My thoughts on Joe Nocera's uninformed rant on Tesla Motors.
Disclaimer: My wife and I are a customers of Tesla Motors. You might think this means I want Tesla to succeed because they have a chunk of our money, but I think it's the other way around: Tesla has a chunk of our money because we believe in their vision and strategy for making it happen. We also own a RAV4-EV.
OK, enough about me. Let's get straight to Nocera's article and learn why Steve Jobs recently described him as "a slime bucket who gets most of his facts wrong."
[Elon Musk] is using [his] wealth to finance two quixotic efforts.
Don't mince words, tell us what you really think.
I'm no auto expert...
Well, at least we can agree on something!
Tesla expects to be delivering four cars a week soon, a number it eventually hopes to double.
Actually, they hope to get to about 35 a week within 6 to 12 months, but maybe math isn't his area of expertise, either.
By the end of 2010, Mr. Musk and his executive team expect to be manufacturing a five-seat, all-electric $60,000 sedan. This, however, will be a much more expensive and difficult task -- and many auto experts doubt that Tesla can pull it off.
What auto experts? Does he mean auto experts who make their living off of the big auto makers? Would they really be expected to say they think this tiny upstart company can easily do what the big guys have been whining can't be done for 10 years?
Among its flaws, the EV1 used a nickel metal hydride battery that couldn't get more than 75 miles before needing a charge.
Now he is getting the facts totally wrong. The first version of the EV1 used lead-acid batteries, 19th century technology, and had a range of 75 miles. The second generation EV1 used NMiH and had a range of over 100 miles.
"My daily commute was 37 miles one way," wrote a man named Michael Posner on a Web site called The Truth About Cars, who drove an EV1 for several weeks back in 1997. "Every trip was loaded with drama," he added. "If I went to lunch, I gave up a few precious miles. That could mean disaster." At General Motors, they took to calling this problem "range anxiety."
99% of all travel is less than 100 miles, so there's 1% of travel that couldn't be done in a second-generation EV1. This one guy tried to do his 74-mile commute in a first generation EV1 with a range of 75 miles. It didn't work out for him. Duh.
Is it any wonder the car didn't catch on?
Who says it didn't catch on? GM only leased 800 of them, but they never mention the waiting list of 4,000 more people who wanted to buy one. This happened with not only no promotion of the vehicles, but with ads clearly designed to dissuade potential customers from considering EVs. One can only guess what would have happened if the car companies actually promoted the strengths and benefits of EVs. When the big auto industry got the California Air Resources Board to eviscerate their Zero Emissions Vehicle mandate, they took back all of those leased cars from their passionate owners, despite offers of cash for the cars and organized public protests. Then they crushed the cars. If you haven't already seen Who Killed the Electric Car, I highly recommend it.
Jump ahead a decade. Oil is so expensive that everybody is thinking about alternatives to $4.50-a-gallon gasoline. At the same time, the technology that makes electric cars possible has greatly improved. The development of lithium ion batteries, in particular, was such a great leap forward that it has made it possible, with enough additional innovation by electric car companies, to produce vehicles that get more than 200 miles. Suddenly, an electric car seems viable.
Wow, that sounds cool.
And yet, and yet. Despite all this progress, we're not close to being ready to mass-produce an electric car. For starters, everyone trying to build an electric car is coming at it from different directions.
Lots of companies are trying to do something that's never been taken seriously, and they all have different approaches. That sounds like innovation. I'd be more worried if they were all doing the same thing.
For instance, while the Tesla has a 1,000-pound battery pack, consisting of over 6,800 cells (at an estimated cost of $30,000) ...
Whose estimate is the $30,000? If that's true, how could Tesla Motors be promising an EV for less than $30,000 by 2012? Maybe the estimate is wrong. Maybe the cost comes down with economies of scale.
...the new Aptera Typ-1 -- a Jetson-mobile if ever there was one -- uses a much smaller battery; its secret sauce is its aerodynamic shape, which greatly reduces drag.
Sure the Aptera has a smaller battery: it's not an electric vehicle, it's a gas/electric hybrid.
Bill Gross, the head of Idealab, which is behind Aptera, told me that he believes that when the car comes on the market late this year, it will sell for around $29,000 -- meaning of course that its business model is the opposite of Tesla's.
