Is Tesla A Game Changer?

fintail

Evan Niu and Fool.com editors probably hold some stock.

gagrice

I think Tesla and Musk have gotten far more than their share of our tax dollars.

Tesla Motors Inc., SolarCity Corp. and Space Exploration Technologies Corp., known as SpaceX, together have benefited from an estimated $4.9 billion in government support, according to data compiled by The Times. The figure underscores a common theme running through his emerging empire: a public-private financing model underpinning long-shot start-ups.

"He definitely goes where there is government money," said Dan Dolev, an analyst at Jefferies Equity Research. "That's a great strategy, but the government will cut you off one day."

http://www.latimes.com/business/la-fi-hy-musk-subsidies-20150531-story.html

stever

That all looks like economic development stuff and proponents justify it by pointing to the jobs and taxes created. Just like they do the oil and gas depletion stuff or highway subsidies, yada yada.

In Elon's case, SpaceX is actually delivering the goods.

gagrice

If SpaceX has a contract to deliver supplies to the space station, I would not consider that a subsidy. That is the cost of doing business. If we paid to develop the rocket he is using, that is a subsidy and we should get that back from the profits he makes delivering goods. The problem is we pay to develop and install various green stuff and never share in the profits. I think Reno NV will be the big losers with the battery factory. Nothing says see you later than cheaper prices from another company. Musk probably has his shares shorted like so many others.

Mr_Shiftright

Some wags call that "socializing profits and capitalizing losses".

All governments pour money into those "native" fledgling industries that they want to see competing in a global market. They finance the transition from R&D to the marketplace.

Some win, some lose.

The Internet is a good example I guess.

stever

Great example Shifty. Some stupid subsidy back in the day now helps pay my rent.

"The problem is we pay to develop and install various green good and bad stuff depending on your own world view, and never share in the profits. "

fintail

Or it might be like subsidizing sports arenas, which can be sketchy at best.

The snark I prefer is "socialize losses, privatize profits", which is pretty much how a few dominant industries work these days.

Mr_Shiftright

You might benefit peripherally. After all, thanks to Star Trek we got cell phones.

I'm sure tax credits have spurred the sale of hybrids and EVs--to what extent, it's hard to say.

I'm still seein' Tesla morphing into a utility company, with even more government assistance. The U.S. definitely wants battery productioin supremacy over China.

stever

fintail said:

Or it might be like subsidizing sports arenas, which can be sketchy at best..

Another good example - how else would college football coaches be the highest paid state official in almost every state?

Mr_Shiftright

Well the Army pays the NFL to stage half-time events. The gov't even subsidizes entertainment!

fintail

Maybe a battery company. Today I read MB is actively pursuing development of a 300+ mile EV. Make it C-class priced, and the market will be upset. If Tesla can get in the market of batteries, it might be more of a viable business model.

Peripheral benefits are too close to trickle down economics for me, the kind of stuff that allows tax breaks for 100K cars.

Mr_Shiftright said:

You might benefit peripherally. After all, thanks to Star Trek we got cell phones.

I'm sure tax credits have spurred the sale of hybrids and EVs--to what extent, it's hard to say.

I'm still seein' Tesla morphing into a utility company, with even more government assistance. The U.S. definitely wants battery productioin supremacy over China.

Mr_Shiftright

Tesla could produce 1/2 million cars a year and still lose money. GM showed us how to do that, and more.

Volume does not equal profitability.

hpmctorque

Now here's a potentially disruptive techonology...

http://www.autonews.com/article/20160614/OEM05/160619961/nissan-develops-new-ethanol-fuel-cells-to-jump-infrastructure-hurdle

hpmctorque

More competition for Tesla...

http://www.autonews.com/article/20160614/OEM05/160619944/electric-car-startups-fueled-by-chinese-money-aim-to-catch-tesla

hpmctorque

Germany's path to green cars should help Tesla...

http://www.autonews.com/article/20160614/COPY01/306149958/germany-needs-emissions-free-car-fleet-by-2030-official-says

fintail

That's 14 years. These social-engineering eco-weenies are hilariously insane.

Oh, I read the bio of the talking head. Carry on, I am sure his prosperous public sector history will afford him a Model X. And even with that, Germany gives a smaller gift to Tesla buyers than across the pond.

hpmctorque

According to the article, the emissions free car fleet by 2030 is the goal, not the law in Germany...at least not yet. That would imply that there's some wiggle room, but still, that leaves fans of internal combustion powered cars, such as myself and probably many others on these forums, little to cheer about.

