The Tesla Model S Road Tests: Not Ready For Prime Time

Updates

June 28, 2016: Business Insider says everyone is missing the point. BI argues that MuskMelon is not concerned about TSLA share price, and yes, this was a SolarCity bailout. BI says MuskMelon envisions:

With this bid, Tesla is trying to become what Musk probably wanted it to be all along: an integrated holding company providing global-warming solutions.

If the SolarCity deal goes through, then Tesla will be a carmaker; a battery maker, thanks to the Gigafactory being built in Nevada; an energy storage company, thanks to Tesla Energy, unveiled last year and selling residential battery packs; and a solar finance firm.

Put all that together under one roof and you get a company that can sell or lease you a zero-emission, off-the-grid lifestyle.

Plus, Musk rescues his SolarCity investment in the process. But there's nothing surprising here in the master plan. Musk has always thought of the companies he's involved with as a single mega investment. It makes sense to use the stock of one to keep another one going.

Or as I've said, a "an electric battery company disguised as an automobile company surviving on government credits and tax breaks." 

June 22, 2016: the Tesla story gets curiouser and curiouser. Battery technology update.

June 22, 2016: Bloomberg weighs in. No matter how "they" spin it, it suggests that MuskMelon is severely cash-strapped.  

June 10, 2016: Tesla has a problem. 

May 13, 2016: billions and billions to ramp up. 

May 10, 2016: Investopedia/Barclay's -- not going to happen. 

May 5, 2016: Meanwhile, MuskMelon is trying to achieve something the manufacturing world has never seen before: produce 500,000 vehicles per year by 2018, a target that was moved up from 2020. 

May 5, 2016: WSJ is reporting that Tesla's losses widen on lower-than-expected deliveries. Now we know why the vice president for manufacturing and the vice president for production are both departing. Yesterday it was a bit unclear. 

April 7, 2016: 1Q16 EV sales; Tesla misses its own forecast. Numbers don't mesh.

April 6, 2016: not all Tesla owners will get the federal tax credit. This is a non-story. The 200,000 car sales threshold will be eliminated when politically expedient, and Elon Musk knows that. A billion dollars can buy a lot of votes.

August 20, 2015: Elon Musk says the interstate Superchargers are not to be used by Tesla owners for routine, daily, local use. 

August 14, 2015: Announced yesterday, apparently $500 million for Tesla was not enough. The Wall Street Journal is now reporting (no link; I'm sure you can find the story "everywhere"):  

Tesla boosted the size of its stock offering, unveiled just a day earlier, by more than $140 million.The electric-car maker said it now plans to sell about 2.69 million shares, up from the 2.1 million shares it said it would sell on Thursday. At the offering price of $242 a share, the sale would raise about $652 million.

August 13, 2015: just weeks after raising $750 million in new loans, Tesla announces a new issue of Tesla stock; will issue 2.1 million shares for $500 million. About $240/share. On July 21, 2015, I wrote: if Tesla requires another $500 million to $1 billion bailout before July, 2016, it will speak volumes of how Tesla is doing.

July 29, 2015: Tesla surges; article on lithium batteries. 

July 21, 2015: GE announces it will get into storage (batteries); Tesla tanks.

June 22, 2015: "They" said it, not me. Tesla has a cash problem. 

February 14, 2015: burning through cash, Elon Musk may be losing his marbles.

April 26, 2014: they're gonna be burning a lot of coal in China if Tesla succeeds. It takes 75 pounds of coal to fully charge the Tesla ... each time.

September 6, 2013: the gargantuan Tesla battery shortage problem, at SeekingAlpha.

September 2, 1013: I think the Tesla is to the EV industry, what the Keystone XL is to the oil pipeline industry. Whether one agrees or disagrees with this writer, the outcome is not only interesting, but very, very critical to the entire future of the EV.  In case the link ever breaks, the writer feels Tesla is in greater financial trouble than folks are willing to admit.

August 19, 2013: the young and the rich buying the Tesla Model S. I think this kills the Chevy Volt. In fact, at the very end of the article:

"If you can afford a $100,000 dollar car why would you buy the Chevy Volt? It is a nice car, but why wouldn't you buy the Tesla Model S? If you have the money, you are going to buy the Tesla model S," said Riswick.

August 17, 2013: Bloomberg reports --

BMW will show a production version of the plug-in hybrid i8 coupe at the Frankfurt auto show next month that’s to go on sale in the U.S. in early 2014. Pricing, also to be announced next month, will be less than $150,000, Willisch said. Model S starts at about $70,000. 