So Aptera is making a hybrid, hasn't passed crash testing, and is promising a car this year. That's why he's comparing them to Tesla, because they are where Tesla was two years ago, except they are trying to do something completely different.
Meanwhile, a third company, Phoenix Motorcars, is hoping to make traditional cars, like S.U.V.'s, that just happen to run on electricity.
Wow, that sounds crazy, sort of like the RAV4-EV and the Chevy S-10 EV. Oh, wait, it's already been done, and quite successfully considering how well-loved the few RAV4-EVs are.
It will take years, if not decades, for the marketplace to choose a winner, which, in turn, will keep consumers from committing to an electric car.
Why do all electric vehicles have to be the same in order to be popular? The Honda Insight and Toyota Prius have pretty much opposite strategies, and yet the Prius is wildly successful and our local Honda dealer keeps sending us letters begging us to trade in our Insight because they are in high demand but Honda stopped making them.
Secondly, even though the range of an electric car can extend to 200 miles or more, that is still not enough for people to abandon internal combustion engines. Surveys have repeatedly shown that the vast majority of people drive 50 miles or less a day -- and the nascent electric car industry takes great comfort in those numbers.
Who said everyone has to give up ICE vehicles for EVs to be successful? How about if every household in the US that currently has two ICE vehicles replaced one with an EV? It seems like that would make a successful business.
But what happens when you want to take a longer drive?
How about a hybrid? See how handy it is that we don't have everyone building the same vehicle?
For an electric car to truly take hold, the country will need some kind of national electric car infrastructure -- either a place where people can stop to charge the battery (although that still means waiting hours to get a full charge) or a system in which batteries can be exchanged like propane tanks.
Gosh, how could we possibly create a national infrastructure for charging electric vehicles? We'd have to build power plants and string wires across the entire country, then put outlets on the ends of those wires. Sounds prohibitively expensive, except for the fact that we've already done it.
According to Tesla, a high current charging station could charge the Roadster's battery pack in less than an hour. So, stop for lunch, plug in your car in the parking lot, and an hour later your EV is fully charged.
Then there are the manufacturing problems. Just because Tesla has succeeded in making an expensive electric sports car does not mean that it will be able to make a moderately priced five-seat sedan. The latter is a quantum leap more difficult. "If the Roadster costs $100,000, how much will the sedan cost?" Mr. Sherman of Automotive magazine said. "It will have more doors, more seats, more metal, larger brakes. The operative word here is 'more.' "
Gosh, maybe they could lay off the carbon fiber and find some savings in economies of scale. I wonder what it cost Henry Ford to make the first 2,000 cars in inflation adjusted dollars. More than a Tesla Roadster, I'll bet.
David Cole, the chairman of the Center for Automotive Research, is another Tesla skeptic. For one thing, he says, the battery solution in the Roadster probably won't work in a heavier car. "Lithium batteries are going to change the world," he said, "but they are not ready for prime time." Tesla's solution in the Roadster -- tying together thousands of small batteries into one giant one -- is "suboptimal." He added, "On a degree of difficulty scale, building a sports car is a 2. Building a high-volume affordable car is a 10."
Ah, so he did find a big auto industry wonk that will put his name on a statement that says starting a new car company is hard. Wow! Fortunately, Tesla Motors figured this out all on its own and is working slowly toward mass-producing EVs while taking advantage of the growing demand for efficient, clean, fun electric vehicles. They sold around 1,000 before delivering a single car. What do you think the demand will be like when they are cranking them out and they are no longer an unproven car company?
Tesla, of course, insists that it is well aware of the difficulty, but remains confident it can succeed. Darryl Siry, the Tesla marketing chief, argues that the company has access to all the capital it needs, that it has just hired a manufacturing expert from Chrysler and that it has a hard-headed chief executive, named Ze'ev Drori, who has a reputation for getting things done. The more I prodded, though, the more skeptical I became.
In other words, Drori is a big auto industry guy who thinks it can be done, therefore he must be high.
For instance, what Tesla doesn't say, unless you really push, is that the sedan it hopes to sell for $60,000 will not get 200 miles per charge but closer to 160.
That's a big problem because 99% of all travel is under 100 miles, and apparently the cheapest Tesla sedan only goes an extra 60 miles of top of that.
