There's been some heat in the electric vehicle market of late: Government financing, VC funding (Better Place), IPO announcements (Tesla), Ferrari news and some missteps.

Today I'm reporting from an Agrion event on Electric Vehicles.  

Trae Vassallo is a Partner at KPCB with a mechanical engineering degree from Stanford and a focus on the greentech space. 

She said, "We feel very strongly about the transportation sector and the electric vehicle market,"  but when asked, "Where is the market now?" her answer is, "What market?"  

She adds, " There are no large-scale batteries, no motors, no inverters.  Drivetrains have not been done in any scale.  We are creating this market."  

Holding back the market are a number of factors, foremost of which are the economies of the vehicle itself -- driven by "enormously expensive batteries."  "If you can create an innovative financing structure, the inflection point might be sooner," according to Vassallo.  She alluded to the innovative financing methods that are being used in the solar market today, such as leasing plans and the PACE program.

She expresses a fear that "if the first few companies do a lousy job, if we can't get the garage-charging process right, it will slow down the market."

KP has invested in luxury hybrid vendor Fisker Automotive and an "unnamed" vehicle firm (V-Vehicle). 

"We invested in Fisker because it's a hybrid.  People have to be comfortable with "range anxiety."  Fisker is an $87,000 luxury vehicle that according to Vassallo needs to be a "zero trade-off car" akin to a 7 series BMW.

Tom Gage, CEO of AC Propulsion, spoke about his company.  AC Propulsion builds EV drivetrains and Mr. Gage has driven an electric vehicle himself for many years.  EVs will not be cost-effective in the near future, but he asserts, "50 percent of new car sales are not cost-effective."  People buy cars for many reasons and cost is not the only factor.  Gage says, "EVs are suitable for the top half of the market."

Gage suggested that the crossover point of economical EVs will be accelerated by the rising price of gas, the decreasing cost of batteries, and the cost savings inherent in a vehicle-to-grid (V2G) system.  But when it comes to the vehicles themselves, the cost equation is "mysterious and murky." 

He added that "no one is limited by range; they are limited by access to charging stations."

Scott Saffian of Coulomb Technologies, which just closed a VC funding round, believes that EVs are not relegated to the high range.  He claimed, "We've been seeing tremendous movement in the lower and middle-range.  Nissan has done a superb job in the ground-level deployment of the Nissan Leaf EV."  He added, "What they did right was they approached politicians and formed a coalition.  It got legs through fleet managers and politicians."

The Nissan program, according to Saffian, caught on so well by June of 2009 that it expanded to 20 cities, up from the original plan of five or six cities.  Today, Nissan claims that they will "build to demand" and that he expects to see 6,000 to 10,000 vehicles deployed.

Another interesting point: while many vehicles will be fleet-operated, city or municipal employees can now buy Leaf EVs off of the same agreement.  

He added that Coulomb was founded on two premises -- that every charge station should be networked and that Coulomb needed to be a self-sustaining business model.  They win revenue from the sale of the charge station and from fee-based charge services.  They are not dependent on a utility or government largesse.