August 17, 2013: hybrids are "better" for the environment that EV -- from The Wall Street Cheat Sheet --

I’m sure you have heard the statement that an electric cars is only as green as the electricity that is used to power it. Climate Central performed a study on the environmental nature of electricity in all 50 states around the U.S. in order to determine what merits electric vehicles have in each state. It turns out that in the states reliant on fossil fuel power stations to generate their electricity, conventional hybrid vehicles and plug-in hybrid vehicles are better for the climate than any electric car available on the market.

When considering carbon emissions for the entire lifetime (including construction) of an electric vehicle, it might surprise you know that EVs start with a far higher carbon footprint that hybrids, or even conventional gasoline cars. The manufacturing of the EV battery alone creates between 10,000 and 40,000 pounds of carbon that then takes tens, or hundreds of thousands of miles of driving, using clean electricity, to work off.

August 9, 2013: fairy tale accounting at Tesla, SeekingAlpha. This is a very complete update of the finances of this company: a) 25% margins on making and selling their cars; b) 100% margins on selling ZEV credits in a fully saturated market.

On Wednesday of this week Tesla reported its second quarter results. It beat guidance and expectations on the number cars delivered and average sales price per car, and significantly improved gross margin on its core business of making and selling cars without regard to the profitability of its 100% margin side business of creating and selling ZEV and other regulatory credits.

August 7, 2013: musings on the electric vehicle story

June 19, 2013; Tesla Model S recalled for defect in mounting bracking of the back seat. Company things 20% of 1,226 Tesla Model S's may be affected.

June 18, 2013: CNBC seems obsessed with Tesla. As am I.

June 11, 2013: yes, the Tesla is for the rich who are looking for a 3rd or 4th car.

June 10, 2013: Tesla is a lemon with a less expensive battery -- Barrons.

June 3, 2013: it just got worse. SeekingAlpha is reporting:

What will be a surprise coming from last week's announcement is that investors will eventually realize that Tesla's SuperCharger infrastructure build-out is going to be SuperExpensive when analysts rework their models to account for ALL costs associated with providing "free" charge-ups and building the network to make it viable.
Not only is TSLA currently a car manufacturer, but they are now becoming an "infrastructure builder." 

Smart money may have been quick to realize the foregoing new cost concerns. After the Supercharger announcement on Thursday (5/30/13), the stock reacted in classic "buy the rumor, sell the news" style. The stock lost $7.17 to close at $97.76 - a 6.85% loss on Friday. Selling spiraled downward shortly after the buzz died down from Elon Musk's morning interview on CNBC to further market his Supercharger concept to the masses.

June 2, 2013: the numbers don't add up. Tesla won't make it. That's my opinion. Whether Tesla survives or not, investors won't make much money. Yahoo!News is reporting:

The main takeaway is that Tesla isn't making money selling electric cars. 

The little money the company has made is through unsustainable tax credits with little hope of a repeat performance anytime soon. In other words, don't count on Tesla's profits keeping pace with its stock price.

Tesla isn't alone in building electric cars, but it is alone in the relative valuation. General Motors and Nissan build electric cars, and, like Tesla, selling electric cars isn't a profit center.

Some of the money is already spent, and there is no putting the toothpaste back into the tube. But other money is subject to the whims of state and federal legislators. Without changes, the federal $7,500 tax credit should phase out beginning with 200,000 vehicles sold. 

Tesla has a long way to go before it sells 200,000 vehicles, but the fact of diminishing returns shouldn't be lost on investors, especially longer-term investors. 

June 1, 2013:  Tesla says its "supercharging" stations around the US will only work for their Teslas.

May 31, 2013: Bob Lutz, former chairman of GM -- the electric car is coming -- CNBC is reporting:

"I always say that the electric car future is definitely coming, because batteries will accept more charge, the cost of batteries will come down, fast charging will happen," he said. "But the whole thing is five to 10 years away."

May 31, 2013: the Tesla is for the very well-to-do, the wealthy

May 30, 2013: companies are even having trouble "giving away" electric vehicles in California. I think there are two reasons: a) there are very few people that can live with the limited range; most folks don't want a brick parked in their garage; and, b) they don't like the idea of a contractor coming out to the house to install a charging station, even if it's free. 

May 17, 2013: Tesla pays back its US Energy Department load nine years ahead of schedule.

April 26, 2013: Tesla cannibalizing Chevy Volt sales.

May 5, 2011: the $109,000 Tesla Roadster is now "retired." It was outsold by the Chevy Volt.

February 23, 2013: Tesla acknowledges the potential of their EV. 

February 21, 2013: decreased earnings at Tesla suggest folks may be cancelling their orders. -- New York Times.  Quote of the day at that linked article:

"We are not demand-constrained," Tesla's chief executive, Elon Musk, said on an investor call on Wednesday. "We are intentionally production-constrained."  

