Long-Term Fundamentals of Tesla Motors (TSLA)

[mdemetri]

I don't believe that is correct.

I agree, I was at the reveal and do not remember hearing this (and it is something that I would have paid special attention too).

 

[adiggs]

The way I look at it is that if Tesla makes a drivetrain that can be used for 30 to 40 years instead of just 15 to 20 years. Then for the next 30 years or more every new Tesla is displacing a gas/diesel vehicle. Otherwise in 30 years many of the new Tesla would just be replacing worn out Teslas. So longetivity reduces the number of electric vehicles required to purge fossil fuel vehicles from the global fleet.

There are options for renovating older vehicles for a second life. At one extreme, the chassis can be removed from the platform and replaced with an all new chassis. Thus only the drivetrain is reused. The renovated vehicle could have all the latest features.

This general idea is in-line with my own thought that there is going to be a cottage industry redoing Tesla interiors in 10ish years. As older Teslas are still running fine and the interior is getting dated / worn out, the cars will get a new life with a fresh interior. Maybe its more like 20 years. Sort of like a remodel for a house.

 

[JRP3]

Yes, I've long considered an aluminum or composite bodied EV more like an airplane or boat, which might get an interior refresh and some new components after 15 or so years and be like new.

 

[MitchJi]

Hi,

We can use the Powerpack price to get a much better idea of their car pack costs than were possible before.

Perhaps, but it's worth remembering that the power (not energy) delivered by the stationary storage batteries is quite a bit lower than the power levels required of the automotive batteries. It would be reasonable to assume that the per-kWh cost of the stationary batteries is lower.

Aside from capacity the main differentiating feature is cycle life. The major factor in the cost difference of the two types of Powerpacks appears to be energy density mainly I believe, because the increased energy density means you get more kw for the same number of cells. Both types of packs have the same rated power output, which as you correctly pointed out is relatively low.

When EM described the product he said that the Powerpacks for backups use a cell with more energy, and the Powerpacks designed for daily cycling use the same cells as the car packs.

It turns out that this was not exactly what he said (I mixed up the types of cells :redface. But I believe that the facts support my original conclusions. Because the Powerpacks that use the cells that have a "chemistry is quite similar to the car" are the least expensive type of stationary storage packs.

I also didn't notice that utilities would have an interest in the low cycle count packs. Thanks for motivating me to dig into this in more detail!

The quotes below are from the 2015 Q1 Earnings Call Transcript:
Tesla Motors' (TSLA) CEO Elon Musk on Q1 2014 Results - Earnings Call Transcript | Seeking Alpha

Elon Musk (Chairman and CEO):
There are two applications which are quite different. One is backup power, or peak-up -- the equivalent, on a utility scale of like a peaker plant, which is a high-energy application. And there is the daily cycler application. There are different chemistries, depending upon what you have.

The backup power chemistry is quite similar to the car, which is a nickel cobalt aluminum or a cathode. The daily cycling control constituent is nickel manganese cobalt. It's quite a lot of manganese in there.

One is meant for, call it maybe 60 or 70 cycles per year. And the other one is meant for daily cycling -- daily deep cycling, so it's 365 cycles a year.

The daily cycler one, we expected to be able to daily cycle for something on the order of 15 years. Obviously warranty period would be a little bit less than that. We expected to be something that's in the 5000-cycle range capability.

Whereas the high-energy pack is more like around the maybe, depending on how it's used, anywhere from 1000 to 1500 cycles. They have comparable calendar lives.

Now for the high-energy one, it's important to appreciate that this is actually -- has a lot of interest from utilities because utilities have to maintain these things called peaker plants, and when there is a sharp increase in usage. You can imagine the highest energy day in California on a hot summer day where there's a heat wave, the energy consumption there is very high compared to a pleasant spring night where nobody's air-conditioning or heating is on, or for very little and commerce is not happening and people are asleep and lights are off....

The high-energy pack is actually very economically competitive in those sorts of situations. The high cycling pack is really great for if you've got some sort of wind or solar situation, that's where the high cycling one is really great on the utility scale.

Jaffe said that Panasonic is selling Tesla power packs at a rate of $180 per kWh.

So I believe that we can safely that the high-energy packs, which use identical 18650 cells, except for a "quite similar" chemistry are very close in cost per kWh to the car packs. I am not sure which type of Powerpacks (high energy or high cycle life) Tesla is selling for $250 per kWh or that Panasonic is selling for $180 per kWw. If it's the high energy packs my estimates were based on valid numbers. OTOH if those figures are for the more expensive higher cycle life packs my estimates for the car packs were based on numbers that are too high!

