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Tom Gage on ZEV mandates, Tesla’s early days, BMW’s EV commitment and V2G tech

Q&A with the EV trailblazer Tom Gage

Tom Gage is one of America’s true EV pioneers. He’s perhaps best known as one of the designers of the tzero electric sports car that provided the inspiration for the Tesla Roadster. However, that is far from his only contribution to the electric mobility field. Charged recently caught up with Gage for a chat about California zero-emission mandates, the early days of Tesla, building powertrains for BMW, and his latest venture, integrating EVs into the power grid of the future.

After earning a mechanical engineering degree from Stanford, Tom worked at various car-related jobs, mostly in the racing/high-performance world.

Tom Gage: My first job out of college was working in a sports car shop in Atlanta, where we did what was then called de-smogging cars – taking off the emission control equipment so they would run better. In the 1970s, the emission controls really hurt the performance of the cars and often didn’t work very well either.


Charged: That’s kind of ironic in light of your later work with EVs.

Gage: Yes (laughing). I figure I’m paying penance now.


Charged: I understand you worked at Chrysler on an EV program.

Gage: Yes. I had eventually gone back to school and got an MBA and then went straight into Chrysler. I was in the Regulatory Affairs Department, and we were involved in all kinds of legislative issues relating to fuel economy and emissions. That was right around the time the zero-emission vehicle (ZEV) mandate first came out in California, so we were looking into EVs, hybrids and the like.


Charged: Chrysler seems to be the least interested in EVs of the major manufacturers these days, but I have a theory that in most companies there are probably two different factions – there must also be pro-EV people at Chrysler. Do you think that’s accurate?

Gage: Yes. I think the number of people is growing, but it doesn’t necessarily make sense for every carmaker to go into EVs now because the market is so small. Back in 1990, GM showed the Impact – the prototype EV1 – at the LA Auto Show, and in April 1990, they announced that they were going to put it into production. Then, in August 1990 CARB came out with the ZEV mandate, and they justified it in part by saying that if GM could do it, then so could the other automakers. The reality was that it was such a niche market back then that, if GM had done it on its own, it might have been able to succeed, partly on the basis of having a technology niche and a publicity benefit. There was no market at all back then, so GM’s strategy made sense if they were the only player. But once the ZEV mandate was put in place, it didn’t make sense for anyone on any kind of commercial basis. So, when the ZEV mandate ruined the GM strategy, then that whole sequence of events took place with the mandate having to be rolled back because it was over-aggressive.

The same rules apply now. Nissan has taken the lead, BMW has taken the lead, and the other carmakers are in varying degrees of planning for the future. Companies like GM and Chrysler – I don’t know what their financial health is, but Chrysler was always kind of struggling – they can play a wait-and-see game. Within each company, there are the die-hard internal combustion fans who say that’s the only way to make any money, and the guys that look into the future and see that things change in this business. They change slowly, but they do change. And once the change starts, you can’t really turn it back.


Charged: Do you think the ZEV mandate is actually counterproductive?

Gage: I think in the long term it’s had a strong effect in pushing carmakers and the market to get into EVs. Its first implementation was counterproductive. It really set back the cause for several years. It was first promulgated in 1990, and here we are 23 years later and we’re really just getting started.


Charged: In another sense, it kind of opened up a door for Tesla to get in there and do their thing.

Gage: It did. It’s very hard to judge what would’ve happened in another scenario. The ZEV mandate actually helped AC Propulsion in the early days. We did play a role in the starting of Tesla, so I wouldn’t say it was a bad idea, but it might have worked better if they had done it a little differently.


Charged: The first time around, the car companies’ lobbyists managed to pretty much kill the ZEV mandate. This time, they’ve tried, but they haven’t succeeded in doing that. What’s different this time?

Gage: I think the technology has come a long way. You’ve got car companies out there that say they’re going to do this. I think the global warming story has gotten stronger, and I think the bigger factor is petroleum dependence – it’s not just a tree-hugging, air-quality issue anymore. It’s a very big strategic, economic and national security issue. I can remember very distinctly back in the early to mid-90s when it was seen as just an air-quality problem or just an LA problem. But I think dependence on petroleum is an issue that resonates on both sides of the political spectrum to a much greater degree.