By the way, how green are the coal burning power plants that supply electricity? Also, how green is the manufacture (from mining the materials to production of the finished product) and disposal of battery packs? Not much has been written about these issues.

stever

Guess it depends on whether you want your pollution "centralized" or spread out all over every neighborhood.

fintail

I think "goal" can be a dangerous thing when one is dealing with an activist type who has been allowed power, or when an article calls it a "path". Especially in some parts of the EUSSR, which are prone to idiotic decisions as of late, and as their defense is subsidized, they can afford to play around. I do notice that the article admits that passenger cars are a minor part of the pollution story, and that no solution has been envisioned for trucks or other transport that pollute a lot more. Low hanging fruit, these guys have based lucrative and secure careers on it.

The German power grid has a lot of wind and solar, but also a ton of coal. No mention is ever made how EVs will impact or stress the grid, of course, and we all know the juice in an EV never comes from coal, but from dandelions and unicorn farts. Another difficulty in the "goal" is the lack of a workable long range EV - Germans take road trips, too. Of course, consumer sentiment isn't important.

Regarding pollution, many who protested 45 years ago and forgot about their old ideals are fine as long as it is exported to NIMBY.

stever

fintail said:

I think "goal" can be a dangerous thing when one is dealing with an activist type who has been allowed power, or when an article calls it a "path".

That's funny - I always avoid dentists who want to put me on a "treatment plan".

I think the goals are good but things can change pretty fast too - guess that's one reason I like the natural gas power plants. Relatively clean, relatively cheap and easy to built (or even relocate), you can ramp them up or down and you don't have a lot of coal fly ash piling up or you don't wind up paying through the nose to "contain" radioactive waste for centuries.

I still think the copper grid needs to go away - sometimes economy of scale creates worse side effects than localized solutions. When we all have one of Elon's battery packs bolted to the garage wall, a power outage won't require buying extra from Quebec Hydro and sending it 4,000 miles.

gagrice

hpmctorque said:

According to the article, the emissions free car fleet by 2030 is the goal, not the law in Germany...at least not yet. That would imply that there's some wiggle room, but still, that leaves fans of internal combustion powered cars, such as myself and probably many others on these forums, little to cheer about.

By the way, how green are the coal burning power plants that supply electricity? Also, how green is the manufacture (from mining the materials to production of the finished product) and disposal of battery packs? Not much has been written about these issues.

A tale of two countries with the same goal.

Norway gets 95% of their electricity from hydro. Will it support the kind of increase an all EV nation will demand??

Germany in its desire to get rid of Nukes, is expanding their coal generation with the dirtiest coal known to man, Lignite coal. If your town is sitting on coal, you will be moved to provide Germany's expanding energy needs.

The German village of Atterwasch is tiny, its single street lined with sturdy brick and stone houses. The village has a single church whose bells peal out at noon each day, a small volunteer fire department, and a cemetery with a special section devoted to German soldiers who died nearby in the closing months of World War II.

Atterwasch may soon be gone.

Vattenfall, a Swedish energy company, hopes to relocate the village and its residents in order to strip-mine the ground underneath for lignite, or "brown coal."

http://news.nationalgeographic.com/news/energy/2014/02/140211-germany-plans-to-raze-towns-for-brown-coal/

Mr_Shiftright

When ICE vehicles are totally banished in the western world (something I won't live to see, but some of you might), then the EV and hydrogen and all the rest will have their chance at market dominance.

fintail

This seems to be a mature site - youngest reader here might be 30. If they have a good run, 60 years to go - not seeing ICE banned that quickly without concurrent revolutions in public transport, alternative power, and sufficient resources to fuel that power.

Norway might be able to do something for passenger cars, as the population of WA state alone is 40% larger than the entire country. But I bet it won't work for trucking, which the country depends on to bring goods to those who live outside the southern population core. Having a massive sovereign fund with a small homogeneous population and little offshore spending also helps.

Atterwasch will be repeated in other areas, kind of a forgotten area of Germany in the far east, kind of like American areas where all the young people who can get out do get out. Sad. Maybe Germany has no natural gas? Goals are good, but maybe not when made by activist types who don't seem to have much real world cred.

Mr_Shiftright

Freight hauling will be an issue that's true.  Perhaps the ICE will only be banned in Metro areas.  I could see all this happening by about 2040. If I  were the CEO of an automaker,  I'd be making ambitious plans to be out of the ICE business.  The next 50 years are going to be real rock n roll. 

fintail

Maybe banned in pedestrian zones in downtown cores (as exist in many places now), but I can't see it in entire metro areas without the revolution I mentioned earlier. In most places, there simply isn't enough EV infrastructure nor enough public transit. Not to mention affordable housing - around here, a lot of people drive a lot because they can't afford to live closer to work. Banning ICE vehicles would only serve as a regressive tax, and the past 30 years have had enough of those. 2040 is a mere 24 years away. It won't be that fast, nothing is that fast in America.