Where have I heard that name before, "Elon Musk?" Oh, yeah,  he's giving battery advice to Boeing.

February 19, 2013, 9:50 am: CNBC test driving the Tesla. Top model gets 265 miles fully charged on cruise control, 65 - 70 mph. Can't speed. Can't take detours. Tesla would not get you from Fargo to Williston without recharging in Belfield -- but that would be fine -- 30 minute quick-charge while having dinner. But no speeding. And no detours. Or you will find yourself in Grassy Butte high and dry. [Update: did I hear correctly? On CNBC February 21, 2013, I thought they said from NYC to Boston, the CNBC driver had to stop twice to recharge, and one of the stops was for an hour recharge. Also, the talking head said that putting a recharging station in at one's home is "not all that expensive": about $10,000. On top of the over-priced electric vehicles.]

February 11, 2013, 4:10 pm: The Times responded and said the story is absolutely factual. Elon Musk said the reporter was required to leave a) with a full charge; b) take no detours on the trip from Washington, DC, to New York; and, c) must not drive "fast" -- "not much above the speed limit" -- the latter point was a bit vague. There was some debate regarding whether the cold night prior to the trip was part of the problem.

February 11, 2013, 3:13 pm: On CNBC, the Tesla Motors/CEO, Elon Musk responded to the NY Times article. Musk had three complaints, none of which were valid. But the most "nutty" comment was that the NY Times driver drove too fast, sometimes as much as ten miles above the speed limit. Really? First, on the interstate and state highways, it is not uncommon for drives to exceed the speed limit by ten miles per hour. And second, the Tesla is being marketed as a sports car, a "fun" car, a "snappy" car, and so you buy it and are told to drive slowly to save electricity? Okay. It was a test drive. The driver was simply reporting his experience which sounded pretty real. I have no idea why the NY Times would "fake" a story on this car as Elon Musk suggests the Times writer did.

February 11, 2013: the WSJ also ran a long story on Tesla; more from the financial angle, as one would expect. 

A key figure will be how many Model S cars the company is now making per week. It was making 200 a week in October and needs to make at least 400 a week to break even.

Tesla, which has posted a loss in every quarter since its initial public offering in 2010, is facing plenty of skeptics. In the third quarter of 2012, it reported a loss of $111 million on revenue of $50 million. The company raised $193 million in an October stock offering.

Tesla is closely watched as lower-than-expected demand for electric cars has forced several startups and publicly traded companies to shut down, and because Tesla received $465 million in loans from the Department of Energy. Not since the 1920s has a startup car company managed to survive in the U.S. market. 

February 1, 2013: Tesla makes Consumer Reports top ten list. Am I missing something?

Original Post 

Two reviews of the Tesla Model S today. One review in the LA Times; one in the NY Times. It was not possible to pick a short summary from the articles. If interested, please go to the linked articles.  This is where I am archiving reviews of the Tesla. 

February 10, 2013: NY Times -- a very, very bad review of the Tesla Model S -- 

Instead, I spent nearly an hour at the Milford service plaza as the Tesla sucked electrons from the hitching post. When I continued my drive, the display read 185 miles, well beyond the distance I intended to cover before returning to the station the next morning for a recharge and returning to Manhattan.

I drove, slowly, to Stonington, Conn., for dinner and spent the night in Groton, a total distance of 79 miles. When I parked the car, its computer said I had 90 miles of range, twice the 46 miles back to Milford. It was a different story at 8:30 the next morning. The thermometer read 10 degrees and the display showed 25 miles of remaining range — the electrical equivalent of someone having siphoned off more than two-thirds of the fuel that was in the tank when I parked.

I called Tesla in California, and the official I woke up said I needed to “condition” the battery pack to restore the lost energy. That meant sitting in the car for half an hour with the heat on a low setting. (There is now a mobile application for warming the battery remotely; it was not available at the time of my test drive.)

February 10, 2013: LA Times tests the Tesla Model S; an EV for $90,000.  So, we'll see how it does.

The trouble is that repeated demonstrations of the car's prodigious power utterly destroy its range. Tesla says this model will go 300 miles on a single charge. The EPA puts that number at 265 miles. Over four days of testing the car, we managed only about 160 miles in heavy-footed driving.

All Model S's will charge through a 120V or 240V outlet. Tesla says the former needs roughly 46 hours to recharge fully, while the latter needs eight to 10 hours. Buyers can reduce these times by adding a second on-board charger for $1,500 and buying a high-power wall connector for $1,200.

Tesla is also installing 100 of what it calls supercharging stations in the U.S. and Canada by year's end, including six already operating in California. They're free for Tesla owners, who can add half a charge in about half an hour.