Long-Term Fundamentals of Tesla Motors (TSLA)

[FANGO]

I don't care how well-reviewed this car is or how fun to drive, because its range is vastly inadequate for my needs.


I haven't seen such an argument made anywhere. Stretching it to these extremes makes it a strawman. Using reasonable parameters and qualifiers, it turns into many variants of reasonable arguments.

And the point is that the consumer will learn that their needs are lower than they think they are.

The argument was suggested one page back, when RobStark said that until BEVs all have over 300 mile range people will think they're going to get stranded by the side of the road - and of course they'll keep thinking that, with Tesla owners talking as they do about 300 (or 500, as seen above) being the "necessary" amount of miles for a battery pack.

The argument about axing small batteries was also made the last time this came up, and people thought that the 60kWh should be axed and the offerings should be only 85/110. It has also been made in the past with the axing of the 40kWh. The argument is made quite often.

The other diagonal is more interesting. People vary in their ability/willingness to pay, and they also vary in the ranges they need/want. That's why plenty of people are willing to buy Leafs for whatever they sell, even though I, for one, would never consider it, and why other people bought >$100k Roadsters. Model S is close to a sweet spot for those upmarket buyers who can afford a 70-100k vehicle. I'm saying that spot can be made even sweeter, and that the Leaf spot is pretty sour right now.

In a nutshell:
- I would not advise a friend who could only afford a Leaf to buy it as his only car today
- I would advise a friend who could afford a Model S to buy one today even as his only car
- If I were in a position to buy a Model S today, I would buy one, but I would jump at the opportunity to upgrade the battery.

The Leaf spot is not sour at all, it's a car which fits the needs of a majority of the populace assuming they have the funds to purchase or lease a new car (though a few used ones exist now) and who have a place to charge it. And it's a car that over 100,000 people have bought and been quite satisfied with (it has better NPS scores than the competition, though not as good as the Tesla, obviously), so I have no idea where you're getting sourness from. Leaf owners tend to love their cars. And this is the problem I have with Tesla owners, who assume that all other EVs are inferior not just to the Tesla (which, of course, they are, but that's why the prices are different), but to their gas competition. They aren't, people love them. And because of that, I, like most Leaf owners according to the NPS surveys, would absolutely recommend a friend to buy one. And have. Obviously even moreso for multi-car families, but some can certainly be fine with it being their only car. And I know multiple EV-only families who have 100-mile-class EVs and nothing else.

 

[JRP3]

Saying that a 500 mile battery is necessary is a big disservice to EV adoption.

No one said that. His point was that a "500" mile battery, which could be significantly less in many real world situations, would be desirable to many. Remember a larger pack also provides shallower cycling, hence longer pack life, and greater power output potential. It also provides a greater buffer of range in inefficient driving situations, rain, wind, cold, etc. Is it strictly necessary? Of course not. Will many people want it, even if they are "educated"? You bet.

 

[abasile]

Saying that a 500 mile battery is necessary is a big disservice to EV adoption. Before the Tesla came out, a 300 mile battery was "necessary." Now it's a 500 mile battery. What do you bet will be "necessary" when a 500 mile battery comes out? I bet it'll be more than 500.

None of them are necessary, none of them have ever been necessary. People are looking for excuses, and you're fueling their excuses.

I would agree that not much range is truly "necessary" for most driving. Our Nissan LEAF has plenty of range for the day to day sort of driving that most people do. It's not enough range for most families to go ICE-free, but it is enough to be very useful to a great many multi-car families, and far more affordable than a Tesla. I hope to see more people come to understand this reality.

On the other hand, now that I'm hooked on EV driving, I'd prefer to be able to drive an EV everywhere rather than burning gasoline anytime we leave our local area (or doing lots of waiting for the LEAF to charge). We could also use more space and AWD (to avoid California snow chain requirements), hence my interest in the Model X. See how high the bar tends to be raised when we start talking about replacing the ICE for everything? A 250 mile battery should be fine, but I'd prefer the versatility of a 500 mile battery once battery prices have dropped further.

