Buy a Tesla, steer clear of the stock

The prospect of never again having to pay for gas is exhilarating, but the stock has to be considered a lemon until the company manages to turn an operating profit.

By TheStreet Staff Aug 1, 2013 12:10PM

Tesla dealership in Los Angeles © MCP/Rex FeaturesBy Robert Weinstein, TheStreet

 

There are few days in life that are more thrilling and terrifying than the day you take your driver's license test.

thestreet logo

 

It was almost 30 years ago, and I still remember returning from the official test drive thinking I didn't pass. As soon as the examiner advised me to "slow down," I thought the exam was all but over.


Newly minted drivers aren't the only ones who get excited. Investors allow emotions to take the steering wheel at times, too.


There's an American-made luxury SUV that I started test-driving a few weeks ago to replace my Escalade. The luxury SUV I'm considering is built in Tuscaloosa, Ala. You may not know it, but Mercedes-Benz has a factory in the South that produces some of the finest vehicles in the world. 


The ML63, packed with 550 horsepower and 560 lb-ft of torque, goes from 0 to 60 in 4.9 seconds, faster than Tesla's (TSLA) standard Model S. The ML63 has all-wheel drive, so when the snow hits the ground, the ML63 also beats the Model S Performance.


But Tesla's Model S Performance has advantages over the ML63. Aside from a neck-snapping 4.2 second 0 to 60 time, the real excitement for me is thinking about never having to pay for gas again. According to Tesla's website, a supercharger station will be built near my home in Wisconsin soon. Tesla allows Model S performance owners to charge their vehicles for free.


I can't say receiving free battery charges invokes the same magnitude of enthusiasm passing my original driving test created, but the thought is attractive. Unequivocally more attractive than buying Tesla shares at the current valuation. 


cash from operations

 At $132 per share, there's not much to like. The forward earnings multiple is over 100 (P/Es over 20 have historically underperformed the overall market); the Quick Ratio is 0.54 (over 1 is considered safe); and last quarter's "profit" was a result of government paid corporate welfare.


Tesla doesn't expect to make an operating profit next quarter -- and the list continues for longer than the range of its high-capacity battery.

 

In other words, buy the car but leave the lemon of a stock for someone else. Otherwise, you may find your investment on the side of the road needing repairs.

 

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27Comments
Aug 1, 2013 5:36PM
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By this same time next year, the author of this SHORT-SIGHTED article will be eating his words.  Bank on it.    

Aug 3, 2013 12:26PM
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Where is the rest of the article? Is this a joke?
Aug 2, 2013 8:52AM
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The author is not a serious investor.
Aug 3, 2013 6:27AM
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Yes do not buy the stock. Continue to let me and everyone else who did make a fortune. Up to $137 today. I'm guessing you tried to short Tesla and got your face ripped off. Shame shame buy calls on Tesla never puts. 

Go ahead and don't invest in the hottest stock in the market. A stock that very well could be the next apple.......
Aug 2, 2013 9:38AM
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Folks that buy Tesla models don't have to worry about Range nor Cost. Eventually cost will come down enough where they can also have base models for the public at large. It will happen. Meanwhile, the Upcoming Model X should be another big winner for Tesla. The stock price, I am more concerning about earnings, the stock price will then take care of itself.
Sep 4, 2013 2:03AM
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Part 9 of 9: Reply to comment by Mr Fat Cat, Aug 7, 2013 11:01AM:


(3) Outlook for Tesla Stock:

Elon Musk thinks it's overvalued; analysts' numbers appear to say so, too. But, in the long run, if little Tesla emerges as a disruptive alternative that changes customer perspectives on what to expect from their cars, then watch out. Apple changed our perspective on cell phones. Amazon did it for retail shopping. Tesla set out to make a better car. It is electric, because the company believes that's how to make a better car.

Wither Tesla? Build innovative cars, substitute no-pressure showrooms and on-line configuration and ordering in place of dealers; apply the philosophy of a breakeven, not-for-profit service operation; blanket the world with free-for-life, solar-powered SuperChargers; provide free added functionality from overnight software/firmware updates, and whatever else Tesla dreams up. Then what?