Charged: When you first got interested in EVs, was there any kind of epiphany?

Gage: Yes. It was very clear-cut. I left Chrysler in 1992, primarily to get back to California. I took a job at SRI Consulting, which was sort of a think tank in Menlo Park. This was in the early days of the mandate, and Honda came to us asking for an exhaustive survey of standards, regulations and practices relating to the EV. Of course, it was a very new field. We set about just doing research. It was back in the day when all the different engineering standards and government regulations specific to EVs didn’t exist.

I went down to Southern California to start talking to people who were in the EV business. There were a bunch of small shops doing EV conversions and stuff, and most of them were pretty amateurish or even crackpots. On that trip, I went to AC Propulsion, which had just been founded. Alan Cocconi had come off the GM Impact program where he was one of the lead technical guys. He had clashed with GM on that program about various ways of doing things and thought he had a better idea, so he started AC Propulsion.

When I drove his prototype car, that was the light switch right there, because he really knew what he was talking about, and he put it into practice with this conversion that he practically built right in his front yard. I got in it and drove around the block, went up the freeway onramp and when I looked down, I was doing 80 merging onto the freeway, going uphill.

This was a Honda Civic he’d converted. It had the first 200 hp electric drive system that he had built. I came down off the freeway just in front of the shop and he said, “Stop here.” He flipped a switch and said, “Now, floor it.” What he had done was turned off the traction control. I floored it and the front tires turned into smoke (laughing).


Charged: And that was the moment?

Gage: Yes. It was a double whammy. I knew a thing or two as an automotive engineer – not that much about EV technology – but he explained it in a way that showed that the other guys really didn’t know what they were talking about. But he did, and he had the hardware to back it up. I started helping him out on the side, one thing led to another, and within a year I was pretty much full time at AC Propulsion.

Alan Cocconi had developed a range-extending trailer, which was a motorcycle engine connected to a generator that we towed behind the Honda Civic. He drove it to Washington to participate in the Partnership for a New Generation of Vehicles (PNGV), which was a program to funnel federal funds to the Big 3 to help them build an 80 mpg car. Of course, with even moderate use of electric-only driving, Alan’s EV/trailer combo got well over 80 mpg, but to the PNGV, it wasn’t “real,” so he had a pretty cool reception – the carmakers thought he was making them look bad. Al Gore was trying to make hay with the automakers, so they didn’t really want this upstart in there. PNGV turned out to be a bit of a boondoggle and died quietly.

I met him in Detroit, and we made the rounds. We went to Chrysler, Ford and a few other places, and then I drove with him across the country back to California. On the way back, we hit a snowstorm in Wyoming, which was quite an adventure. That was really the start of my full-time efforts at AC Propulsion.


Charged: AC Propulsion’s tzero electric sports car caught the imagination of Tesla founders Martin Eberhard and Elon Musk, and they ended up licensing the company’s powertrain technology. How did you first hook up with the Tesla guys?

Gage: I had a neighbor named Steve Casner, who had a Toyota RAV4 electric, and I always had an EV in my front yard, so we got to talking. He was working at a company with Martin Eberhard, so he told Martin about me. Martin called me, and he had all these schemes, and I was sort of talking through what the realities were. We were just converting the tzero over to lithium-ion batteries. He got involved with that. He actually put some investor money – a small amount – into AC Propulsion, and we finished the conversion of the tzero to lithium-ion batteries. We drove it from LA up to San Francisco for the Michelin Challenge Bibendum event. We drove it with only one stop, so it was obviously getting much better range with the reduced weight and increased capacity of the lithium-ion batteries, which had replaced the lead-acid batteries. It had the highest score in the Michelin Challenge Bibendum that year. Martin was pretty impressed – we all were.

That was in September 2003, and in November I remember going to the LA Auto Show with him and he started talking up the guys in the Lotus booth, saying that he wanted to convert a Lotus Elise. That was sort of the start of Tesla right then. Then, he borrowed the tzero for about three months. He took it up to northern California and used it to woo investors – show them what he was talking about and that it could really be done. I think it was pretty key in getting the company off the ground.