The bottom line is that Tesla has strategically chosen to occupy the "no compromises" portion of the EV market, not the "local driving only" segment. There's room for both. But Tesla is doing a wonderful thing for overall adoption by showing what EVs *can* be. We know that some folks get drawn to EVs by Tesla, then end up purchasing a LEAF or another EV that they can better afford.

 

[FANGO]

People have been driving less because gas is getting more expensive and they can't afford to drive more. EVs are reversing that trend (of course, EVs are a small population compared to ICE cars, so the general trend continues--except for EV drivers).

Mostly I think we can agree to disagree. And no, I don't think that once you have a 500 mile battery, you'll be clamoring for a 750 mile battery. People aren't clamoring for 750 mile ICE cars because the 500 mile cars they have now have the range required for almost everyone. The battery size Tesla chose was based on economics and available technology, not on what would be ideal. The current range of the Tesla is barely adequate, but it's the first EV that has a range you can live with--which is why I purchased one. A Leaf wouldn't even get me (and most of my co-workers) to work and back without stopping to charge. The only time I'm inconvenienced in the Model S is on trips, so it's not a big problem as trips are two or three times a year event, but it would be a lot better if there was no inconvenience. And don't forget that as batteries get better the range will increase without increasing vehicle weight.

Sigh, the forum ate my response to this post.

Short version: miles driven is dropping because young people drive less and people are moving into cities and air transportation for long distances is getting cheaper necessitating less roadtrips. VW seems to think 700 miles on a car is important, that's why they talk about it in their ads even though they use fuzzy math, and 300 miles is not 'barely adequate' for almost anyone, and if it went to 500 you'd still have people saying it's 'barely adequate' even if it isn't (as evidenced by the VW commercial). If you drive over 80 miles one-way to work (as you say you'd need to charge on the way), you are an outlier and should not generalize your experience to the overall population's.

 

[jerry33]

If you drive over 80 miles one-way to work (as you say you'd need to charge on the way), you are an outlier and should not generalize your experience to the overall population's.

I meant round trip, not one way. However, I do have several co-workers that do 80 or more miles one way. This is Texas, not California.

 

[FANGO]

I meant round trip, not one way. However, I do have several co-workers that do 80 or more miles one way. This is Texas, not California.

Yeah, and for those people they can buy an S or they will have to wait until the 3 - which will be an improvement in price, rather than longer range. But for you, if it's 80 miles two-way, if you can charge at work (since you're there for hours anyway), you would be fine with a Leaf. Maybe even without charging. I used to routinely drive my MINI E, which was rated at 100 miles on the old 2-cycle test (so it would probly be lower now), 50 miles each way to LA and back without charging, and never worried about it. Or you could use a Volt, and you'd still do ~90% of your miles on electric power if you could charge at work, and that's with just ~40 mile range, much less than the "barely adequate" 300 miles.

One thing I'm trying to say here is that these cars are a lot more capable than they get credit for, and that we, as EV drivers, should be telling that story, instead of saying that the cars are less capable than they get credit for. And acknowledging that huge batteries are nice for niche applications, but that they're still niche. Almost any EV on the market has suitable range for a large number of applications, so we need to get past this question, and talk about how great they are in their application, because they're all enjoyable to drive, cheap to run, convenient to charge and tremendously better for the air we all breathe when compared to gas cars. Start dispelling the reasons people have not to buy EVs, instead of endlessly talking them up.

very late edit: interestingly, I looked up vehicle miles traveled per capita by state, and it turns out that Texas is actually below average. California is a little below Texas, but both are below average. (9,267 TX, 8,647 CA, 9,590 USA, as of 2010 DOT numbers.)

 

[GLDYLX]

Perhaps many, if not all early adopters, either live in homes with a garage to charge in, or live in condos/apartments that have adequate parking and provide/allow plugs for charging. Many of us waiting for Model≡ live in apartments that don't provide parking and may have electrical that's a bit fragile (built in 1923, last permit pulled 1974). I have no hope for home charging in the next decade, so I plan to charge on the occasional weekend when I'm doing administrative stuff at work and I can block the loading door. I don't think I'm alone. This is why range is still a pressing issue for many of the "masses".