Will there be a BEV tipping point? If so, Will the incumbent automakers catch on in time? Whatever its size, what will Tesla's market cap be if/when we reach this tipping point?

OK, so those are the cosmic questions. Back down to earthly analysis, the interest that this stock continues to generate suggests that it merits some thought and attention. I'm not exactly sure what "stock is a trade nothing more!" means, but I'm sure it doesn't mean "watch", "buy", "hold", or "sell". If you actually do more in the Market than toss out vague negatives, you might check

"Investors Send Love to Tesla in Form of $20 Billion Market Cap", dated 8/28/13, at

http://wallstcheatsheet.com/stocks/investors-send-love-to-tesla-in-form-of-20-billion-market-cap.html/?a=viewall

wherein you'll find one good forward-looking numerical framework. It's easy, of course, to find additional solid, legitimate analysis on-line.
Sep 4, 2013 2:00AM
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Part 8 of 9: Reply to comment by Mr Fat Cat, Aug 7, 2013 11:01AM:



--Resource 2 of 3: Emissions from Driving: By Zip Code and US Total

"Emissions from Hybrid and Plug-In Electric Vehicles", by the US Department of Energy, Alternative Fuels Data Center, at
 
http://www.afdc.energy.gov/vehicles/electric_emissions.php

allows one to enter a ZIP Code to see a breakdown of the electricity sources used, and compare the “well-to-wheels” annual emissions generated from vehicles using (1) electricity from the grid – EV's; (2) gasoline – ICEV's and hybrid electric vehicles (HEV's); or (3) a combination of the two – plug-in hybrid electric vehicles (PHEV's). The US as a whole is also shown.

Well-to-wheel emissions include all emissions related to fuel production, processing, distribution, and use. In the case of gasoline, emissions are produced while extracting petroleum from the earth, refining it, distributing the fuel to stations, and burning it in vehicles. In the case of electricity, most electric power plants produce emissions, and there are additional emissions associated with the extraction, processing, and distribution of the primary energy sources they use for electricity production.

Using the values for the entire US, for example, I calculated that EV's give an ~(13-8)/13 = ~38.5% overall average reduction in CO2 over ICEV's. In my ZIP Code, 98104, the reduction in CO2 is ~(13-4.9)/13 = ~62.3%.

--Resource 3 of 3: Electric Vehicles’ Emissions and Fuel-Cost Savings

"State of CHARGE - Electric Vehicles’ Global Warming Emissions and Fuel-Cost Savings across the United States", by the Union of Concerned Scientists, June 2012, at 

http://www.ucsusa.org/assets/documents/clean_vehicles/electric-car-global-warming-emissions-report.pdf

has an Executive Summary, a Full Report, and extensive data in Technical Appendices.

The Union of Concerned Scientists (UCS) is the leading science-based nonprofit working for a healthy environment and a safer world. UCS combines independent scientific research and citizen action to develop innovative, practical solutions and to secure responsible changes in government policy, corporate practices, and consumer choices.

The UCS Clean Vehicles Program develops and promotes strategies to reduce the adverse environmental impacts of the U.S. transportation system. This website provides tons of recent (June, 2012) data, beautiful charts up the yin yang, and tight scientific analysis.

Sep 4, 2013 1:58AM
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Part 7 of 9: Reply to comment by Mr Fat Cat, Aug 7, 2013 11:01AM:




--Resource 1 of 3: Life Cycle Pollution, ICEV's vs. BEV's

"Renault Fluence and Fluence ZE Life Cycle Assessment (LCA) - Comparison of LCA's for Gas, Diesel, and Battery-Electric Versions of the Same Car", October, 2011, at

http://www.renault.com/fr/lists/archivesdocuments/fluence-acv-2011.pdf

Renault produces the Fluence, a mid-sized sedan, as an ICEV with both gas and diesel engines, and the Fluence ZE, the same car in BEV form. The three versions offer a baseline equivalence; that is, Renault, as a large, leading edge, resource-rich, and multinational automaker applied a similar top-end competence and evolution in engineering to each of the three versions of the Fluence. Then, manufacture of the three cars on the same assembly line yielded tightly controlled manufacturing equivalence.

