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Tesla won’t produce the Model X until it’s sufficiently awesome

Elon Musk would rather wait to put out an eagerly awaited product than push one out that’s not awesome.

That was apparent from the language used in Tesla’s Q3 newsletter, published Tuesday (emphasis ours):

We recently decided to build in significantly more validation testing time to achieve the best Model X possible. This will also allow for a more rapid production ramp
compared to Model S in 2012.

In anticipation of this effort, we now expect Model X [the company’s forthcoming SUV] deliveries to start in Q3 of 2015, a few months later than previously expected. This also is a legitimate criticism of Tesla – we prefer to forgo revenue, rather than bring a product to market that does not delight customers. Doing so negatively affects the short term, but positively affects the long term. There are many other companies that do not follow this philosophy that may be a more attractive home for investor capital. Tesla is not going to change.

Tesla’s earnings beat analyst’s expectations, but some weren’t impressed by the pace of deliveries by the luxury electric-car maker. Tesla said it would deliver about 33,000 vehicles in 2015, lowering its estimate by 2,000. John Thompson, CEO of Vilas Capital Management, said on CNBC’s “Closing Bell” program that Tesla is “grossly overvalued … A company making 33,000 cars is worth half of Ford Motor Company today.”

Still, Tesla’s stock closed at $240.20 Friday, down 98 cents for the day, but up from $230.97 since Tuesday’s earnings report. Ford closed at $14.17, down 2 cents.

(Photo: Darren Brode, Shutterstock)

Europe says yes to alternative vehicles

Things have always been a little easier in Europe when it comes to saving gas and adopting different kinds of vehicles. The distances are shorter, the roads narrower, and the cities built more for the 19th century than the 21st.

Europeans also have very few oil and gas resources, and have long paid gas taxes that would make Americans shudder. Three to four times what we pay in America is the norm in Europe.

Thus, Europeans have always been famous for their small, fuel-sipping cars. Renault was long famous for its Le Cheval (the horse), an-all grey bag of bones that’s barely powerful enough to shuttle people around Paris. The Citroën, Volkswagen and Audi were all developed in Europe. Ford and GM also produced models that were much smaller than their American counterparts. Gas mileage was fantastic — sometimes reaching the mid-40s. A big American car getting 15 miles per gallon and trying to negotiate the streets of Berlin or Madrid often looked like a river barge that had wandered off course.

More Europeans also opt for diesel engines instead of conventional gasoline — 40 percent by the latest count. The overall energy conversion in a diesel engine is over 50 percent and can cut fuel consumption by 40 percent. But diesel fuel is still a fossil fuel, which have a lot of pollution problems and don’t really offer a long-range solution. So, Europeans decided that it’s time to move on to the next generation.

Last week the European Union laid down new rules that will try to promote the implementation of all kinds of alternative means of transportation, making it easier for car buyers to switch to alternative fuels. The goal is to achieve 10 percent alternative vehicles by 2025 over a wide range of technologies, removing the impediments that are currently slowing the adoption of alternatives. If everything works out, tooling around Paris in an electric vehicle within a few years without suffering the slightest range anxiety would become a reality.

By the end of 2015, each of Europe’s 28 member states will be asked to build at least one recharging point per 10 electric vehicles. Since the U.K. is planning to have 1.55 million electric vehicles. That would require at least 155,000 recharging stations, which is a pretty tall order. But members of the commission are confident it can be done. “We can always call on Elon Musk,” said one official.

For compressed natural gas, the goal is to have one refueling station located every 150 kilometers (93 miles). This gives CNG a comfortable margin for range. With liquefied petroleum (LPG) it will be for one refueling station every 400 kilometers (248 miles). These stations can be further apart because they will mainly be used by long-haul trucks travelling the TEN-T Network, a network of road, water and rail transportation that the Europeans have been working on since 2006.

