Tesla’s Deliveries In Europe Show Strange ASP Increase (TSLA)

1 Dec 2014 | Author: | No comments yet »

Audi to launch an all-electric vehicle by 2017 to rival Tesla.

In mid-2013, investors Stephen and Samuel Lieber, who jointly manage Alpine Woods Capital, singled out Tesla Motors as their single best investment idea.Bayerische Motoren W (OTCMKTS:BAMXY) is not interested in an ownership stake in Tesla Motors Inc (NASDAQ:TSLA), reported German weekly magazine WirtschaftsWoche, quoting BMW.

Elon Musk, founder and CEO of Tesla, has done what GM couldn’t when, 20 years ago, EV1 was introduced as the first (failed) mainstream, all-electric car.According to reports, automotive manufacturing giant Audi is planning to rival close competitor Tesla, by launching a battery-powered family car by 2017.As fiercely capable as well as independently thinking and acting as an electric Batmobile, or something Q provided for James Bond, the Tesla Model S P85D is the ultimate halo car. 691 horsepower, instant torque, semi-autonomous driving capabilities, a drive setting labeled “Insane,” and suave style — Bond would be so lucky. After some hesitation, the salesperson said he might be able “to dig one up.” There were two Model S sedans in inventory for the entire New York metropolitan area, a sporty black one and a red one. The news disappointed investors who were expecting both automakers to work together on the production of battery packs and other lightweight components for electric vehicles (EV).

Speaking to Auto Express, Audi’s technical development chief Ulrich Hackenberg said, “I was able to reengineer the R8 e-tron project and technology with the team and we are on the way to a range of 450km (280 miles).” It is believed that a new body deign by Audi will allow for biggest batteries to be stored under the floor of the car, allowing for greater range without compromising baggage and passenger space. The news follows Tesla CEO Elon Musk’s interview with German news magazine Der Spiegel last week, where he said the Palo Alto-based EV manufacturer is impressed by BMW’s use of “relatively cost-efficient” carbon fiber for manufacturing exterior vehicle parts. Could Tesla, in particular, with its to-be-released cheaper plug-in sedan, along with the other dozen major EV manufacturers, be the portent of an automotive revolution that finally displaces the vilified internal combustion engine? Meanwhile, Tesla Motors opened its patents to competitors in the spirit of open source movement and to facilitate innovation and development on an industry level. “At Tesla, we felt compelled to create patents out of concern that the big car companies would copy our technology and then use their massive manufacturing, sales and marketing power to overwhelm Tesla. Or has Musk created—no small feat—a modern Maserati? (The latter celebrates its centennial on December 1, 2014.) At present, the wisdom of the stock market gives Tesla a value approaching that of GM, which produces as many cars in a week as Tesla does in a year.

Musk said, “We are talking about whether we can collaborate in battery technology or charging stations.” He further mentioned that Germany could be Tesla’s next possible location for a lithium-ion battery plant in the next five to six years. Musk realized Tesla’s true competition is not the possibility of other electric car companies in the market, but rather the “enormous flood of gasoline cars pouring out of the world’s factories every day.” Musk said that the rapidly evolving technology platform of future electric cars would not only help Tesla, and other car manufacturing companies, but the world itself.

Any possible collaborations in the future between the two automakers will be highly beneficial for both, as they can race ahead together to tap a greater share of the EV market. Maybe we’ll join the wait list for the all-weather Model X sports utility vehicle coming out next year as we could use the all-wheel drive in the Northeast for navigating the Polar Vortex. It turns out that the notion that bicycle-loving millennials eschew cars is wrong; the downturn in auto ownership breathlessly flagged by New Economy mavens turns out to have, instead, been about money. It could produce 33,000 Model S a four-door sedan this year, with new all-wheel-drive version that delivers different levels of torque to the front and rear axle from two motors. As the Great Recession slowly recedes, millennials are buying cars and surveys show they want them roughly as much as their boomer parents did. (Different styles to be sure, but there’s no evidence they’d prefer to bike, hitchhike, take the bus or walk.) For Tesla’s aspirational acolytes, however, the future is obviously one where most cars will depend on batteries of electricity, not barrels of oil.

Musk uses a conservative estimate for 2015, promising about 50,000 new cars, even though the output and order book point to a number substantially higher. Tesla upgraded its Fremont California plant in August, adding a new production line for skeletal assemblies to grow volumes and improve precision. “It was like changing the tire on a bus while it was rolling down the freeway,” Musk explained. A bizarre business decision, surely, to so ruthlessly eradicate your own competitive advantage?” That wasn’t to advantage us” says Musk, “it actually disadvantages us.

