TSLA - Tesla Motors

[Cardboard]

"Pretty funny also that a company started from scratch can compete with the likes of major defense contractors Boeing and Lockheed Martin with tens of billions $ in R&D and a long history of advanced tech such as stealth, jet engines, etc when it comes to developing rockets, but SpaceX did just that. Those bloated defense contractors were lacking in vision and misallocating their massive amounts of capital...just look at some of their programs like the F-35: hundreds of billions of dollars over budget--total budget now over $1 Trillion--with nothing to show for it thus far. Where's all that money going?? Where's all the hundreds of billions in capex the automakers all spend every year really going?

 

To believe that car manufacturers will succeed just because they've been doing it for 100 years...laughable. Guess you must be a loyal GE and IBM investor as well. Those two 100+ year old companies seem to be doing great in the face of disruption... And let's not forget where the 3 U.S. automakers were just 10 years ago: 2/3 bankrupt, and the other teetering...and they haven't done that great even in recent years with a booming auto market. They somehow just find new ways of shooting themselves in the foot (oh, and all they really are and have been for decades: glorified full sized pickup truck manufacturers).

 

A brand like Tesla has pretty much come out on top of luxury brands like BMW, Audi, etc in a short span of time despite those brands having spent lots of capital on marketing over decades (Tesla spends pretty much nothing on marketing, is a lot younger as a company, and a lot more successful with Gen X/Y/Z). And there are objective measures of Tesla's superiority in engineering: just look at the NHTSA ratings for their products. If those old auto companies are so talented with 100 years of experience, how'd this scrappy upstart engineer its cars to be so much safer?"

 

Hey Dalal.Holdings, are you not the same guy that was pumping hard GM in a different thread?

 

Cardboard

[Leverage Capabilities]

 

 

Pure electric cars have vastly fewer moving parts than internal combustion engine (ICE) based cars and hence much fewer potential points of failure. Tesla will likely require much fewer "service centers" than to support typical fleet of ICE vehicles. The servicing is also where ICE dealers make the most money, hence those same dealerships are less likely to want to sell electric cars to buyers and instead attempt to steer them away from such purchases (this has been observed with the Chevy Bolt/Volt).

 

Distribution should not be an issue at all. Amazon shows how distributing products to individuals can work well (and cheaply) without much of a brick and mortar presence.

 

 

 

 

Not sure if using Amazon as a distribution proof-of-concept for Tesla is a great comp here (shipping books vs. cars). Even if a Tesla is less likely to require servicing than an ICE, you still need to have a broad geographic footprint to entice customers to purchase a car. If I live in Nebraska, and the nearest Tesla service center is in Chicago, am I still going to buy a one over an EV that i can take to the local dealership / certified third-party?

[Dalal.Holdings]

Hey Dalal.Holdings, are you not the same guy that was pumping hard GM in a different thread?

 

Cardboard

 

I’ve been a GM long for a while (though whittled down by now) which I indicated in a post on this thread a page or two back. I continue to hold some, now believing that the biggest promise for GM is through Cruise Automation (brilliant acquisition by current management), not its legacy auto business.

 

So yeah, my thesis on GM has changed over time while I’ve learned a good deal about the traditional car biz— is that confusing? It’s because I like Charlie Munger:

 

“The ability to destroy your ideas rapidly instead of slowly when the occasion is right is one of the most valuable things. You have to work hard on it. Ask yourself what are the arguments on the other side. It’s bad to have an opinion you’re proud of if you can’t state the arguments for the other side better than your opponents. This is a great mental discipline.”

[Liberty]

https://www.cnbc.com/2018/10/16/judge-approves-elon-musks-settlement-with-sec.html

[Liberty]

Video of Munro teardown of Model 3:

 

https://www.bloomberg.com/news/features/2018-10-17/tearing-apart-teslas-to-find-elon-musk-s-best-and-worst-decisions

[Dalal.Holdings]

David Pogue on why you still can't buy a Tesla in 16 states: https://finance.yahoo.com/news/cant-buy-tesla-states-161318245.html

 

Turns out these people are only for "free markets" when it doesn't hurt them...

 

Tesla also points out that its prices are fixed, and its salespeople are paid primarily on salary, not commission. “Customers will never be rushed into a purchase, haggle over the price of the car, wonder if they could get a better deal across town, or puzzle over confusing add-on products, like GAP insurance or rust-proofing.”

 

“We think that it’s absolutely critical that we have a direct relationship with our customers,” Todd Maron, Tesla general counsel, told me. “We look at our stores as educational centers. There are all these questions people have; we view our salespeople as teachers who can patiently answer them.”

 

Back in the 1930s, the car companies established this system so that they could worry about making cars, and the franchises could worry about selling and repairing them.

 

Technically, the states’ elected officials are keeping Tesla out. But they’re doing so at the request of another group: Other car companies’ franchise owners.

 

Traditional car dealers make very little money from selling new cars. “The vast majority of their income comes from service,” says Bruce Becker, president of the Electric Vehicle Club of Connecticut. A National Automobile Dealers Association spokesperson told The New York Times back in 2015 that dealers make three times the profit from service as they do from selling new cars.