Interestingly, hydrogen refueling doesn’t get much attention beyond a sufficient number of stations for states that are trying to develop them. There is noticeably less enthusiasm for hydrogen-powered vehicles than is expressed for EVs and gas-powered vehicles. All this indicates how the hydrogen car has become a Japanese trend while not arousing much interest in either Europe or America.

At the same time, Europeans are planning very little in the way of ethanol and other biofuels (they also mandate 20 percent ethanol in fuel). Sweden is very advanced when it comes to flex-fuel cars. They have been getting notably nervous about the misconception that biofuels are competing with food resources around the world — Europe does not have its own land resources to grow corn or sugarcane the way it is being done in the United States and Brazil. Europe imports some ethanol from America but it is also now developing large sugar-cane-to-ethanol areas in West Africa.

Siim Kallas, vice president of the European Commission for TEN-T, told the press the new rules are designed to build up a critical mass of in order to whet investor appetites for these new markets. “Alternative fuels are key to improving the security of energy supply, reducing the impact of transport on the environment and boosting EU competitiveness,” he told Business Week. “With these new rules, the EU provides long-awaited legal certainty for companies to start investing, and the possibility for economies of scale.”

Is there any chance that the public is going to take an interest in all this? Well, one poll in Britain found last week that 65 percent would consider buying an alternative fuel car and 19 percent might do it within the next two years. Within a few years they find the infrastructure ready to meet their needs.

Paul Revere: The Teslas are coming, the Teslas are coming!

When he died, the patriot Paul Revere was embalmed in V8 juice, tanning lotion and several energy drinks. Surprisingly, he reappeared at a relatively recent conference of the Massachusetts Association of Automobile Dealers, looking fit and ready for another ride. The dealers had prayed for his second coming. They hoped that even though his previous ride was only one horsepower, he would consent to try a low-horsepower vehicle and ride the state, warning their brave residents that Tesla is online and in-store sales of electric cars coming. The dealers’ marketing folks felt that a reincarnated Revere would do wonders for their shaky image as wheeler dealers (excuse the pun). His deep, holier-than-thou, Fred Thomas-type voice (you know, the actor-turned-politician-turned-actor who now sells most anything on TV for money) would convince all but his former peer group (dead people) that Tesla was anti-American.

“What did Tesla do wrong,” asked Revere? Oh, it’s trying to sell its non-horse, torque-engine vehicles directly to modern-day patriots. Can you imagine euthanizing horsepower? Tears came to Revere’s eyes. But there’s more, paraphrasing a former automaker and cabinet officer Charles Wilson, one of the dealers indicates that what’s good for automobile dealers was and will always be good for America. What Elon Musk, the head of Tesla Motors, wants to do is eliminate dealerships. If the present case before the courts in Massachusetts is won by Tesla and Teslas are sold online, from a storefront, or shopping mall, surely Ford, Chrysler and General Motors will not be far behind. Forget capitalism, forget free markets, forget competition, even forget, Paul, your membership in the old Tea Party in Boston (you know, the taxation-without-representation crowd). Forget everything you fought for. By eliminating dealerships, Tesla will cost jobs. Dealers soon will have to close their doors. Bypassing dealers to sell cars will also first limit and then end our community philanthropy — you know, Little League teams, Fourth of July concerts, community picnics, jerseys for kids etc. Tesla’s headquarters is in California, and it’s a crazy state with Hollywood and all that. Californians act like foreigners. Tesla’s founder believes in global warming, he isn’t satisfied with life in America and he is developing a spaceship where the elite can, someday soon, travel to a second home and ruin our local economy. Losing dealers will make every community less American. Sure, vehicle costs may come down and emissions may improve, but what American is unwilling to pay extra to save his or her friendly auto dealer?

Revere was puzzled. He was a merchant way back then and he believed that competition and the free market were part of the American Dream. (To be honest, he also feared riding and did not understand how he could ride a multiple-horse powered vehicle. He had only mounted one horse.)