As the study was originally confidential/internal use only, I expect Renault witnessed no barriers to data gathering and analysis of pollution in complete and exhaustive detail. Renault called this a "life cycle assessment" to indicate that it includes every single pollutant created and emitted in the material acquisition, manufacture, operation, and dismantling/recycling of the vehicles.

The 116-page report documents an incredibly complex, comprehensive study. Page 91 has a terrific summary diagram, "Figure 22: Environmental impacts of Fluence all along life cycle for diesel 1,5l dCi, petrol 1,6l 16v engines and 5AGen1 electric motor (EU geographic context for fuel and electricity production)". Forget the tortuous title: The main study result appears here in a nice, simple graph.

** One interesting result: **

Some BEV reports tell us that BEV's pollute MORE than ICEV's. How? Emissions from production of the Li-ion battery are huge, and raise the lifetime emissions of the BEV higher than the ICEV. This analysis suggests that this is ridiculous. This study used three cars that covered 150,000 km (90,000 mi.) over a ten-year life. The Fluence ZE uses a 22 kWh battery.

Using page 91, I calculated that, yes, production of the 22kWh battery caused pollution from the BEV version's manufacture to exceed the ICEV version's creation by 3.6 tons of CO2. However, the BEV's lower operating emissions quickly - in ~15 months - cancelled this out. At end of life, the BEV Fluence ZE had produced 77.4% less CO2 than the gasoline ICEV Fluence, 14.2 vs. 62.8 tons. This is a very conservative calculation, as 9,000 miles/year, and a ten-year life, are both rather low for modern cars in our modern lives, and the savings in emissions increases as mileage increases. Using a more common annual mileage of, say, 16,000 miles/year, and a 20-year life,

** the BEV Fluence produces 82.3% less CO2 than the gasoline Fluence, **

19.2 vs. 108.4 tons.

Sep 4, 2013 1:56AM
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Part 6 of 9: Reply to comment by Mr Fat Cat, Aug 7, 2013 11:01AM:




"'NHTSA does not publish a star rating above 5, however safety levels better than 5 stars are captured in the overall Vehicle Safety Score (VSS) provided to manufacturers, where the Model S achieved a new combined record of 5.4 stars,' the company (Tesla) said in a statement. The ratings underscore the structural advantages electric cars have over gasoline-powered vehicles and the lengths to which Tesla has gone to make the Model S as safe as it is stylish."

"And just how strong is the Model S’s roof, which is secured with aerospace-grade bolts? It broke a testing machine that was pushing down on the roof with the equivalent of the weight of four cars."


(2) BEV's Reduce Costs and Pollution, Improve Efficiency

I've owned, fixed, modified, and generally been crazy about cars for over 55 years. All along, I've loved the many in's and out's of ICEV's. With ICEV's having become so incredibly good, I wasn't really interested in hybrids and BEV's, though the Volt was notable for its excellent, innovative engineering.

Then came the Tesla Model S, and everything changed. I don't own one, and probably never will. As a low-income senior citizen, I'll probably never own another vehicle beyond my current low-mileage 22/29 MPG minivan. But if I ever get a new car, it will be electric. Maybe it'll be a used Model S. Looking out 8-10 years, nothing but a BEV makes sense, and the Model S speaks directly to the heart of a car nut.

Just checking, but if you hold the tired, discredited view that any of the following are NOT true...

(a) BEV's pollute less than ICEV's*

(b) BEV's are >=4 times more efficient than ICEV's

(c) BEV's are <=1/4 the cost of ICEV's**


*INCLUDING pollution from battery production

**BEV's range as low as ~1/8 the cost of ICEV's


...you're quite wrong, and need to do some research. As a friendly service to you, I have included links to four nicely-illustrated, but incredibly comprehensive analyses.

When the Tesla Model S prototypes appeared, I was not immediately convinced that BEV's were such a good deal, but, intrigued by the Model S/Tesla/SpaceX/SolarCity/PayPal/Elon Musk stories, I have performed hundreds of hours of research into BEV's and hybrids. I've found fluff, propoganda, bad science, anecdotes parading as rigorous study, conclusions that contradict actual results, lies...and good stuff. These three studies are the most correct and authoritative that I have found. They address all life cycle pollutants, efficiencies, and costs.

