by Julian Spector
November 19, 2019

Come for the fast cars, stay for the bureaucratic politics.

That’s the appeal of the new racing flick Ford v Ferrari, which recounts the clash of automotive titans that unfolded at the 24 Hours of Le Mans race in 1966. The engines roar and RPMs tick up past 7,000, but the real drama unfolds in board rooms and office corridors: the 24-hour race only caps off an industrial feud between artisanal Italian shop Ferrari and the mass-production dynamo Ford.

It’s a battle over philosophies of corporate innovation. Ferrari makes its cars by hand and prizes beauty over production quantity. Ford, helmed by the founder’s son, efficiently pumps out boxy 1950s vehicles that don’t inspire so much love from the hip, young Baby Boomer generation. The marketing department decides the way forward is to build a winning sports car and take home the Le Mans trophy that Ferrari has won for several years straight.

To do so, the company must navigate the tension between the untrammeled creativity and competitive spirit of its hand-picked designer, Le Mans winner Carroll Shelby, and the layers of bureaucracy, deference and protocol that constitute Ford's way of doing business.

And that is why anyone interested in the business of the energy transition should take a look at this movie. It has a lot to say about how a big incumbent company can quickly produce a radically different product under intense time and quality pressure. That Ford just this week unveiled its first electric vehicle only heightens the stakes.

Ford approached its Le Mans challenge with what later generations might call a “corporate startup” strategy: it went outside the company for the skills and disruptive vision, but funneled it through Ford’s corporate oversight. The example suggests two principles: that groundbreaking innovations happen best outside of a stifling corporate structure, and that the resources, workforce and industrial might of large companies can be invaluable to making an innovative idea a reality.

With those principles in mind, the Ford/Shelby framework helps translate episodes from the annals of corporate cleantech.

Why didn’t Current succeed as a commercial energy “startup” within the ultimate grid incumbent, GE? Too much Ford and not enough Shelby in its DNA.

When Mercedes-Benz's corporate HQ canned its entry into the home energy storage market after having hired a talented crew in Silicon Valley, that was Ford refusing to let Shelby do his thing.

What about another energy incumbent, Shell? Its New Energies division has been acquiring a roster of potential Shelbys as it buys up storage startups and solar developers and electric car charging startups and seemingly every other part of the future grid value chain. But we’re still waiting to see how those outside innovators coalesce under the banner of The Shell Way.

And then there’s Tesla, which broke the mold by combining both Shelby and Ford in one company — but with a higher market cap.

Ford chose to bring back the Shelby vibes this week by taking an actual risk. Its new model, unveiled Sunday, takes the Mustang brand into the electric era. It’s also an SUV, which Americans have been clamoring for lately. This is no dinky shoebox for environmentalists (not that there’s anything wrong with that aesthetic); it actually looks cool, and the top-shelf model can go zero to 60 in less than four seconds.

“I hope this will show we are now deadly serious about electrification,” Chairman William C. Ford Jr. told The New York Times.

The company got there by carving out space for creative thinking and backing it up with engineering and manufacturing skills few can match. The Shelby Strategy rides again.

Susan Kennedy hands over the steering wheel at AMS

In other corporate leadership news, AMS founder Susan Kennedy has relinquished the CEO title and passed it to her top software expert. She'll stay involved as chair of the board, however.

Plenty of cleantech startups make the eventual shift from founder to “growth CEO.” The transition often goes from a wonky, technical founder to a polished, business-savvy veteran who’s been to an IPO rodeo or two. In this case, AMS hired internally, elevating subject-matter expert Seyed Madaeni, who ran the development of the company's AI trading algorithm for the last couple of years.

It’s a sign that commercial storage pioneer AMS has made good on its reinvention as a software company. But it’s also the end of an era, since Kennedy created this company and kept it alive through sheer force of personality. That’s not hyperbole: When money got tight, she cashed out her retirement savings to keep the doors open, and then parlayed that show of faith in her business into several million dollars more from the likes of Arnold Schwarzenegger.

In the company’s telling, the first few contracts in Australia have sparked a rush of business. Now the entry into California is commencing. The business environment will differ — it's a less wide-open market than Australia, but a more entrenched renewables industry with its own ideas about how to operate projects.

But Madaeni insists on a “try it, you’ll like it” sales strategy, in which the trial is a side-by-side comparison of how a power plant actually dispatches with what the AMS platform would have it do. Then the relative profits can speak for themselves.

In a sign of the times, the company now must figure out what to do with the vestigial commercial storage development business it pivoted away from to focus on software. Madaeni and Kennedy both affirmed the value of behind-the-meter resources, while acknowledging that a development company and a software-as-service company don’t sit naturally in the same management and financing structure.

Which implies that, if somebody were looking to buy a development shop charged with operating a virtual power plant in Southern California, this could be the chance. Kennedy turned down earlier acquisition attempts, as I reported previously. But times have changed.

Is there an opening for upstart home battery vendors?

We've seen high-profile companies jump into the home battery product space this year, notably Panasonic and generator master Generac. Now there's a new contender that has no preexisting brand recognition, but a lot of good ideas and an outsider's perspective on the market.

I interviewed a retired Marine colonel named Brent Willson who spent his short stint in retirement launching NeoVolta, a home battery brand that went to market in May and now sells a few dozen systems a month.

What the company lacks in energy industry pedigree it makes up for in a fresh approach to the residential storage market. A friend in the solar industry asked Willson for advice on procuring battery products. Drawing from a career handling massive military procurement efforts, Willson evaluated all the available options and found none entirely to his liking. Unwilling to settle, he designed his own, which his company assembles in a factory outside of San Diego.

The sudden appearance in the industry may generate skepticism. And Willson bucked the usual process by going straight to IPO at $1 a share, instead of seeking approval from the industry gatekeepers who divvy up capital to promising ideas.

His diagnosis of the shortcomings of the existing residential ecosystem is worth a listen.

Willson wanted something with the safety and cycle life of sonnen's lithium-iron-phosphate batteries but at a price comparable to the Tesla Powerwall. With units selling for around $13,000, NeoVolta definitely beats sonnen's unusually high price point. It's more expensive than a single Powerwall, but that's not the only cost to consider.

Though Tesla leads with an extremely low battery pack price, the customer also pays for labor and ancillary equipment. It takes time to wire up the various additional boxes a Powerwall needs to do its job, and that pushes the actual price higher than one might expect.

Many houses need more than one Powerwall for the backup power to effectively cover home usage; indeed, Tesla's website defaults to a double Powerwall configuration. A customer choice could come down to multiple Powerwalls for whole-home backup or one NeoVolta for critical-load backup, at which point the latter is cheaper.

Speaking of labor, NeoVolta makes a point of really fitting the key components into the box; the outcome is that installation is pretty speedy. An installer I spoke with said NeoVolta jobs take his teams six hours on average, whereas Powerwalls typically require a day and a half. The all-in-one simplicity of installation also differs from the LG Chem, which must pair with a separate inverter from another manufacturer (usually SolarEdge).

The bet here is that if NeoVolta can make life easier for solar installers, they'll be more inclined to pitch it to their customers.

It's on NeoVolta to prove it is here to stay and that customers will trust the 10-year warranty from a company that's only existed for a couple years.

Building a new brand for home storage is hard — see Electriq, which tried to push a new brand of smart-home-connected battery but ended up choosing to supply white-labeled products for bigger names. Or Mercedes-Benz Energy, which never got off the ground. 

It's an uphill battle. But shrewdly diagnosing the weaknesses of the competition is a good place to start.