But he understood what the dealership folks were trying to tell and sell him. While in his heart, he was a bit ambivalent, he finally said he would do the famous ride again, and this time, because mileage capacity had increased and population of Massachusetts had grown, he agreed to try to go farther west than in his famous, poet-legitimized and sanctified ride.

But just as he gave them the okay, the dealerships received an email from a colleague in Boston that Tesla had won in the Massachusetts court. One dealer started crying. Several others criticized “those activist judges.”

Revere asked to read the email. It indicated that the Massachusetts Supreme Judicial Court unanimously determined that the Mass. State Automobile Dealers “lacked standing to block direct Tesla sales under a state law designated to protect franchises owners from abuses by car manufacturers” (Reuters, Sept. 15, 2014). Succinctly, the law was tied to the franchise relationship rather than unaffiliated manufacturers like Tesla.

The court’s finding should make it easier for Tesla to secure positive rulings in many other states. Earlier this spring, senior officials from the Federal Trade Commission strongly indicated that laws outlawing direct sales harmed consumers. Revere, after looking at the email, felt guilty that he had all but agreed to replicate his famous ride. But he was consoled by the fact that freedom and competition won out, at least in the Tesla case in Massachusetts, and that at least consumer democracy was alive and well in the state. He couldn’t help but muse on the fact that Texas, a state supposedly committed to minimal regulation and almost zero interference by government concerning businesses and citizens’ lives, turned its back on Tesla because of lobbying by dealers. Tesla cannot sell directly in Texas. But, as Ralph Waldo Emerson suggested, “foolish consistency is the hobgoblin of little minds.” After driving a Tesla (with no horsepower), Revere went back to the halo- lit neter lands happy. We haven’t heard from him since. But on faith alone, his experience with reincarnation likely would have made him a fan of Tesla’s electric cars and other alternative fuels.