Charging just isn't as simple as plugging in every night for many urban dwellers.

I am very interested in Elon Musk's plan for urban charging, but suspect that companies like Blink and Chargepoint will be our only options for some time to come.

Or maybe that's one of the "cards" he's hiding in R&D...

 

[FANGO]

Urban charging is a problem but won't be solved by enormous batteries, but by figuring out better charging solutions for people without garages. I would not recommend even a model s to a person who doesn't control their own charging. I don't think tesla will solve the problem themselves either, they will need government support, like san Jose's recent move to require charging in all new developments, and California's law to require HOAs and such to allow the installation of charging stations.

 

[ItsNotAboutTheMoney]

I don't think the raison d'être of an EV is to be plugged in, either - it's to drive. I have no complaints about range or charging and I'm happy with my 85 kWh, but it is definitely easier to find a place to plug in my phone than it is to plug in my car. For example, I can plug it into my car. Can't plug my car into my phone!

The raison d'etre of a car is not to drive, it's to be drivable. You park your car and walk away until the next time you need it. A cellphone goes with you and you only park it to charge. That's why people's cellphones run out of charge. The way your car will run out of charge is using it and stretching the charge.. The way your cellphone runs out is because you're not actively using it so you aren't aware that the battery's low. The cellphone comparison actually is limited to "a battery-powered device you plug in and some people get way too partisan and obsessive about." Unfortunately I can't suggest a better analogy.

 

[EldestOyster]

We could do a thread with a simple poll: Do you want 1. More Range or 2. A lighter car. I have little doubt what this educated EV audience will choose.

Speaking as a 2-car household, my answer would be, "One of each, please"

Elon is one of those who doesn't consider the ("up to") 100-mile EV to be useful. I think he's ignoring a sizable application, but I also think it's proper to say this is fairly irrelevant to Tesla's mission. So the two will co-exist.

What card is he hiding? No one's suggested inductive charging yet. I'd like to see better than the current (80%?) efficiency for that technology.

 

[Blip]

I tink this weight/range-discussion is a bit 'long-term' for this thread... ;-)

 

[Yggdrasill]

People's needs for range lie on a bell curve. My guesstimate for what percentage of the population can make due with a given range:

50 mile EPA: 10%
100 mile EPA: 40%
150 mile EPA: 60%
200 mile EPA: 80%
300 mile EPA: 90%
400 mile EPA: 95%
500 mile EPA: 97.5%
1000 mile EPA: 99.5%
2000 mile EPA: 99.9%

The exact figures aren't really that important, but it shows the concept. And for the automaker, the question is - how large a share of the market should you try to appeal to? Is 40% enough, or should you aim for 95%? Do you offer a variety of range options, with a variety of models and battery packs, or do you cater to a specific niche?

I think Teslas 265 mile range is more than enough for the majority of the population, but I also think there is a meaningful market for longer range as well. Those 10-20% who need longer range will usually be willing to pay a premium, as well, because these people will tend to travel very many miles each year, and the fuel savings with an EV will be extreme.

 

[FANGO]

Ygg, if you're talking about needs and not wild fantasies, then your numbers are all vastly too high. 2,000 miles, really? Shift every number down by two or three ranks on your table and you'll have realistic percentages.

Eldest oyster, I think you're right on about co-existence, but maybe not about inductive charging. It's another thing that reduces efficiency for a very minimal benefit, and there are downsides as well (weight, cost, incompatibility). Inductive charging hasn't taken off for any other devices because people realize that plugging in is really not that bad, when confronted with the reality (cost, size, etc.) of the inductive charging options which are available. Maybe Tesla will work on it, I have no doubt that they already have done work on it's viability, but I think overall it's not going to be viable and probably won't happen. As for normal-range cars being outside of Tesla's mission, the mission is to accelerate vehicle adoption, and offering cars that more people can afford is a way to do that - and was the point of the S and will be the point of the 3. So bringing back a 160-mile offering would be beyond reasonable.