Mr_Shiftright

I think necessity will be the mother of invention in this case. They might only allow EVs and hydrogen cars in the cities, or making driving ICEs very expensive. Younger people like mass transit, bicycling to work, electric scooters. A lot of people under 30 don't even have driver's licenses anymore.

There's plenty of money to build mass transit. All we have to do is stop throwing it away on other useless things.

A lot depends on whether or not the climate and environment continues to deteriorate at the current rate or changes its mind. If the former, the impetus for change will be very strong. If the latter, then my scenario will be premature I guess. But inevitably, we'll change energy sources.

fintail

Necessity, or transparent attempts at social engineering by a demographic who doesn't have such a great track record? Most young people eventually have families and can't scooter their brats to the mall or hover over them after school via a bus, nor do they want to raise 2.4 kids in a 500 sq ft city apartment. The millennial boom will eventually grow up and move on. More demand for personal transport, no matter the desires of guilted activists who never seem to practice what they preach. I got mine, to hell with you.

Plenty of money for transit from what? From our Praetorian sector expenses? Sorry, those won' be cut. And it's not like the social safety net can be made more threadbare. Tax the rich, perhaps? Funny.

The fun part is thinking ICE passenger vehicles are a significant impact on climate change. I suspect forcing electric trucks would have more of an impact.

hpmctorque

It'll be interesting to review today's comments in, say, five or ten years, since most predictions turn out to be wrong, especially about the future (credit for that goes to Yogi Berra, I believe).

Maybe all the money that's being poured into battery research by the major auto manufacturers, tech companies and universities will finally yield a major breakthrough in battery technology, resulting in smaller, lighter batteries. Or, maybe some eccentric tinkerer will develop it in his garage. Maybe there will be breakthroughs in charging systems. Whatever the case, it'll be fascinating to watch. Just don't deprive me of my ICE.

stever

3D printers will kill the trucking industry. Think coal trains but with little plastic and metallic beads for the "ink" cartridges hauling the "freight" with drones bringing supplies the final mile to your front door..

Oh, and don't forget the soylent green tanker cars for building BLTs from scratch.

And if you just absolutely insist on a ride from prom night, you could license and build this. (3ders.org)

stever

"But the issue that continuously pops up in the media is the allegedly rising or out of control warranty costs of the company. [W]e've charted every available data point concerning Tesla's warranty expenses, and in contrast to what we sometimes read, what we see is a company whose warranty expenses are gradually getting under control. This is not the picture of a company slipping into crisis." (Warranty Week)

The article goes on to say that Tesla no longer has the world's most expensive warranties on a per-unit basis, but they haven't yet disclosed who's ahead of them.

.

fintail

I suppose everyone has a learning curve. At least they aren't catching on fire anymore.

Now they can upgrade the "leather covered 2x4" interior that doesn't befit something in that price range (even after ridiculous tax breaks) and maybe move on from the elongated egg styling theme that still seems to astound dull people who think they know design.

Mr_Shiftright

I don't see your future at all, as I think your view might be based on past events---like the way the army always fights the last war. I must also respectfully disagree--the cumulative effect of the ICE on climate change is significant. as cars and truck account for 1/5th of all emissions in the USA. (19 lbs of C02 emitted out tailpipes for every gallon of gas consumed).

Interestingly, while total U.S. transportation (includes ships, planes, trains) account for 30% of all US emissions, production of electricity accounts for more.

So you do have a point about the EV being a somewhat delusion solution in the long run. As Stever mentioned, EVs will centralize pollution. However, you cannot centralize global warming.


So my long-winded point--if we don't create the future, it will be created for us.

stever

Tesla Model S Named Top Car in New Quality Study

"The Model S does have its share of minor issues, but the innovation and excitement of the product overpowers any lasting negative feelings regarding those issues," Strategic Vision said in a statement.

Strategic Vision says its TQI ratings are based on owner responses to survey questions in four areas: problems with this vehicle, tangible and intangible aspects of the vehicle and the emotional aspects of the ownership experience."

If you think the study is dubious, you'll be pleased to note that they think highly of the Fiat 500 too.

Mr_Shiftright

That quote--if you really think about it--is basically saying that people will spend $130K for something that doesn't work well because it's cool to own.

Well, ok, we've certainly seen THAT before in the automotive world.

stever

Are you referring to the Model S or the 500?

(How's the MINI holding up?)

fintail

Shifty, I don't see your future at all either, not without the revolutions I mentioned earlier. The ICE in question was passenger cars, not ICE overall (which ignores shipping, trains, and trucks, subjects nobody is willing to touch, not to mention electricity, or how the grids will compensate for increased EV use, or the environmental damage caused by the manufacture of EV components). One good volcanic burp is equivalent to how many passenger cars, or really, the equivalent of how many years of passenger cars? If ICE is 30%, which includes all ICE, what is passenger cars? 20% of that 30%? So 6%.