Sep 4, 2013 1:53AM
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Part 5 of 9: Reply to comment by Mr Fat Cat, Aug 7, 2013 11:01AM:




V. The Model S Value Proposition


(1) The Model S is a Spectacular Car

You concluded: "I certainly wouldn't buy the car..." Of course not, not if you're an oil/gas/other troll (wink, wink).

Otherwise, I fail to see why anyone with at least a workable knowledge of automobiles would outright dismiss the Model S. You do know that the owners and reviewers love the car, say it's far better than any car they've ever driven, right? Owners say all you need to do is drive it, and you're sold. Apparently so, as, at last May's stockholders' meeting, Mr. Musk said that Tesla had commissioned a study, and found that, on average, each Model S owner is selling TWO MORE by word of mouth. It's a rare product that one likes so much that they won't shut up about it. Though no one seems embarrassed by it, everyone seems to get the silly "Tesla grin" when they're in a Model S , and the accelerator gets nailed. Especially if you're a schill: Get on Tesla Motors' website, and read the amazing things that owners, and interested parties like me, say, at

http://www.teslamotors.com/forums

I was curious, so, today, I glanced at a Model S Forum. The owners were comparing notes about the incurable "Tesla Disease" in which you don't convulse, you COMPULSE. The affected are addicted to slipping away to scour the Internet for Tesla stories, data, photos, videos, people - anything about Tesla-anything. These people are not stupid or mental, they're well-spoken folks who are really and truly worried about their compulsion. I know. I may be ~$100,000 short of a Model S, but I've got it, too.

You know that the Model S has won every major award that exists in the car world, yes? Motor Trend named it their 2013 Car of the Year, and Automobile magazine voted it the Automobile of the Year, and, for the first time ever, the vote by both test teams was unanimous? It received Yahoo Autos' Car of the Year, World Car of the Year's 2013 World Green Car award, and Green Car Reports' Best Car of 2013 award, huh? And in the very objective big one, Consumer Reports rated the Model S 99/100, and said it was the best car they'd ever tested. Ever. Their Director of Testing said he would have rated the car 110% if he could. Seriously. And he's the boss.

The NHTSA just rated the Model S for safety. It received a distinction that surpasses shiny trophies: The Tesla Model S is the safest vehicle ever tested - another "best ever". The article "How the Tesla Model S scored the highest-ever government safety rating", at

http://qz.com/116992/how-the-tesla-model-s-scored-the-highest-ever-government-safety-rating/

explains the rating as follows: "Apparently, the “S” stands for superlative...Tesla Motors’s Model S electric sports sedan, which received Consumer Reports’ highest-ever automobile rating, now has scored “the best safety rating of any car ever tested” from the US National Highway Safety Traffic Administration (NHSTA), according to the Silicon Valley automaker."

"The NHSTA awarded the Model S its highest rating of five stars for its ability to protect drivers and passengers from frontal crashes, side crashes and rollovers. But this being the company co-founded by tech overachiever Elon Musk, Tesla says the Model S actually received 5.4 stars."

Sep 4, 2013 1:51AM
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Part 4 of 9: Reply to comment by Mr Fat Cat, Aug 7, 2013 11:01AM:




Bob Lutz is now retired from GM. He also now counts Musk as a friend, and credits Tesla with inspiring him to push the Volt, a plug-in hybrid, through GM. If you don't know anything about Lutz, you should watch him in something on-line. He and Musk did an interview with Charlie Rose that I thought was fascinating, given the context and positions of the two men - two very, very bright guys. Lutz is a cigar-chomping, staunch and proud Republican, an interesting character with lots to say. When he learned that Tesla had tamed the Li-ion battery, something GM naysayers said coldn't be done for another 10 years, Lutz famously said that if, out in Silicon Valley, some guys who knew nothing about cars could do it, then GM damn well could, too. And then Bob Lutz became the father of the Volt, as much an amazing engineering feat as a car, IMHO. But I digress.