Either way when we factor in GF price reductions the prices are either disruptive, or very close.

And:
Energy Storage Tipping Point Within 10 Years, Tesla Motors CTO JB Straubel Contends | CleanTechnica

“I think we’re at the beginning of a new cost-decline curve, and, you know, this is something where there’s a lot of similarities to what happened with photovoltaics. Almost no one [would have predicted] that photovoltaic prices would have dropped as fast as they have, and storage is right at the cliff, heading down that price curve. It’s soon going to be cheaper to drive a car on electricity — a pure EV on electricity — than it is to drive a gasoline car. And as soon as we see that kind of shift in the actual cost of operation in a car that you can actually use for your daily driver, you know, from all manufacturers I believe we’re going to see electric vehicles come to dominate the whole transportation fleet."


"Also, that same battery cost decrease is going to drive batteries in the grid. There’s going to be much faster growth of grid energy storage than I think most people expected. You suddenly get to have energy that’s 100% firm and buffered from photovoltaics that’s cheaper than fossil energy. And we’re within sort of grasping distance of that goal, which is very, very exciting.“

 

[neroden]

Long-Term Fundamentals.

I'm getting very worried about Tesla's awful, awful management decisions. See the threads about Tesla's elimination of prepaid Ranger service.

This is the sort of thing which can sink a company with great products.

 

[Robert.Boston]

@neroden: You say "decisions" but point only to the change in offered pre-paid Ranger service contracts. Are you thinking about additional issues?

As a shareholder, I understand why Tesla had to reevaluate whether the Service Anywhere offering was sustainable. I want Tesla to be successful, and part of the success is profitability. The Service Anywhere warranty suffers from what economists call a selection bias: the only people who buy it are the people most likely to be very expensive to service. For example, I bought it knowing that I spend nearly half the year in a fairly remote part of Maine. If my only property had been my Boston house, 5 miles from the Watertown Service Center, then I wouldn't have paid the extra $100/year.

Does Tesla give up some sales by not offering a Service Anywhere warranty? Sure. Do those sales generate as much margin as other sales? No. As long as Tesla is production-constrained, it should rationally be selecting the highest-margin sales.

Note that Tesla continues to honor its existing commitments. With my pre-paid Service Anywhere contract, I've never paid for Ranger service and never had to say a word to anyone about it.

 

[atang]

@neroden: You say "decisions" but point only to the change in offered pre-paid Ranger service contracts. Are you thinking about additional issues?

As a shareholder, I understand why Tesla had to reevaluate whether the Service Anywhere offering was sustainable. I want Tesla to be successful, and part of the success is profitability. The Service Anywhere warranty suffers from what economists call a selection bias: the only people who buy it are the people most likely to be very expensive to service. For example, I bought it knowing that I spend nearly half the year in a fairly remote part of Maine. If my only property had been my Boston house, 5 miles from the Watertown Service Center, then I wouldn't have paid the extra $100/year.

Does Tesla give up some sales by not offering a Service Anywhere warranty? Sure. Do those sales generate as much margin as other sales? No. As long as Tesla is production-constrained, it should rationally be selecting the highest-margin sales.

Note that Tesla continues to honor its existing commitments. With my pre-paid Service Anywhere contract, I've never paid for Ranger service and never had to say a word to anyone about it.

This + 100

 

[austinEV]

Along these lines, I predict we will eventually see the current Tesla owners Grandfathered into free supercharging for life, and everyone else will see a modest pay-for-use. its the only solution to some of the looming problems with the prepaid model.

 

[dalalsid]

Along these lines, I predict we will eventually see the current Tesla owners Grandfathered into free supercharging for life, and everyone else will see a modest pay-for-use. its the only solution to some of the looming problems with the prepaid model.

I would hope that it is more of a soft cap - enforced for chronic misuse that is clearly defined - on usage as opposed to pay for use.

 

[austinEV]

I would hope that it is more of a soft cap - enforced for chronic misuse that is clearly defined - on usage as opposed to pay for use.

Better yet. Free to use for 100kWh/month (making up a number) and then charge at cost after that.

 

[dalalsid]

Better yet. Free to use for 100kWh/month (making up a number) and then charge at cost after that.

Just make the limitation annual instead of monthly and it is good. 2500kWh in any 12 month period.