It'll probably be like the joke of "free trade", where developed areas sacrifice so some guilted activist types who already got theirs can feel better about the crimes of their forefathers. Sadly, these dopes have a lot of power.

"The Model S does have its share of minor issues, but the innovation and excitement of the product overpowers any lasting negative feelings regarding those issues,"

Sounds like a paid statement. I wonder if the group owns stock, or should I say, how much.

Mr_Shiftright

Model S primarily. I think people would bail on the 500 if it proved troublesome.

The Mini is still great fun. The Mini's problem was, and still is, if you believe current road tests---the build quality, which basically sucks.

An EV Mini would be a disaster, because then you'd REALLY hear all the squeaks and rattles---or as Car and Driver put it: "like driving in a cocktail shaker".

stever

Sounds like the MINI has a lot in common with the Model S - owners are more than willing to put up with some glitches for the other benefits.

Mr_Shiftright

I think once more and more EVs become mainstream, that will change. There's little "brand loyalty" among buyers these days. Making excuses for high tech gadgets that don't work starts to sound pretty lame among one's peers.

stever

Agree, bring on the pods with the Tuesday night updates.

Mr_Shiftright

Not sure if Tesla is a game changer, but definitely seems to have been a "game accelerator". The EV pace is picking up.

texases

I question the net benefit of EVs re: CO2. A Scientific American article a few years back indicated most areas would be better off with regular hybrids, that both plugin hybrids and EVs were worse, CO2-wise because of the coal used for electricity in much of the country.

texases

The SciAm article was in 2012, and referred to a study by the Union of Concerned Scientists. The summary results were:
"Nearly half of Americans (45%) live in the “best” regions where EVs produce lower global warming emissions than even the most fuel-efficient gasoline hybrids on the market today (greater than 50 mpg).
Another third (38%) live in “better” areas where EVs produce emissions comparable to the best gasoline hybrid vehicles (41 – 50 mpg).
A minority (17%) reside in “good” regions where emissions from EVs are comparable to the most fuel-efficient non-hybrid gasoline vehicles (31 – 40 mpg)."

So 55% of Americans would be as good or better off (CO2-wise) driving a Prius or 2017 Accord hybrid (49 mpg). This also would greatly reduce the impact of making those HUGE battery packs in EVs (hybrids are 1/10th the size).

Mr_Shiftright

I agree...I'm a big fan of hybrids like the Volt. I could foresee scenarios where a hybrid enters an "EV only zone".

The only time I really get behind EV proliferation is when we're talking about the inner core of very large cities. In Manhattan for instance, the noise alone of the traffic is deafening.

thecardoc3

Mr_Shiftright said:

I agree...I'm a big fan of hybrids like the Volt. I could foresee scenarios where a hybrid enters an "EV only zone".

Ford already has an app that allows the owner to plan a trip based on where they want the car to run EV only, and allow it to be a hybrid everywhere else. An example would be a trip between two towns. In the first town they start out in EV mode, and the moment the car leaves the first town's area it switches to hybrid mode. This allows the car to retain battery charge for EV mode to be used in the next town instead of simply running the EV battery down and then going hybrid the rest of the way.

stever

texases said:

I question the net benefit of EVs re: CO2. A Scientific American article a few years back indicated most areas would be better off with regular hybrids, that both plugin hybrids and EVs were worse, CO2-wise because of the coal used for electricity in much of the country.

I think the real benefit will come when the ratio between cars and people shrink. Wonder what it is right now in the US - 1.5 cars per person? Sure seems like it sometimes.

Uber to town in someone else's Prius, ePod shuttle across town, Google pod home with three other commuters. Rinse and repeat. Friday afternoon an autonomous SUV shows up for your Saturday tailgate party.

Mr_Shiftright

Sounds pretty smart since EVs are much more efficient at lower speeds. I think trying to push EVs to go hundreds of miles using charging stations or battery swaps is a clunky solution.

texases

@stever - I question those savings, too - what about all those Uber drivers cruising around waiting for fares? Or the extra distance some pod has to drive to pick me up before I even start my trip? Or all the new vehicles that will made to supply those services? Not at all obvious there's a benefit, for decades to come.

stever

Yeah, it's going to help up front more - fewer cars needed overall, so less mess created building them. Average mile "driven" per person probably will go up (sending a car out for a gallon of milk, etc.). Lots of unintended consequences to try to avoid.

(Do Uber/Lyft drivers really "cruise"?)

Mr_Shiftright

It's possible that in the near future, people will regard driving a car like they regard riding a horse nowadays--a quaint form of occasional recreation.