Many auto journalists are speculating that Tesla may instigate a paradigm shift in the auto business. The preceding three articles suggest that the big automakers hang decisions on changes in the margins of their many vehicle lines, and, so, they think in unit volumes and cost/revenue/profit numbers in the millions and billions, respectively. As a result, they haven't yet embraced the idea that a truly successful Tesla could create a tipping point for the entire industry.


IV. State of BEV Battery Capabilities

You said: "...battery technology is another problem. It might be years before a solution is found..." Huh? What world are you living in? Please do a little research. Tesla offers the clearest evidence that current Li-ion batt's are good enough in range, power delivery, thermal management, size, and weight. Cost is the real obstacle for Li-ion, and Tesla, et al, are working on that. I don't know if simple increased economies of scale have set in, but the cost of BEV Li-ion batteries has dropped ~40% in the last two years.

Refined Li-ion, Li-Pb, Li-air, graphene and graphene-something anodes, nanotubes, liquid batteries, and much more are in play - researchers around the world are working on a variety of promising material science projects. There is a huge amount of work, both public and private, going on right now. We're in an international race to develop the next generation of batteries for mass market BEV's, and thereby dominate a gigantic new worldwide market.

Tesla decided about a decade ago that Li-ion would work, and perfected their Li-ion battery management system. Tesla offers two battery sizes, 60kWh and 85kWh, which have, respectively, 208- and 265-mile EPA range(s), less in very cold weather, more under very good conditions.

Not enough for you?

Consider very fast charging at home, and free-forever, fast SuperChargers on the road at ~110-160-mile route midpoints that will cover 80% of the nation by the end of next year, 98% by 2015. SuperChargers replenish half a charge in just 20 minutes, and 80% in 40 minutes. SuperChargers cover the most popular routes, located where an owner would want to stop, such as cafes, restaurants, and shopping areas.

And don't ignore the 90-second automated battery swap machines that will start appearing before the end of 2013 at SuperCharger locations. Battery swaps will not be free. While the complete cost model hasn't yet been evaluated, Mr. Musk has suggested that the value given will approximate that of 15 gallons of gas, and will be priced accordingly

There's an 8-year, unlimited mileage warranty for the 85kWh battery, but the Roadster batteries, which are not optimized as well as the Model S batteries, are holding up really well. Please see "TESLA ROADSTER BATTERIES RETAIN 80–85% OF ORIGINAL CHARGE AFTER 100,000 MILES", dated 7/20/13, at

http://evobsession.com/tesla-roadster-batteries-retain-80-85-of-original-charge-after-100000-miles/

Sep 4, 2013 1:47AM
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Part 3 of 9: Reply to comment by Mr Fat Cat, Aug 7, 2013 11:01AM:



(1) The article "Why Tesla is Beating GM, Ford and Toyota - Electric Cars", dated 7/11/12, at

http://www.forbes.com/sites/adamhartung/2012/07/11/why-tesla-is-beating-gm-ford-and-toyota-at-electric-cars/

says: "It was easy for Detroit automakers to scoff at this effort (the Roadster) – and they did."

"In 2009, while Detroit was reeling and cutting costs – as GM killed off Pontiac, Hummer, Saab and Saturn – the famous Bob Lutz of GM laughed at Tesla and said it really wasn’t a car company.  He proclaimed Tesla would never really matter, because as it tried to grow up it would never compete effectively. According to Mr. Lutz, nobody really wanted an electric car, because it didn’t go far enough, it cost too much and the speed/range trade-off made them impractical.  Especially at the price Tesla was selling them.  And who would want a roadster?"

"But, in 2009 Tesla sold 100% of its production.  And opened its second dealership. As manufacturing plants, and dealerships, for the big brands were being closed around the world."

"What's so different about Tesla and GM or Ford? Well, everything."

"Tesla is a classic example of a disruptive innovator, and GM/Ford are classic examples of old-guard competitors locked into sustaining innovation. While the former is changing the market...the latter, entrenched fogies, keep laughing at it."