Toyota Embraces Hydrogen

Toyota is the world’s most successful car company. The Prius is the most popular gas-electric hybrid ever, with 3 million sold in 80 countries worldwide. Toyota can be said to have pioneered the first vehicle that has challenged the traditional internal combustion engine.
So why is the Japanese giant now moving away from hybrids and placing its bets on the hydrogen fuel cell?
It’s a tough question. Not many analysts can see the sense of it. Elon Musk dismisses the whole idea as “fool cells” and says it can’t succeed. Yet, Toyota maintains that there are inherent advantages in the technology that will eventually emerge. Most of all, the decision by Toyota, Honda and Hyundai to go with hydrogen instead of electric vehicles has set off a fierce debate on which technology — if either — represents the better route to replacing the internal combustion engine.
It is not as if this is a snap decision for Toyota. In 1992, the company set up two task forces — one to investigate the gas-electric hybrid and one to pursue the hydrogen vehicle. In 1997 the Japanese giant introduced the Prius, which has gone on to become one of the most successful models of all time. But work never stopped on the fuel cell project. Now, as company officials reportedly believe hybrid technology may have reached the point of diminishing returns, they feel it is time to move on to something new. “Of all the advanced power train systems we have in our portfolio,” Toyota Senior Vice President Bob Carter told Green Car Reports, “we see hydrogen fuel cells as being the no-compromise, primary-option vehicle for the next 100 years.”
All this is happening, of course, at the moment when Tesla seems to be proving that electric vehicles can go head-to-head with gas-powered cars. So the question is, what does Toyota see in hydrogen that can’t be achieved by following up with electrics?
Range is one answer. Toyota is still convinced that electric vehicles will never get beyond the 150-200-mile range that most EVs now achieve — although Tesla is already pushing toward 300. The new Toyota Fuel Cell Vehicle (FCV) that will go on sale in California next summer will have a range of 300 miles, with hopes of future improvement.
Even more important than range is refueling time. A fuel-cell vehicle can fill up at a hydrogen pump in ten minutes — still significantly longer than gasoline — but an EV takes from four to six hours. Even the new “superchargers” that Musk is installing around the country take 20 minutes to give a half-charge. But Musk is also working on a battery-pack replacement that would be faster than a gasoline fill-up.
Of course all this is predicated on having “filling stations” available, and on that score, hydrogen is even further behind. There are only 60 such facilities in the entire country. Tesla just announced its 100th supercharging station in April and that’s just a small part of the action. Most EV owners recharge at home and the electric grid is everywhere. Providing hydrogen around the country would require a whole new infrastructure.
Joseph Romm, who once promoted hydrogen cars as Assistant Secretary of Energy under Bill Clinton and later wrote the book, “The Hype About Hydrogen,” remains one of the fiercest critics of the technology. “Hydrogen is the smallest molecule and escapes almost any container,” he wrote in his blog, ThinkProgress. “It makes metals brittle. It is almost impossible to transport. These are physical barriers that will be very difficult to overcome.”
Another surprising aspect of hydrogen is that it is not particularly cheap. Unlike EVs, ethanol or methanol made from natural gas, hydrogen does not offer consumers any financial incentive. At the J.P. Morgan Auto Conference in New York last week, Senior Vice President Carter admitted that a full tank of hydrogen needed to carry the driver 300 miles will cost $50, slightly higher than ordinary gasoline. By contrast, the owner of a Prius only pays $21 for the same trip, and the owner of a Tesla Model S would pay $9.60 at off-peak rates. It’s hard to see how there is going to be any appeal to consumers.
Now it must be admitted that much of the fierce debate taking place on the Internet concerning fuel cells vs. EVs revolves around reducing carbon emissions rather than freeing ourselves from foreign oil. EV advocates imagine a grid running on wind and solar energy while H2 partisans envision windmills and solar collectors turning out prodigious amounts of hydrogen. Other environmental critics have argued that without a larger component of non-fossil-fuel sources generating the electricity, converting to electric vehicles will do nothing to reduce carbon emissions, although some people disagree with all this.
It sometimes seems as if we are trying to accomplish too many things at once. Putting more FCVs and EVs on the road would definitely move us toward energy independence. The source of the hydrogen or electricity can be sorted out later, and the same goes for methanol and ethanol as a liquid substitute for gasoline. These fuels might originally come from natural gas, but renewable sources such as landfill gas and manure piles could be substituted later.
The important thing is to keep moving forward on all fronts. No one knows when some vast new battery improvement or an entirely different method of extracting hydrogen may prove to be a game-changer. Toyota is doing this by pursuing the fuel cell vehicle — even though for the present the odds seem slightly stacked against it.

 
“Toyota FCV-R Concept WAS 2012 0629″ by Mariordo – Mario Roberto Durán Ortiz – Own work. Licensed under Creative Commons Attribution-Share Alike 3.0 via Wikimedia Commons.

Tesla Motors, Inc.’s Demand Is Growing Faster Than Production

Tesla’s (NASDAQ: TSLA ) Model S has been an enormous success. Not only has the all-electric luxury sedan been outselling all comparably priced cars in North America in 2013, but Tesla is expecting sales to increase by more than 50% this year. Most surprising of all, however, is that Tesla is achieving this without spending any money on advertising. How long can this trend continue?

 

What’s Behind Tesla’s Demand For $500 Million In Gigafactory Incentives

Tesla Motors has been playing a game of economic development poker for its $5 billion Gigafactory with five states — Arizona, California, Nevada, New Mexico and Texas. Last week, Tesla’s billionaire CEO Elon Musk revealed the bid he expects from the winning state. Musk, speaking on a conference call with analysts, said the place that gets the Gigafactory will need to put up 10 percent of the total cost, meaning $500 million.

How Can Tesla Motors Inc Create A Self-Driving Vehicle?

Stocks.org

CEO Elon Musk stated at the annual shareholder meeting last month that he was confident that Tesla would be able to roll out vehicles that could take the user from the highway entrance to the highway exit without touching any controls.