 

[austinEV]

Done.

 

[neroden]

Does Tesla give up some sales by not offering a Service Anywhere warranty? Sure. Do those sales generate as much margin as other sales? No

So what?

I think it's a very dangerous marketing error. As soon as Tesla is "the car which only works for big city dwellers", Tesla gets a damaged reputation. And the reputation will *stick* even if Tesla eventually builds enough service centers (which is not happening so far). Eventually Tesla wants to sell cars in upstate NY, or Pittsburgh, or Montana, etc., right?

There's a reason the Anywhere Service was offered in the first place: so that Tesla wouldn't be written off as a "region-limited car". Now it WILL be written off as a "region-limited" car. Big big marketing error. Could hurt for decades.

Worse, a lot of people didn't buy the Anywhere Service under the assumption that Tesla would provide reasonable prices for service. Now those people -- the ones who live in Montana, or Pittsburgh, or upstate NY, anyway -- are gonna be *ticked off*, and they will happily spread the bad news about Tesla. I already know someone in Ithaca complaining about this. Tesla is still not clearly documenting their new decision to make Model S limited to regional availability -- there's no giant warning of "NO SERVICE AVAILABLE" which pops up if you enter an address in an unserved area, and they're still advertising Ranger service. This is a good way to generate ill-will.

(Yes, I'm also thinking of additional issues, but detailing all the communications failures of Tesla would take a long time... they just don't seem to be able to get their act together.)

The cost of providing Ranger service at reasonable cost to the minority people *outside a reasonable distance from the service centers*, but still in the continental US, should be written off as a vital marketing expense. Ranger service isn't needed for people who live close enough to an Service Center, and if Tesla has any coherence in Service Center deployment (which Tesla currently does not), it should keep the number of people using Ranger service limited.

As a shareholder, I understand why Tesla had to reevaluate whether the Service Anywhere offering was sustainable. I want Tesla to be successful

I do too, and I think sending a big "**** YOU" message to rural Tesla buyers -- and by rural I am including *Pittsburgh* -- is a poor marketing choice. If they're serious about eliminating affordable warrantly service for future buyers, they need to own up to it in big warning letters. More sensibly, they could go back to offering the service they should be offering.

This does bring up another management failure, which is the utter failure to deploy sufficient service centers.

----
So far Tesla has earned *positive* free media. They could just as easily be earning *negative* free media, and they seem to be making choices which will lead to that. It's stupid and destructive.

Whatever the cost of unlimited Ranger service for people more than 200 miles from a Service Center is, it should be considered a vital marketing expense and written off. It has to be cheaper than paid advertising.

 

[Johan]

Just make the limitation annual instead of monthly and it is good. 2500kWh in any 12 month period.

Good. This would be absolutely acceptable as the "fine print" Fair Usage Policy I suggested upthread.

 

[ludicrousspeed]

I am a huge Musk fan and love the fact that he is more in it for the benefit of the environment and general population rather than profits. However, as a long term investor it would be nice to see the company making money off of their Supercharger network, which Tesla has spent large amounts on in order for it to have a distinct advantage. Given this competitive advantage, and the use of open-source patents, I think the company can make a fortune from charging competitors to have access to the superchargers. Or better yet, charge the customers of the competitors a small amount per charge for their cars.

Think of this scenario: 8-10 years from now, there are millions of EVs on the road and the general adoption is in full swing, and Tesla still holds an advantage in charging capabilities. People who own Teslas will continue to use the superchargers for free but now other companies or other consumers have to pay a small amount when they use them. That way: 1) Supercharger stations wouldn't be ridiculously packed because some competitor vehicle owners would rather charge elsewhere for a lower rate. 2) It's the best free advertising for Tesla. Every owner of an EV other than Tesla will have to consistently notice first-hand how beneficial it would be to switch over to a Tesla. 3) Profits. Tesla has spent so much money on expanding the supercharger network and technology that it would be a shame if they never got any real direct return on them.

What are your thoughts on this idea and has it been discussed before? I am relatively new to the forum. Thank you.

 

[austinEV]

I am a huge Musk fan and love the fact that he is more in it for the benefit of the environment and general population rather than profits. However, as a long term investor it would be nice to see the company making money off of their Supercharger network, which Tesla has spent large amounts on in order for it to have a distinct advantage. Given this competitive advantage, and the use of open-source patents, I think the company can make a fortune from charging competitors to have access to the superchargers. Or better yet, charge the customers of the competitors a small amount per charge for their cars.