(2) The summary in "A decade later, Tesla now officially a threat to the auto industry", dated 8/26/13, at

http://gigaom.com/2013/08/26/a-decade-later-tesla-now-officially-a-threat-to-the-auto-industry/

concludes: "Tesla is just starting to be seen as a threat by many in the auto industry — a decade after Tesla was founded. So now what do they do?"

(3) A couple of weeks ago, GM's CEO Dan Akerson formed a committee to study Tesla - and Musk, personally (!) - to determine whether GM's business is threatened by Tesla. In the article "Tesla's a Threat to the Auto Industry, But Detroit's Reacting All Wrong", dated 8/19/13, at

http://www.linkedin.com/today/post/article/20130819140631-40280384-after-the-auto-industry-studies-tesla-what-car-will-they-make-part-i?trk=mp-reader-card

Shai Agassi, Founder, Better Place, 2007-2012, and President, Product and Technology Group, SAP AG, 2001-2007, says: "A recent flurry of articles...reported Steve Girsky’s disclosure of GM’s new secret team, tasked with studying EV maker Tesla and its CEO Elon Musk. There is probably no one better than Girsky, GM’s current vice chairman and a former leading automotive analyst on Wall Street, to study and understand the threat and opportunity that Tesla represents for the car industry. Tesla’s $15B+ market cap demonstrates that the stock market is betting on Tesla’s potential to take a significant share of the broader car market, not just luxury cars."

"If those analysts are right, GM shouldn’t be the only company worried about Tesla’s future plans."

Sep 4, 2013 1:45AM
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Part 2 of 9: Reply to comment by Mr Fat Cat, Aug 7, 2013 11:01AM:



III. Risk from Accelerated EV Development by Competitors

You said: "I'd bet every car company in the world is working to make a practical reasonably priced electric car". Well, sure: The major manufacturers ALREADY have BEV's and hybrids on the road, with more coming. And, with the Nissan Leaf being the single notable exception, all are modified pre-existing internal combustion engine vehicles (ICEV's), and all cost significantly more than the ICEV's on which they're based.

Tesla, principally because they evangelize and produce only BEV's, is different. As the previous point here mentioned, Tesla is using its BEV-only strategy to reach production of "a practical reasonably priced electric car". Add Tesla's direct sales/break-even service model, and Tesla is far from simply a head-to-head competitor to the incumbents as your statement implies.

Tesla, in business for 10 years, was ignored by the industry until recently. Even now, it's doubtful that any auto industry titans lose any sleep over Tesla. Maybe they should. The article "Why Tesla is Right, and GM and Ford are Not", dated 7/11/12, at

http://www.thephoenixprinciple.com/blog/2012/07/why-tesla-is-right-and-gm-and-ford-are-not.html

says: "In short, Tesla is demonstrating it CAN change the game in automobiles.  While not everybody is ready to spend $100k on a car, and not everyone wants an electric car, Tesla is showing that it can meet unmet needs, emerging needs, and expand into more traditional markets with a superior solution for those looking for a new solution.  The way, say, Apple did in smartphones compared to RIM."

"Why didn't, and can't, GM or Ford do this?"

"Simply put, they aren't even trying. They are so locked-in to their traditional ideas about what a car should be that they reject the very premise of Tesla.  Their assumptions keep them from really trying to do what Tesla has done - and will keep improving - while they keep trying to make the kind of cars, according to all the old specs, they have always done."

"Tesla set out to make a better car.  It is electric, because the company believes that's how to make a better car.  And it is changing the metrics people use when evaluating cars."

"Meanwhile, it is practically being unchallenged as the existing competitors - all of which are multiples bigger in revenue, employees, dealers and market cap of Tesla - keep trying to defend their existing business while seeking a low-cost, simple way to extend their product lines.  They largely ignore Tesla's Roadster and Model S because those cars don't fit their historical success formula of how you win in automobile competition."

"The exact behavior of disruptors, and sustainers likely to fail, as described in The Innovator's Dilemma (Clayton Christensen, HBS Press.)"