The tzeros (we built three of them) were completely hand-built cars – there was almost nothing but headlights and shock absorbers and things like that that were taken from other cars. All the major parts were hand-built. It was a Sportech kit, but we actually changed the frame and the body by the time we built the second car. The Sportech was sort of the template. Even on the Sportech, everything was hand-built, and then we changed the Sportech to better fit the electric car.

We realized that with the tzero, we couldn’t make money, let alone meet crash test standards and the like, so we sort of changed gears and started developing the eBox, an EV conversion based on the Toyota Scion xB. The plan was to commercialize that and get some money to do so, so I went to see Elon Musk. I took the tzero and he drove it. I said what we’re really looking for is money to do this eBox, and he said (more or less) that he wasn’t interested in the eBox – it was too mundane. He wanted a sports car. I said he should talk to Martin Eberhard. Martin hired JB Straubel, Elon got involved, and the rest is history.


Charged: You guys thought the eBox had a better chance at being commercialized, but Musk and Eberhard were more interested in the tzero because they thought that was a sexier deal?

Gage: Yes. After we won the Michelin Challenge Bibendum, Martin said, “Are you going to build my car, how’s it going?” I said we weren’t going to build any more tzeros. So that to some degree was the impetus for him to get into the business. “Well, if you’re not going to build it, I’ll build my own” – that type of thing. 


Charged: I have a vision of those days as being fun, freewheeling times, kind of like the early Internet days.

Gage: It was really fun – it was really an underdog, David-and-Goliath kind of thing. We knew it could be done, we knew how to do it. Car companies are big, dumb and stupid, and they couldn’t do anything right. Then the government was in there, and the politicians were doing the wrong thing. So there was a real sense of being at the beginning of a process and knowing with a great deal of assurance that you were onto something that the rest of the world’s going to catch up with over time. I think that’s been borne out to some degree – maybe it took longer than we thought. It was very gratifying to be a part of that.


Charged: AC Propulsion went on to provide powertrain components for a lot of different cars, including the electric version of the MINI.

Gage: Yes. I think as time plays out, BMW’s commitment to electric propulsion is going to be recognized as an important strategic shift for the company. The MINI E was a case study in corporate decisiveness. The success of their electrification plan really required more information about EVs in general in the real world (the technology, the customers, the infrastructure), because BMW, unlike most of the car companies, hadn’t been a part of the original mandate. They didn’t have any EV knowledge from that, and they hadn’t been part of the fuel cell program because they had an internal combustion vehicle that ran on hydrogen. They really had nothing related to electric propulsion and batteries at that time, or nothing recent or significant. So, when they came to AC Propulsion and said let’s do the MINI E, I think they wanted to get smart in a hurry, and they did. We signed the contract in January of 2008, and by the end of the year, there were 500 MINI Es on the road in California.

A ZEV provision was one of the reasons for the timing. They could get extra ZEV credits by getting those cars complete, but they had to be on the ground in California for that provision to be effective. So, they shipped all the cars to California and eventually they put some of them into service in New York and New Jersey as well. Then, they were getting such good results, they ended up building a total of over six hundred and putting them, in small numbers, in London, Berlin, Paris, Tokyo, Shanghai, Beijing, Mexico City, Rio de Janeiro – all over the place.

AC Propulsion provided the motor, the inverter, the charger, the battery and the battery management system – everything that made the car go. The battery was our design. We contracted with the companies that actually assembled the batteries. Fundamentally, everything that was in the eBox went into the MINI E. So all that work that was done on the eBox didn’t really achieve fruition as an eBox, but it did as a MINI E.


Charged: AC Propulsion also worked with the Taiwanese company Yulon on an electric version of the Luxgen minivan. What ended up happening with that?

Gage: Well, Luxgen also got a license to produce the drive system after Tesla did. We had their full cooperation. They also ended up buying quite a number of drive systems from AC Propulsion… they had a license to produce the drive system, but they ended up buying quite a number from AC Propulsion as well. I believe they built several hundred of those Luxgen minivans, maybe more than that by now. Their whole program is essentially funded by the Taiwanese government, so it’s moving rather slowly.


Charged: You’re now president of a company called EV Grid.

