BARRON'S COVER Recharge Now!

[dennis]

A point I made upstream, but if I understand the EV tax credit program correctly, those credits will be phasing out for Tesla buyers right around when the Gen III debuts (@200,000 units per manufacturer). If so, the pre or post-tax credit pricing is moot because there will be no post-EV credit price for Tesla buyers then - the price will be the price.


Update: of course I mean the $7500 federal credit.

I'm surprised that the shorts haven't pointed this out sooner. On the other hand, they don't believe that Tesla will sell 200K cars by 2017, but 25K/40K/55K/65K delivered in 2013-2016 would put them close. Taking out international sales, they could run out of credits by the end of 2017.

The challenge for GEN3 is that to deliver a 200 mile car for $35K Tesla will have to cut the cost of the Model S 60kwh in half (MSRP without rebate is $69.9K). Will slight downsizing, volume efficiencies and battery improvements be enough to get them there?

 

[PeterK]

I consider home charging an essential part of the supercharger network strategy. If you take away home charging, the only people who can use the SuperCharger network are the ones living in Folsom, Gilroy, Harris etc.

Nobody who lives in a city would even be able to get to a supercharger in the first place. (Except if you live in Seattle for some reason...).

And more and more, as you go to visit someone at their home you will find they have a 240V line in the garage or driveway. I've had one installed at my mother's place, and a friend just put one in at his beach house in Rhode Island, in part to encourage me to visit. The more cars out there, the more Level 2 or greater plugs...

 

[Darko]

I'm surprised that the shorts haven't pointed this out sooner. On the other hand, they don't believe that Tesla will sell 200K cars by 2017, but 25K/40K/55K/65K delivered in 2013-2016 would put them close. Taking out international sales, they could run out of credits by the end of 2017.

Right, even making that argument is for the shorts to admit that Tesla will be more successful than what they are now arguing. But they'll eventually get to this line of trashing in their 5-step program of recovery as the new "line in the sand" marker of success. The phaseout of their tax credits will in fact be an extra bit of headwind just as Gen III gets going, something that even Tesla itself may have not imagined until recently given the sales numbers, but in the end I don't think will be that influential - the technology is that compelling and in 4 years people will know Tesla and be much more comfortable with it. There is a large pool of the population that can afford a 35K car, and while consumers have a bad track record of calculating TCO, they are getting very tired of paying for $4 gas and can easily understand free charging throughout the US - Tesla has 4 years to prime the pump.

 

[Curt Renz]

I consider home charging an essential part of the supercharger network strategy. If you take away home charging, the only people who can use the SuperCharger network are the ones living in Folsom, Gilroy, Harris etc.

Indeed that is so. Supercharger stations are being placed at the mid-points between large cities. They are designed to accommodate long distance travel and relieve range anxiety. If city dwellers had nearby access to FREE Supercharger stations, each station would need a huge number of ports, and the deluge of users would be quite costly to the company.

 

[EVNow]

I consider home charging an essential part of the supercharger network strategy.

Of course it is the essential part - I've been doing it for 2 1/2 years. But that is not the supercharger network - just as it is not part of the CHAdeMO network.

We should not have hidden assumptions when we make statements like this - otherwise it will be discredited like the $500 a month for S claim.

 

[DaveT]

Mmm. It was definitely in one of the last 3 I listened to, either in the AllThingsD interview, SuperCharger announcement, or StockHolder meeting. He broke down the pre- and post- tax for the Gen III.

I remember I was surprised because it's the first time I heard a "20s" number.

I'll go re-watch them...

I watched all those interviews and don't remember a post-tax credit 20s number.

I do remember him saying that with gas savings that Gen III car would cost in the $20s for the end user (meaning including tax credit and gas savings) but that's different than a post-tax credit $20s.

 

[deonb]

where do you see something in seattle? That map dot looks south of Tacoma to me

If you go to 'winter 2013' it's the one in WA state that's gray. Right on the intersection between the I5 and I90.

 

[Palpatine]

The mass-market segment will be crowded by the time Tesla plans to deliver Gen III. Chevy just introduced GM's first all-electric car, the Spark EV, at $20,000 (after the $7,500 tax credit). Consumers seem cool to paying more for an electric vehicle with a driving range that's a fraction of an internal-combustion model's. Disappointing demand drove price cuts last month on Honda's Fit EV and Nissan's Leaf. The category-leading Leaf sold fewer than 10,000 units last year.

We're sure Musk could have told us why potential buyers of affordable electrics still see internal-combustion-powered cars as a cheaper, more convenient choice.

I think above assessment from Barron's article make some sense unless someone has better explanation if it is not true.

None of those other EVs are compelling products. The market is really not interested in a 100 mile or less vehicle. Tesla only makes EVs that get 200+ miles of range. And Tesla is the only car that has solved proactively the long range issue with the Supercharger network.

By the time we reach 2016 when Gen III comes out, there will 100,000 Model S and Model X Teslas out there on the roads recharging for free going cross country. Many people will know someone with either a Model S or Model X and raving about the long distance fun of this EV network of SCs. Then the Gen III $35,000 version will come out and I suspect a huge number of people will be ready to dump the ICE.

 

[deonb]

Of course it is the essential part - I've been doing it for 2 1/2 years. But that is not the supercharger network - just as it is not part of the CHAdeMO network.

We should not have hidden assumptions when we make statements like this - otherwise it will be discredited like the $500 a month for S claim.

Right, but comparing it with 115k gas stations is equally incorrect.

In order to go places I don't really care about there being 115k gas stations. For it to be considered a network I care that there are some:
1) Close to where I live
2) Close to where I'm going
3) On the way to where I'm going

The vast majority of gas stations are there to satisfy #1 and #2, since we don't have gasoline pipelines going into our houses.

If you have a gas station count that only satisfy #3 it would be an interesting comparison. But that number is very much not 115k - it's most likely under 5k.

 

[treehugger350]

I have always believed and experienced that those who are deeply invested in the status quo will never see innovation coming, nor understand the speed or scale of its effects on the economy.

Wow, that was poetic.

 

[Soflason]

On NASDAQ's site today, there is a thought-provoking article that challenges the core negative assumptions of this Barron's piece by making some alternately positive assumptions less common in the financial press. This is presents the "other side of the coin" that should be taken into serious consideration by the bears:
Tesla Motors is Overvalued AND Undervalued