It will cost considerably more to get 200 miles per charge -- which of course makes it an awfully costly car even for the moderately wealthy.
Yeah, cars that cost over $60,000 don't sell at all. Well, except for high-end sports sedans. Do you think Tesla can sell 20,000 high-end electric sport sedans? I sure do. 6-year-old RAV4-EVs sell for over $60,000 on the rare occasion when a lucky owner of one decides to sell. (The linked eBay item #230254014549 shows a RAV4-EV auction which closed at $89,200 but the top bidder flaked so it sold to another bidder for $69,850.) Could Tesla sell a million sedans at that price? Probably not. Given that they are only going to make 20,000 a year, it seems highly likely to me they could sell them at $60K even if they can get the cost down well below that.
I also don't see any problem with Tesla's plan to sell 200,000 EVs per year at less than $30,000 each. The only problem I can see with that is the length of the waiting list. They might need to sell them for more so their supply can meet the demand.
And that kind of petty dissembling on Tesla's part doesn't exactly inspire confidence.
Tesla said the sedan starts at $60,000, but they have never said the cheapest model will have a 200-mile range. In fact, they have not announced the specs for the sedan at all. It is somewhere between naive and disingenuous to connect the dots incorrectly and call Tesla liars.
So where should we pin our short-term electric car hopes? Andrew Grove, the former chief executive of Intel, has lately been pounding the table on behalf of something called a plug-in hybrid -- which uses a far more energy efficient design than the Prius, Toyota's popular hybrid. The Prius is powered both by batteries and an internal combustion engine, but essentially they are both working at the same time, so it is always consuming gas.
Well, except for the fact that a Prius has a small range that it can drive on pure electric. It's a small matter of installing and flipping a switch to give the US version of the Prius an extended pure electric range like the model sold in Japan. Then, for under $10,000 you can increase that range to over 40 miles.
A plug-in hybrid would drive completely on electricity until the battery runs down -- after about 40 miles or so -- and only then would the car switch to internal combustion.
A plug-in hybrid can go either way. It can have the design of a Prius (a parallel hybrid) with a larger battery, or it can be a serial hybrid like the Aptera or Chevy Volt.
Such a solution has the potential to cut the nation's gasoline bill in half.
That sounds a lot like what replacing half of the ICE cars with EVs, except with the hybrid strategy, everyone gets to keep paying for maintaining their internal combustion engines, catalytic converters and mufflers. I wonder why the big auto companies are doing everything possible to stall the adoption of pure EVs?
Mr. Grove believes that big cars like S.U.V.'s can be retrofitted to become plug-in hybrids, and he's right. But it is also expensive; Martin G. Klein, the founder of the battery company Electro Energy told me that it costs $50,000 to turn a Prius into a plug-in hybrid. (He's done it.) "But in a future scenario," he added, "it would cost a few thousand dollars."
So, it's wildly expensive, except that it isn't. In fact, companies like HyMotion are doing it today for about $10,000.
So where should we look, realistically, for a mass-market electric vehicle? Believe it or not, Detroit. In fact, the quick-fix approach that strikes me as the most promising comes from -- surprise! -- General Motors, the chief villain of "Who Killed the Electric Car?" The Chevy Volt, which the company wants to bring to market in 2010, is a plug-in hybrid that aspires to be able to travel 40 miles before switching to gasoline power. But the best part is that the combustion engine will automatically recharge the battery -- so it can switch back even while you're driving.
Yes, that's right: we should look to Detroit to do what small companies are doing today, while also not actually producing pure electric vehicles and protecting their ICE maintenance revenue stream. It's amazing how unattractive EVs look when you can just keep doing the same old thing, with a twist. They want to create a more efficient ICE vehicle by burdening a perfectly good EV with the weight and hassle of the ICE engines they have built their business around. Go Detroit!
It's not sexy like the Tesla, and it's not aerodynamic like the Aptera Typ-1. But for a mass-market solution in the here and now, that's the one to root for.
Except for the part where it's neither here nor now, it's set to match Tesla's Model S time frame, and it isn't an electric vehicle. But other than those things, it's great. So, let's all kneel and bow toward Detroit and hope that we can get in our reservations for Tesla's Model S and the 2012 sedan before they are sold out as far as the Roadster is.