Gage: Yes. It was really kind of a path of opportunity once I left AC Propulsion. I’d been working since 2000 or so with Professor Willett Kempton at the University of Delaware, and we developed the concept called vehicle-to-grid, (V2G), where the EV, because it has a battery on board and a charger that’s connected to the grid, can respond to signals from the grid operator, and interact with the grid in ways that support grid stability.

The AC Propulsion drive system was particularly useful for this, because not only could it regulate its charge rate up and down, it could actually go into negative charge, or discharge. So, it could take power from the grid, charging its battery, or it could discharge its battery into the grid and actually eject power back. So this allowed the kinds of minute adjustments that are needed to keep the grid stable – grid regulation. This is a revenue-generating service that the grid pays for. Usually, it’s done by giant generators that produce more power or produce less. Batteries are very effective – in fact they’re more effective because they can respond faster to grid demands.

The University of Delaware developed the technology to communicate, control and provide this service from grid-connected cars, and AC Propulsion developed this drive system to provide the cars. Over the years, they’d been able to finance about five cars – they were doing this on an experimental basis. But the problem was that you really needed a hundred cars or so to have a significant effect on the grid. Nobody had a hundred cars to begin with, let alone the money to buy them, so it was just sort of a science experiment. When the MINI E program started winding down, they had six hundred MINI Es, and all of them had this bidirectional charger feature that hadn’t really been implemented. I talked to BMW, and we agreed that we could take some of the MINI Es and put them to use in a larger-scale V2G demo. 

So, that was the start of EV Grid. Since then, we’ve gotten involved in quite a bit of other battery-related activity. We took over the battery operation that AC Propulsion had – so now they’re just doing drive systems and we have a license for all of the battery and battery management technology. We’re also getting involved in battery second-use development, which the car companies are very interested in, because they see it as a way to capture residual value from the battery. There’s a lot of opportunity out there in the field of integrating EV batteries and the power grid, and we’re looking for commercialization prospects as we go forward.


Charged: Is there anything that’s not getting covered in the media a lot, something that people have overlooked, that could be an important trend on the EV scene?

Gage: The thing we’re looking at, not to say that we have a solution or anything, is the scale of EV commercialization. One percent of the fleet is over two million EVs. Ten percent would be twenty-five million, and the amount of battery capacity in terms of both power and energy that will then be connected to the grid is completely unprecedented, and that’s not widely recognized. 

That level of battery capacity has to be integrated in the grid in a very intelligent, sophisticated, complex way, otherwise all these batteries will just be random loads on the grid without any control, and the grid will be in chaos. To provide the upgrades and other control schemes necessary as sort of a hodgepodge, a patch-up job, will degrade the usefulness of the grid. So, the level of integration has to be significant, and it probably has to involve a much greater degree of intelligence and communications and smarts that has so far eluded the utility industry. They’re very old-school, and they haven’t really been brought into the high-tech arena at all. It’s partly because of the way they’ve been regulated and managed over the years, and partly just because they’re a very conservative industry.


Charged: They’re so fragmented. There are thousands of them and every state has different regulations.

Gage: Yes. They just have a completely different business model. In the auto industry you say, “What’s the investment, what’s the expected return, what’s the profit?” It’s a very straightforward way of looking at projects. The utility industry doesn’t look at it that way. We look at using car batteries as a way to support the grid and mitigate the effect of those very same batteries as a very cost-effective approach. They say, what we need is giant batteries in a warehouse to offset all the batteries in the cars, which is probably the most expensive solution. But they see it as a way to get a return on their investment. It’s just a different way of looking at the world, and it’s all regulated. It’s not totally governed by economics, it’s governed by politics as well. It’s going to be very interesting.

One aspect that’s having a big impact in my area is that the Department of Defense has bought into the idea of a smart grid in a big way because they see it as a mission-critical approach to operating a base in the future, so that they can be completely independent of the overall grid in the event of some kind of an emergency. So, what they’re doing is a little different from what has to be done in the commercial sphere, but it also does lend quite a bit of credibility to the idea that EVs will not just be a dumb load, but will be an active player in operating the grid.


This article originally appeared in Charged Issue 12 – FEB 2014

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