It's not a totally bananas possibility.

  • It matters because even if Democrats win the White House, they would need some Republicans to advance big policies (unless they also took the Senate and killed the filibuster).
  • A source familiar with the bill's development tells me that sponsors have been in discussions with potential GOP backers.

Flashback: Roughly a decade ago, GOP Sen. Lindsey Graham floated a version of a "clean" standard, albeit as Republicans were countering largely Democratic calls for renewables-only mandate.

  • GOP Sen. Lisa Murkowski has also expressed openness to the idea, per this piece I wrote for The Hill in 2010.

What they're saying: The bill is supported by United Steelworkers, the Utility Workers Union of America, the Union of Concerned Scientists, and the Clean Air Task Force, sponsors say.

  • The National Wildlife Federation and The Center for Climate and Energy Solutions also sent me emails supportive of the idea.
2. A new twist in the electric pickup race

Handmade sign in Lordstown, Ohio. Photo: Michael S. Williamson/The Washington Post via Getty Images

GM's plan to sell its shuttered Lordstown, Ohio, plant to the Workhorse Group, an electric truck company, would remove a political headache for GM and is already bringing new prominence to the little-known buyer.

Driving the news: GM is in talks with Workhorse and an affiliated party to "bring significant production and electric vehicle assembly jobs to the plant."

Why it matters for EVs: The popularity of pickups makes them a potentially huge market for electric models.

  • Wednesday's news is the latest development in the intensifying race to push electric pickups into the mainstream, for both commercial use — which is Workhorse's focus — and personal vehicles.

What's happening: Other recent developments in this race include...

  • Amazon and Ford both recently invested in Rivian, which is developing an electric pickup and other vehicles, and Ford also has separate plans to electrify the popular F-150 on its own.
  • GM's own broad electrification strategy includes full size pickups, CEO Mary Barra said in late April.
  • Tesla is also working on an electric pickup design.

The big picture: The sale is likely to help ease political pressure on GM, which has been under fire over the restructuring announced in late 2018 that included layoffs.

  • GM also said it's investing $700 million to expand operations in 3 other Ohio locations. The news emerged when GM-critic President Trump, citing a call with Barra, tweeted about it.
  • It's also a major lift for Workhorse, which saw its stock soar by 215% (and it's still rising in pre-market trading).

What's next: “The first vehicle we would plan to build if we were to purchase the Lordstown Complex would be a commercial electric pickup, blending Workhorse’s technology with Lordstown’s manufacturing expertise," Workhorse co-founder Steve Burns said in a statement.

Go deeper: The Vindicator, an Ohio newspaper, has much more here.

3. Parsing Tesla's long-shot robotaxi plan
Illustration: Aïda Amer/Axios

Tesla CEO Elon Musk is banking on a risky new strategy for the electric automaker: a robotaxi service that he argues will transform Tesla into a $500 billion company, Axios' Joann Muller reports.

The big picture: Like other AV companies, Musk is fixated on a potential $3 trillion market opportunity for autonomous mobility as a service.

  • But while most say fully self-driving cars are still a decade away, Musk is telling investors they'll be here by next year and that Tesla will have first mover advantage with a million robotaxis on the road.

Between the lines: Investors are eager to fund his plans — as seen by last week's fresh $2.7 billion equity and bond deal.

  • Musk's track record is spotty, though — even he admits to blowing his self-imposed timetables — but in the end, he insists, "I get it done."
  • Still, his latest idea — for Tesla owners to rent out their cars via a vast Tesla robotaxi network — seems "half baked," as Cowen analyst Jeffrey Osborne put it to CNBC.

How it will work, according to Musk:

  • Tesla owners can offer their cars for rent on Tesla's car-sharing network.
  • They could pocket up to $30,000 a year (Tesla would keep 25% to 30% ) and their cars will rise in value — up to $250,000 within 3 years, Musk claims — as more self-driving capabilities are added via software updates.
  • Tesla would supplement the fleet with company-owned cars as needed.

Yes, but: The economics of the plan seem dubious and there are a host of unanswered legal, logistical and technology questions.

Go deeper

4. Catch up fast: nuclear, Anadarko drama, Exxon

Nuclear: Three Mile Island nuclear power plant will begin a planned shutdown on June 1 now that owner Exelon confirmed it won't receive financial aid from Pennsylvania's government, per AP.

Oil drama: Bloomberg reports that Occidental's corporate jet has flown to The Hague in the Netherlands.

  • "While it’s unclear what Occidental’s jet is doing there, Royal Dutch Shell Plc is based in The Hague and has a joint venture in the Permian Basin with Anadarko Petroleum Corp., which Occidental is currently trying to buy for $38 billion."

Tech: "Exxon Mobil said Wednesday it will invest about $100 million over 10 years in emissions-reduction technologies at some of the nation's top energy research labs," according to the Houston Chronicle.

  • Exxon is working with DOE's National Renewable Energy Laboratory and National Energy Technology Laboratory.
5. More EVs: VW and Dyson

Tesla rival: Volkswagen announced it's taking pre-orders in Europe for its electric ID.3 hatchback. Various versions will have roughly 205–340 miles of range. More via Bloomberg:

  • "The new ID.3 hatchback — which VW hopes will be the electric-car successor to the iconic Beetle — will start at less than $33,600, roughly the same level as the diesel variant of its bestselling Golf hatchback."

Speaking of Tesla, Joann reports: "If it seems unlikely that wealthy Tesla owners would want to share their high-tech cars with the masses, think again. Teslas are already among the most popular cars rented on Turo, the original peer-to-peer car-sharing site."

Dyson's plan: Per the Financial Times, "James Dyson has lobbied Theresa May to bring forward to 2030 her planned ban on the sale of petrol and diesel cars, as the entrepreneur unveils the first patents for his own range of electric vehicles."

6. UN chief seeks to jolt climate ambition

United Nations Secretary-General António Guterres is trying to rev up global efforts to achieve climate goals that are slipping out of reach.

Driving the news: In a new interview with AP, he warns of a "catastrophic situation for the whole world" as he prepares to tour Pacific islands facing existential threats from rising seas.

The big picture: Guterres offers big goals ahead of the climate summit he's convening in September, including no new coal-fired power plants built after 2020 and ending fossil fuel subsidies.

  • He's not giving up on achieving net-zero global emissions by 2050 (that is, a mix of emissions cuts and systems that remove atmospheric CO2).

Between the lines: The coal target won't happen, and subsidies are a long-term project. They totaled over $300 billion in 2017 (and that doesn't even count production subsidies).

  • But by offering aggressive goals, it appears Guterres wants to reset the conversation around ambition to limit temperature rise to 1.5⁰C.
  • That Hail Mary target would require extraordinarily sharp cuts in years and decades ahead, yet emissions are still rising.

The bottom line: "It is achievable, but it needs a transformational approach," he tells AP, citing huge shifts needed in power, transport, industry, and agriculture.

Go deeper: UN details massive changes needed to slow global warming

Ben GemanAmy Harder