To that end, he needs to goad his competitors to adopt new electrical standards and create momentum – and noise — for upgrading the aging electrical infrastructure that needs to support the transition from fossil fuels to renewable energy. Given the world’s car makers produced 65,000,000 vehicles in 2013, it’s not possible for Tesla to move the needle on the world’s carbon crisis as a minor player — 33,000 Teslas could roll off the line in 2014, according to Musk.

Musk open-sourced the company’s patents this year in an effort to encourage other car manufacturers to leverage Telsa’s R&D to catch up technologically. Real-world data show that fuel economy and environmental attributes are valued, but only a tiny niche elevate them to the detriment of cost and the five core attributes. If consumers bought cars like commodities based solely on maximally efficient transport, the world’s roads would resemble a dystopian future of identical Chiclet-like pods. The truth is most car buyers have little interest in what’s under the hood (whether the propulsion comes from oil, corn alcohol, lithium batteries, or gerbils on tread mills), provided the six energy-gobbling attributes are delivered in the right mix at the right price.

According to the company website, Tesla has built a network of 272 charging stations (132 in the U.S., 102 in Europe and 38 in Asia) and charging is free for Tesla owners. In this mix the solution to delivering fuel efficiency is always technology; for those who dream of a pure electric utopia, it is the battery-electric car.

Musk may need thousands more of charging stations to compete with the convenience of a gas station on every corner — the U.S. has 122,000 gas stations alone. Batteries are not good at storing energy compared to a steel gasoline tank. (We know how hard it is, in part, because the Obama administration spent $2 billion on stimulus subsidies for companies to build new battery factories in America.

That experiment yielded neither a technological nor a domestic production revolution.) We also know how difficult it is because of the inherent differences in the physical chemistry in the molecules used to store energy. In a TED talk, Musk explained solar energy is really “indirect fusion,” and there is a giant nuclear generator in the sky, the sun, and we want to use a small portion of the energy. Musk partnered with Panasonic for a $5 billion Gigafactory that he’s building in Nevada to become the world’s largest producer of batteries and bring about breakthroughs to reduce the cost of energy storage. The Gigafactory will produce Lithium-ion batteries for the Tesla cars, and also stationary batteries for the electrical grid and residential homes, on or off the grid. Musk says he can reduce battery costs by at least 30 percent on scale economics alone, before factoring in improvements from technological innovation.

Our sources agree and believe the retail cost of batteries, currently about $500 per kWh could fall to $70-80 kWh in the decade as batteries slide down the cost curve. Driving 200 miles on kilowatt-hours, using 40 kWh, uses just $5 of electricity; each fill-up, on the other hand, costs about $90 when you include the amortized battery cost. And, surprisingly, his competitors are some of his most ardent admirers. “No other car manufacturer has achieved a global brand so quickly, it’s a huge accomplishment for this hard-charging executive,” said Dan Akerson, former CEO of General Motors and Vice Chairman of the Carlyle Group. “Teslas are beautifully designed with great pick up and first class engineering.” “Musk has challenged the industry and it has to respond. Panasonic is Tesla’s battery partner and supplies the lithium-ion battery in the Model S, shipping the packs over the Pacific Ocean from its Japanese factory. Although this is true, the underlying difference in energy density—hydrocarbons vs. electrochemistry—is locked in the physics of the associated atoms and molecules.

The auto industry is notoriously Darwinian and may consolidate into a few worldwide giants from a hundred small car makers,” and that will set the stage for a new world order, according to Akerson. The only reason you’d subsidize the latter over the former is because you believe the world is running out of oil, or that batteries lower the use of hydrocarbons. Super-computing software will also unveil mysteries of combustion that will translate into improve engine designs and software-controlled combustion with the potential to at least double average combustion efficiency. (Indeed, big data software is already enabling design of radical new classes of lightweight, high-strength materials that will do more for the average car than aluminum did for Tesla.) Batteries will get better, too.

And better, cheaper ones will enable the ubiquitous deployment of the hybrid architecture that so dramatically improves gasoline engine efficiency in city driving. One can imagine a vehicle’s body panels fabricated from electricity-storing technology that could be recharged wirelessly and frequently from opportunistic points in urban areas.

One is tempted to paraphrase Winston Churchill: Hydrocarbon-burning internal-combustion engines are the worst way to propel vehicles, except for all the others.

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