Experienced auto journalists think that because Tesla's unit volumes now and for many years to come are relatively tiny, the big guys dismiss Tesla. In doing so, they are missing the giant existential threat that a successful Tesla poses. Consider these three articles:
Sep 4, 2013 1:42AM
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Part 1 of 9: Reply to comment by Mr Fat Cat, Aug 7, 2013 11:01AM:


I. Model S Comp's from Daimler

Auto journalists say the Model S is in the same category as a loaded E Class, maybe a non-optioned S Class, but is most closely comparable with a non-AMG CLS Class.


II. Tesla Motors' Strategy vs. Risk

You said: "It's a long way from making a few cars to becoming a recognized and desirable brand".  Given the many major awards, and the substantial amount of favorable-to-glowing mainstream press that Tesla Motors has received, I'd say it is well on the way "to becoming a recognized and desirable brand". Elon Musk, Tesla Motors CEO and Co-Founder, agrees with you, though, and has said several times that you can't call Tesla a real auto manufacturer until they've scaled up, and they're cranking 'em out.

We are early in the adoption of battery electric vehicles (BEV's) worldwide. At what level of ongoing production could one say that Tesla is here to stay? How about towards the end of 2014's run of 40,000 Model S's, just as Model X starts production, or during the following Q1 2015 when both Models S and X are rolling out at full tilt?

Regarding "...expensive car...cheap one." Haven't you read about Musk's 3-stage plan, quoted repeatedly in the press? Per Musk, it takes about three generations before a tech product is ready for prime time. In Tesla's case:

- Step 1: The Roadster was proof-of-concept for "rich folks", including "God fearing rich Republicans".

- Step 2: The Model S is the moderately-priced car produced in moderate volumes for people of moderate means; thought leaders and brave early adopters expected and welcomed. Model X fits here. Republicans, too.

- Step 3: $30K sedan for the masses in 2017 (I'll bet $35-40K): This has been Musk's goal since his early university days, hence, Tesla's main goal, too. God-fearing Republicans on the way up belong here. Please see "TESLA 4TH MODEL — AFFORDABLE EV — TO COME IN 2017", by Nathan August, EV Obsession, dated 4/11/13, at

http://evobsession.com/tesla-4th-model-affordable-ev-to-come-in-2017/

Aug 7, 2013 11:01AM
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The author drives an Escalade? He's testing out a MB ML63? He finds the Tesla an alternative to the previous two?

Although I like many of Mercedes vehicles, I find all three of the above to be ridiculous choices for transportation. All of them are very expensive, and the first two would best suit a rapper or hip hop artist. I can't see any God fearing rich Republicans in one. 

The Tesla might be a fine vehicle, but the same thing was said about the Tucker, Kaiser, and other embryonic car companies.. It's a long way from making a few cars to becoming a recognized and desirable brand. Even established car companies have run into financial problems along the way - GM, Ford, Chrysler, and others. 

There is an old saying that it is easy to build a great expensive car, but it is very hard to build a cheap one. Unless of course, Tesla target market is the rich folks. Another problem is competition. I'd bet every car company in the world is working to make a practical reasonably priced electric car. Finally, battery technology is another problem. It might be years before a solution is found to resolve these issues.

I certainly wouldn't buy the car, and the stock is a trade nothing more!


Aug 7, 2013 4:38PM
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OK, they charge your battery for free. Do you take a cab to and from the charging station?
Aug 1, 2013 5:50PM
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A Tesla is a beautiful car, about $60k.

 

I would buy one, and it would be my primary car if I did. The problem is range.

 

If you are in town only, it's great because it's range is about 260 miles.

However, if this going to be your primary (and only) car, then if your going on vacation and drive 400-800 miles in areas where there are no Tesla charges, you are up a creek.

That's my only problem with the car. I know more charges are being built in various areas, but not where I go( I put 700 miles in Yosemite Park alone).

Aug 1, 2013 2:37PM
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"...the real excitement for me is thinking about never having to pay for gas again."

After paying an extra $45,000 for the privilege for the next decade.
Aug 1, 2013 2:55PM
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Not only paying the extra 45 grand but having to pay the replacement battery after 6 to 8 years and figuring out where all those batteries will go in our Nations landfill.

 

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