The journey of a thousand miles, replacement fuels and FFVs

The headlines recently have been terrible — a commercial plane was shot down over the Ukraine, there’s war in the Middle East and more. It makes you wonder, over and over again, about man and woman’s inhumanity to his or her fellow men and women.

While certainly not equal in impact on the world at the present time, I happened to run across one point of light concerning a set of innovations which, in the long run, could positively impact climate change, security and consumer choice issues. It was reflected in a couple of articles describing the partnership between the state of California’s Energy Commission and Cummins Engines to develop an E85-fueled engine that apparently cuts Co2 by up to 80 percent (read it in Fleets and Fuels) in medium-duty trucks.

According to Cummins Engines and the Commission, a relatively small 4-cylinder, 2.8-liter engine has been successfully subjected to 1,000 miles and 1,500 hours of testing. It is now going through validation tests in Sacramento.

The story is a welcome one. Cummins indicates that the engine can generate 250 horsepower and 450 pound-foot of torque using E85. “Using lignocellulosic-derived E85, the powertrain’s efficiency features 75 to 80 percent lower well-to-wheels carbon emissions than gas engines; depending on the drive cycle…Cellulosic E85 is not derived from tilling, fertilizing and harvesting corn…Using corn-derived E85, the high thermal efficiency and power-to-weight ratio of this engine results in 50 to 80 percent lower well-to-wheels carbon emissions compared with the gasoline engine.”

Based on the Cummins documentation, California’s Energy Commission indicates “that successful completion of the project may result in a new market for E85 fuel now dominated by gasoline and diesel in the 19,500 lb. step-van fleet market.” The agency estimates greenhouse-gas savings as great as 69 percent, or 10 to 20 percent using corn based ethanol.

Fortunately, the general principles guiding development of Cummins’ engine may help improve flex-fuel automobiles and grant Americans more confidence in the environmental, price and economic benefits associated with extended use of E85.

Lessons learned may increase the nation’s ability to reduce GHG emissions. Based on what Cummins has done, using smaller engines extends the benefit of E85. Diesel-like cylinder pressures are important. Ethanol’s high-octane rating generates more engine efficiency. Use of state-of-the art sensors for spark ignition and coordination of stop-and-start functions enhances efficiency and reduces emissions. E85 is clearly a safe fuel.

The knowledge gained from the Cummins effort could lead to better flex-fuel vehicles and could support the effort to use increased technology fixes for older, non-flex-fuel cars and FFV twins. Perhaps the biggest benefit from the partnership between California and Cummings relates to the boost it could give to the search for replacement fuels, as well as the myth-busting understanding it could provide consumers about the safety of E85. It is a safe fuel, assuming engine adaptation and software amendment.

Elon Musk’s proposal to share Tesla’s electric-car patents and ideas might at least encourage increased collaboration among FFV makers in Detroit and the potential players in the conversion industry that likely would emerge, subsequent to EPA testing and approval of older vehicles for conversion. Even improved cooperation at the margin would could expand production of new FFV vehicles and expand conversion of older vehicles. For automakers and makers of conversion kits, as well as developers of FFV software technology, successful collaboration would generate larger markets.

Increased use of E85 through conversion of existing cars and the increased production of new FFV vehicles would help meet national and local environmental objectives, reduce gasoline prices and provide consumers with lower fuel costs, apart from gasoline. Both would also reduce dependency on foreign oil. Paraphrasing the poet Robert Frost, while FFVs — new or converted — are on a road less traveled now, as John F. Kennedy indicated, the journey of a thousand miles must begin with one step. The road less traveled now has more replacement-fuel drivers and FFVs than ever. Because of this fact, the journey of a thousand miles toward alternative fuel choices has made progress and, hopefully soon, will move at a faster speed. Success will mean a better quality of life for us all. It’s good news!

Image credit: Wikimedia commons