 

[Yggdrasill]

Ygg, if you're talking about needs and not wild fantasies, then your numbers are all vastly too high. 2,000 miles, really? Shift every number down by two or three ranks on your table and you'll have realistic percentages.

I'm talking about needs, and I think the figures are in the ballpark.

Looking at a 50 mile EPA range EV, I think 10% is about right. This range would really only appeal for people who almost never travel beyond 20-30 miles, or has two or more cars. Also, very many in the group of people who has two or more cars wouldn't accept such a small range, as the range is barely good enough for doing some shopping at nearby stores, on a hot day with the A/C running.

A 100 mile EPA range EV has significantly more utility. This can in most cases be a second or third car, and having it as the only or primary car is workable for a significant amount of people (though in most cases, still inconvenient). You can be fairly sure that most people (75%?) will need at least one car that's good for the occasional long-distance trip, and a 100 mile EPA range EV just isn't that car. Maybe 50% of the population would find a 100 mile EV in accordance with their needs, but that's maximum.

A 150 mile EPA range EV is even better. Now we're talking about a car that can do the occasional long-distance trip, even if this will add inconvenience, and the range is good enough for virtually all second/third/forth cars. 60-70% seems realistic.

A 200 mile EPA range EV is better still. Long distance trips are possible and not extremely inconvenient given sufficient charging. Still, for regularly travelling long distances, stopping every 2-3 hours is too inconvenient for a significant amount of people. It's also not sufficient for towing, as you'll constantly be stopping, using hours and hours on charging. 80% seems about right.

For greater ranges; long-distance trips, towing, travelling at 100 mph, extreme weather environments, etc become less and less of a challenge, thus winning over a greater and greater percentage of the population. And I don't find it unrealistic to assume that 1 in a 1000 people may occasionally need the 2000 mile EPA range to tow a boat 500 miles without stopping with the A/C on full blast.

The sweet spot range-wise for me personally would be around 350 miles EPA range. That would mean I could make it to and from those of my friends who live the furthest away from me without stopping, in -10C and with a slightly degraded battery capacity. I have done this trip in the past for xmas parties and the like. Sometimes, I've stayed the night, but if I were to plug in there, I would at most get around 30 kWh in 16 hours. I can do the trip in the Model S, but that involves 30 minutes at a SC. I find that acceptable, but it would certainly be better if I didn't have to. Basically: I would pay for up to 350 miles EPA range, while I wouldn't pay for more than that.

 

[JRP3]

Yes, it's important to remember that any "range" we are talking about can easily be cut by 40% or so by different conditions. People want to be able to rely on their range in the worst of conditions, when it's probably the absolute worst time to run out of a charge. That's why 400-500 mile range vehicles are important for many.

Regarding the importance of range vs weight, I just did a quick search on the forum. "range" returned over 23,000 results, "weight" returned 5,400. Range is obviously more important, even among experienced EV owners.
And yes, we are way off topic for this thread :redface:

 

[The Blue Owl]

And the point is that the consumer will learn that their needs are lower than they think they are.

Market behaviour at large is not determined by minimum needs. The more you move away from the lower end, the greater the weight of nice-to-haves and wants. Nobody needs 200hp cars, or 3000 sq feet homes, or more than two pairs of shoes. What people need is irrelevant when it comes to changing the status quo for the better, assuming you don't coerce people to fit within your arbitrary parameters. What matters is what people in the majority choose freely.

The Leaf spot is not sour at all, it's a car which fits the needs of a majority of the populace assuming they have the funds to purchase or lease a new car (though a few used ones exist now) and who have a place to charge it. And it's a car that over 100,000 people have bought and been quite satisfied with (it has better NPS scores than the competition, though not as good as the Tesla, obviously), so I have no idea where you're getting sourness from.

The sourness is in context, which you like to change all the time to make your argument work.

