The Real Reason Tesla Is Still Alive (And Other Green Car Companies Aren't)
Yes, Tesla is on the dole from taxpayers. But it also has something you can't get from the government.
The Real Reason Tesla Is Still Alive (And Other Green Car Companies Aren't)
63 comments, 11 called-out
Comment Now
Follow Comments
Tesla Motors CEO Elon Musk. (Image credit: Getty Images via @daylife)
Add VPG to the growing list of recent green car failures: Bright Automotive (electric delivery vans) , Carbon Motors (clean diesel-powered police cars), Aptera Motors (three-wheeled electric cars), Coda Automotive (inexpensive electric sedans) and, arguably the most infamous, Fisker Automotive (plug-in hybrid sports cars).
All had applied for financing under a $25 billion U.S. Energy Department loan program to promote development of cleaner cars, but only Fisker and VPG managed to draw the lucky tickets. Fisker was awarded $529 million (but received only $193 million before the DOE cut them off because of missed milestones) and VPG received $50 million. But now, they’re all dead, or almost dead. (One exception: tiny Wheego Electric of Atlanta, an EV start-up that started out making glorified golf carts and now sells a handful of bubble-shaped two-seaters with a top speed of 65 mph. The company is talking about introducing a $44,000 electric SUV next, but I wouldn’t hold my breath.)
That leaves only Tesla Motors TSLA +10.61%, maker of the plug-in Tesla roadster and the new Model S sedan, still standing. Which begs the question: why has Tesla made it when so many others have not?
One reason, of course, is that Tesla’s new Model S sedan — which followed the introductory Roadster — is a very impressive vehicle. Motor Trend and Automobile have showered it with accolades and Consumer Reports just this week issued a rave review, calling it the best vehicle they’ve ever tested. The influential magazine gave the Model S a rating of 99 out of 100 and said it “is brimming with innovation, delivers world-class performance, and is interwoven throughout with impressive attention to detail.”
Depending on price, which ranges from $62,400 to $87,400 (including a $7,500 federal tax credit), the Model S has a driving range of between 208 and 265 miles. A full charge takes about six hours from an ordinary 240 volt outlet. The interior is lush, with an enormous 17-inch video touchscreen dominating the center console. “It’s what Marty McFly might have brought back in place of his DeLorean in ‘Back to the Future’,” wrote Consumer Reports.
The Fisker Karma is sophisticated, too — perhaps more so, because its range-extended EV powertrain is more complex than a simple electric car. It runs on battery power for about 40 miles, after which a small gasoline engine kicks in to power an electric motor that extends the EV range for up to 300 miles. It’s the same technology in General Motors GM -0.73%‘ Chevrolet Volt.
Unfortunately for Fisker, the Karma was plagued with quality issues from the start, mostly due to battery problems from its supplier, A123 Systems.
Tesla had early quality problems, too. The $109,000 Roadster was recalled at least twice after it was introduced in 2008, including once to fix electrical problems that caused a fire. But Tesla always saw the Roadster as a way to test out its concept and prove that electric cars could be cool, so those problems weren’t fatal to the larger business plan. The company managed to work through them and so far, the Model S has had no major quality glitches.
Tesla’s launch of the more mainstream Model S got off to a very slow start, causing the company to miss its 2012 sales targets, but production picked up significantly in the first quarter. Tesla now aims to sell 21,000 vehicles in the U.S. this year, up from a previous goal of 20,000. That would have it outselling the Audi A6 and nearly matching the Lexus GS350. It’s aiming for 10,000 more in Europe. Meanwhile, it’s making plans for the next car in its lineup, the Model X SUV.
Photos: The Tesla Model S. (Photo credit: Wikipedia)
Experience, for one thing. While most of the other green car start-ups were founded by traditional car guys with a dream but little experience running a company, Tesla founder Elon Musk, with degrees in physics and business, had already built and sold one successful company, PayPal, (to eBay in 2002 for $1.5 billion) and also runs SpaceX, a maker of rockets and spacecraft. He had the stomach to push through difficult times, and the chutzpah to twist the arms of reluctant investors.
Having good partners is also important. Musk knew the company wouldn’t stay alive for long just by selling a couple thousand electric sports cars to rich guys. So he looked to bring in more income by selling battery packs to other automakers. Daimler AG of Germany not only bought Tesla batteries for an electric version of its Smart minicar and for its big Freightliner trucks. It also invested $50 million in the company. Likewise, Toyota teamed up with Tesla to develop the next-generation Rav4 plug-in and invested $50 million in Musk’s company as well.
Page
1
2
Next Page »
end quote from:
