Total’s $1.1 Billion Saft Acquisition & Tom’s BMW i5 — Cleantech Talk #26

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Editor’s Note: In episode #26 of Cleantech Talk, Matthew and I tackled Tom Moloughney’s vision for the BMW i5, how BMW could potentially compete with Tesla Motors and the Tesla Model 3. We then chatted about a fascinating recent acquisition — Total’s majority control acquisition of Saft — and the general topic of Total’s apparent leadership among oil companies in the transition to clean energy.

You can listen to the show via the embedded player below, on iTunes, or on SoundCloud. Or you can download it. Below the embedded player, you can read Matthew’s helpful show notes. And you can check out our Cleantech Talk archives for previous shows if you haven’t listened to them yet.

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We start today’s podcast with Tom Moloughney’s excellent thought piece about how BMW could fend off the Model 3 — and could in fact be the best-positioned carmaker to transition to electric propulsion.

It’s a persuasive article, and it can’t hurt that BMW’s luxury-only approach gives it the liberty to pivot faster (or should we say, “less slowly”?) than its competitors. Even with the battery price declines we’ve seen, companies that sell $15,000 entry-level vehicles will have to support combustion engine development for a very long time.

BMW has already been quoted saying that most or all of its lineup would be electric by 2025 (more discussion here). Bear in mind that its phrasing usually means that the company will make plug-in electric options (in the form of PHEVs) available, not that they will only sell BEVs and PHEVs. It’s generally safer to design options than to limit your product selection to what you think a rational customer should want.

(A sustainability case in point comes from legendary carpet maker Interface, which in the early 2000s decided that, instead of selling carpets to customers, it would lease carpeting instead. Among other things, this would help the company achieve extended producer responsibility over the product’s entire lifecycle, by making it easier to pick up and recycle worn-out carpet. Seriously, it was doing “Carpet-as-a-Service” before the suffix “-as-a-Service” was cool.

Unfortunately, buying carpet qualifies as a capital expense, while leasing carpet qualifies as an operating expense. And Interface’s customers couldn’t get their accounting teams to agree on shifting the requisite pile of money from one bucket to another in a timely manner. Which meant customers defected to the competition in droves, putting Interface in a suddenly-precarious position … because it was ahead of its time. Happily, the company decided to start selling carpeting again, and was able to put the traumatic episode behind it.)

A 2014 article claimed BMW had spent $2 billion on its i brand, which probably represented the bulk of its electric vehicle development to that point. If any readers know of more-up-to-date figures, let us know! I was able to find a $5 billion (!) figure for Nissan’s total spending through 2013. Alas, it’s probably waaaaay too late to call CEO Carlos Ghosn the Six Billion Dollar Man (cue ’70s cultural reference!), since the Renault-Nissan alliance has probably spent much, much more than that by now.

Of course, given Tesla’s secondary stock offering, those “Six Billion Dollar Man” headlines might well be being held back for Elon Musk anyways. 🙂

Zooming out to look at the broader cleantech world, Total — the French oil company — announced that it was acquiring leading battery maker / battery systems maker Saft for about a billion dollars. Combine that with Total’s majority stake in SunPower and you’ve got yourself a nice solar + storage pairing, the French cleantech equivalent of a velvet-soft taleggio with a round, medium-dry pinot blanc.

(To be honest, that last bit came out of a Google search. I only ever went to a wine and cheese party once; I was hungry, found I didn’t like the cheeses, kept getting offered wine, and wound up getting a bit drunk. Which his then-girlfriend thought was endearing, in a mercifully patient sort of way.)

Total’s acquisition wasn’t the only recent one either, as Oracle swallowed up utility consumer engagement specialists Opower.

Total’s acquisitions seem well timed, and we can hope that this represents something of a sea change in the company’s strategy. After all, both Saft and SunPower are established companies which are already generally profitable. Earlier clean energy efforts (whether genuine or greenwashing) by fellow oil titans such as Shell, BP, and even Exxon have tended to consist of venture capital–style bets placed on startups with promising technologies: lottery tickets, if you will.

Total, instead, now has two cleantech divisions which can (and do) stand on their own two feet. Perhaps the parent organization’s financial resources might even be able to help, when it comes to accessing capital.

Saft and SunPower also stand to benefit from (theoretically) being able to cross-pollinate between clients: at a minimum, cross-selling SunPower’s solar clients with Saft storage solutions should become easier, and vice versa.

For example, Saft won a contract a few months ago to provide battery solutions for 200 French trains, and train stations are generally large enough for utility-scale installations (allowing for lower cost-per-kW). That could open doors for SunPower, which itself recently won 500 MW of solar power purchase agreements in Mexico. Whenever it is that utility-scale battery storage becomes attractive, Saft is in a good position to be able to win that business.

… Check in next week, for your electric fix!

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Matthew Klippenstein

Matthew Klippenstein is a renewable energy consultant in Vancouver, Canada. He has chronicled the Canadian electric car market for since 2013, and has provided commentary (in English and French) for print, television, radio, web and podcast media. An early guest on "The Energy Transition Show", his work has also been discussed on "The Energy Gang".

Matthew Klippenstein has 37 posts and counting. See all posts by Matthew Klippenstein