Think of this scenario: 8-10 years from now, there are millions of EVs on the road and the general adoption is in full swing, and Tesla still holds an advantage in charging capabilities. People who own Teslas will continue to use the superchargers for free but now other companies or other consumers have to pay a small amount when they use them. That way: 1) Supercharger stations wouldn't be ridiculously packed because some competitor vehicle owners would rather charge elsewhere for a lower rate. 2) It's the best free advertising for Tesla. Every owner of an EV other than Tesla will have to consistently notice first-hand how beneficial it would be to switch over to a Tesla. 3) Profits. Tesla has spent so much money on expanding the supercharger network and technology that it would be a shame if they never got any real direct return on them.

What are your thoughts on this idea and has it been discussed before? I am relatively new to the forum. Thank you.

EVERYTHING has been discussed before Your plan is Musk's so it isn't very novel. He wants other vendors to join the TM standard, and yes it wouldn't be free for those users or at least would involve a one-time payment.

 

[Words of HABIT]

ROAD TRIP
Just returned from road trip from Toronto, Ontario, Canada to Myrtle Beach/Orlando/Clearwater, Florida, USA. Took Maryland route down and returned West Virginia route.
Observations:
300,000 conservative estimate of cars seen en route (Interstate highways and parking lots)
4,950 km (3,076 mi.)
$500 in gas (Honda Pilot)
17 days
four Teslas spotted (three Model S and one Roadster)(I can spot one from 500 yards in the dark)
0 Tesla Supercharges spotted.
0 generic EV charges spotted.

I asked a few locals and none had heard of Nikola Tesla, the Tesla Coil, Elon Musk, Tesla Motors, Model S or the Tesla Roadster. Regular posters on this TMC forum, especially those on the California coast, may think that all things Tesla are common. From my observations, this could not be further from the truth. My guesstimate is that 99% of the World's population have yet to hear of Tesla Motors, and of the 1% in the know, only 1% of those (one in 10.000) could accurately cite Tesla produces only one 100% electric vehicle with a 300 mi. range and 0-60 mi/hr of 3 seconds.
This is pre-1998 Apple (after the Mac is introduced but before the first iMac).
The potential is enormous.

Note to Tesla Motors: Install Supercharges on all Interstate State Visitors Welcome Centres and Rest Areas (this is where most travellers stop), and increase the range to exceed that of gasoline engine cars (it is just a matter of time).

The family had a fantastic time at Myrtle Beach, Universal Studios in Orlando, and Clearwater. Great Country.

 

[EVNow]

Regular posters on this TMC forum, especially those on the California coast, may think that all things Tesla are common. From my observations, this could not be further from the truth. My guesstimate is that 99% of the World's population have yet to hear of Tesla Motors, and of the 1% in the know, only 1% of those (one in 10.000) could accurately cite Tesla produces only one 100% electric vehicle with a 300 mi. range and 0-60 mi/hr of 3 seconds.
This is pre-1998 Apple (after the Mac is introduced but before the first iMac).

When I used to talk to my colleagues about Model S - the usual question would be who makes it ? They assumed it was just a car model made by one of the big OEMs. The very idea of a new car company is no novel.

Now-a-days it is a different matter. Most colleagues here seem to know what Tesla is. But I'm on the west coast and EVs are very common.

 

[ItsNotAboutTheMoney]

Better yet. Free to use for 100kWh/month (making up a number) and then charge at cost after that.

Not if they can help it. Metering costs money. Better, if possible to limit Supercharger. Enforced parking time limits plus limited charging rates near home would help. Plus there's also Autopilot. Shouldn't be too long before cars can move themselves out of the way.

 

[MitchJi]

Hi,

So I believe that we can safely that the high-energy packs, which use identical 18650 cells, except for a "quite similar" chemistry are very close in cost per kWh to the car packs. I am not sure which type of Powerpacks (high energy or high cycle life) Tesla is selling for $250 per kWh or that Panasonic is selling for $180 per kWw. If it's the high energy packs my estimates were based on valid numbers. OTOH if those figures are for the more expensive higher cycle life packs my estimates for the car packs were based on numbers that are too high!

Tesla is selling the more expensive higher cycle life packs for $250 per kWh, so my estimates were based on numbers that are too high (based on Powerwall prices about 20% high)! Also the trays are hot swappable, which is a great feature, but probably more expensive to build than the car packs.