I said "sour spot", as opposed to "sweet spot". A product is in the sweet spot when it is displacing the competition by being compelling enough for a majority of the customers in a given market segment, while also allowing the vendor to make a profit. Model S is in a sweet spot, as evidenced by it outselling its gas equivalents in most markets where it's offered, and its numerous car-of-the-year awards it snatched from its gasoline rivals. People want the car because it's better, not because it's electric, and Tesla makes a large profit on it.

The Leaf is loved by its owners, I know. So was the EV1. That doesn't mean it's in the sweet spot of its segment, not by a long shot; it is not yet compelling enough for a majority of the customers in the market for a $30k car. People buy it not because it's better, but because it's electric, which is why gasoline cars in its segment still outsell it in most markets.

The electric car that will occupy the sweet spot for the $35k market is 30 months away and is called the Model 3. That car will most likely have the ability to displace gasoline car purchases in that market for a majority of the customers, not because it's electric, but because it will be functionally equivalent to an ICE at the same price, and in some ways vastly superior.

Leaf owners tend to love their cars. And this is the problem I have with Tesla owners, who assume that all other EVs are inferior not just to the Tesla (which, of course, they are, but that's why the prices are different), but to their gas competition. They aren't, people love them. And because of that, I, like most Leaf owners according to the NPS surveys, would absolutely recommend a friend to buy one. And have. Obviously even moreso for multi-car families, but some can certainly be fine with it being their only car. And I know multiple EV-only families who have 100-mile-class EVs and nothing else.

Your problem is not with Tesla owners, it's with the market. Elon knows that, which is why the number one focus for Tesla was, and still is, range. The buyers know that, which is why the Leaf doesn't have a waiting list of 4 months; even though it satisfies many people, it doesn't satisfy a majority. And investors know that, which is why many, myself included, are going all in with Tesla stock, as opposed to Nissan.

I can't think of anything useful to add, so I guess I've run out of charge on the subject.

 

[EarlyAdopter]

And here I thought this was the "Long-Term" Fundamentals thread, but somehow it seems to have turned into the "Long-Range" Fundamentals thread.

Can I kindly suggest we take discussion of range needs over to a more appropriate part of the forum, and instead focus on discussion of things like the earnings impact of a 2015 exit rate of 100,000 cars and this analyst forecast for 2016 earnings and a $316 price target?

More $ and EPS and less mi and Wh/mi here please.

 

[kalikgod]

vehicle miles traveled per capita by state

Vehicle miles per registered vehicle would be a much better metric. Living in Texas these results don't seem intuitive to me, but it is what the numbers say. Using Table MV-1 FHWA and Table VM-2 FHWA, I get these numbers:

State	Miles driven	Vehicles	Miles / Vehicle
California	326,272,000,000	27,702,150	11778
Texas	237,836,000,000	20,238,122	11752

 

[callmesam]

Can we talk long-term costs of the Supercharger Network with all these new cars?

Energy provision, only.

$50/car/year with the following assumptions:

15,000 miles per year
10% of miles Supercharged
3 miles/kWh
$0.10/kWh

Current Costs:
~50,000 cars using Supercharger Network
$2.5M/year

End of 2015 (Projected)
130,000 MS/MX using Supercharger Network
$6.5M/year

End of 2016 (Projected)
270,000 MS/MX using Supercharger Network
$13.5M/year

End of 2017 (Projected)
770,000 MS/MX/M3
$38.5M/year

 

[Robert.Boston]

Can we talk long-term costs of the Supercharger Network with all these new cars?

Energy provision, only.

The way Elon thinks about it is this: Tesla installs a lot of solar panels and either uses that power in the SuperChargers directly or sells the solar power to offset its purchased power costs. That approach puts the annual SC cashflow near zero.

As an economist, I think he's engaged in flawed accounting. If he spends, say, $250M installing solar panels everywhere, they would generate positive cash flow regardless of whether Tesla also has SCs. The SCs are still cashflow negative. And, Tesla will have tied up $250M in capex that could be used for other things, like expanded factory capacity, new service centers, etc. that contribute more directly to the bottom line.

This isn't to say that the SCs aren't a good investment: they clearly accelerate the adoption of Tesla's cars.