 

But an electric car has no engine and no transmission. It has no spark plugs, fan belts, air filters, timing belts, or cylinder heads. It never needs oil changes, tuneups, or emissions checks. Your brake pads go years without needing replacement, too, since just lifting your foot from the accelerator slows the car down (by recharging the batteries).

 

That, Becker says, is why car dealers “see the electric car as an existential threat to their service business. It’s revenue that these car dealers don’t want to give up.”

 

“Their concern is that if [the direct-to-customer dealership model] starts to take hold and become a popular structure, then GM or Ford might decide they want to go direct as well, and the dealerships would be cut out,” Connecticut state senator Toni Boucher explains. “They’re threatened personally.”

 

In my state, “they” means CARA (Connecticut Automotive Retailers Association) and its president, James Fleming. He’s the man behind the 2015 website TeslaCrash.com (now defunct), whose headlines included “Owning A Tesla Is Awesome, Until You Get In An Accident”; “Person Buys Tesla, Person Immediately Crashes Tesla”; and “Bank of America is predicting a massive Tesla collapse.”

[Jurgis]

But an electric car has no engine

 

For things without engines they move surprisingly fast.

Those hippie Tesla owners must be pedaling like crazy.

 

8)

 

[Liberty]

But an electric car has no engine

 

For things without engines they move surprisingly fast.

Those hippie Tesla owners must be pedaling like crazy.

 

8)

 

[rb]

It may not have an engine and AC electric motors are extremely reliable (though the permanently magnetic ones for Model 3 are way less) but the owners will really not like it when the VF drives start to go (and they will). Though that would be an expensive fix I'm not sure how profitable it would be for the service centers as it would depend on the setup of the VFD.

[Spekulatius]

It may not have an engine and AC electric motors are extremely reliable (though the permanently magnetic ones for Model 3 are way less) but the owners will really not like it when the VF drives start to go (and they will). Though that would be an expensive fix I'm not sure how profitable it would be for the service centers as it would depend on the setup of the VFD.

 

In principles this is correct that electrical motors are reliable, but practically, I am not so sure. i have  not had a car breakdown since about 13 years ago and that failure was due to an old defective battery. Most cars now break down, because the electrical or electronic system fail.

 

FWIW,  I do agree that restricting car sales  due to lobbying from car dealers is nonsense.

[ERICOPOLY]

https://www.yahoo.com/amphtml/finance/news/einhorns-greenlight-exits-apple-u-170514459.html

 

"Like Lehman, we think the deception is about to catch up to TSLA," Einhorn's firm Greenlight Capital, which has sold Tesla shares short, said in a quarterly investor letter obtained by Reuters. "Elon Musk's erratic behavior suggests that he sees it the same way."

 

I've been saying the same thing. Haven't had the courage to short-it (kudos to those who purchased puts!!!!), but Elon's behavior has been the 'tell' that the company isn't doing well IMO. We'll see how it shakes out, but I'm convinced not all is well beneath the hood.

 

musk has been complaining about delivery logistics but an analyst stated that they delivered >95% of cars produced last Q.  sounds like the guy is a brilliant but inveterate liar

 

They had a large inventory of unsold vehicles at the end of Q2.  They aren't sold until delivered to the customer.

 

12,000 unsold vehicles is only 2 or 3 weeks of production, and at $60,000 ASP it amounts to $720,000,000.

 

What they managed to do (through a lot of effort) in Q3 was to dramatically increase production of the Model 3 while at the same time keeping unsold inventory constant.

[K2SO]

The car business isn't the MP3 streamer or phone business. There aren't huge network effects here. It's very competitive, and not a winner-take-all market. Car manufacturers successfully copy each other all the time.

 

I'm certainly not a Tesla bull... far from it... but I've always thought that their charging network is creating a huge underlying competitive advantage that nobody ever talks about.

 

[rb]

The car business isn't the MP3 streamer or phone business. There aren't huge network effects here. It's very competitive, and not a winner-take-all market. Car manufacturers successfully copy each other all the time.

 

I'm certainly not a Tesla bull... far from it... but I've always thought that their charging network is creating a huge underlying competitive advantage that nobody ever talks about.

It could be. But I'm not so sure about it. Is there a reason why a whole lot of charging stations can't pop up if electric vehicles become popular? They're already popping in a lot of places. It's perceived as somewhat of a competitive advantage because comparatively Tesla has a lot of them now. But if you can sell electricity for cars profitably you'll likely see many, many 3rd parties build them. If that happens, the number of 3rd party stations will absolutely overwhelm Tesla's stations.

[rkbabang]

The car business isn't the MP3 streamer or phone business. There aren't huge network effects here. It's very competitive, and not a winner-take-all market. Car manufacturers successfully copy each other all the time.

 

I'm certainly not a Tesla bull... far from it... but I've always thought that their charging network is creating a huge underlying competitive advantage that nobody ever talks about.

It could be. But I'm not so sure about it. Is there a reason why a whole lot of charging stations can't pop up if electric vehicles become popular? They're already popping in a lot of places. It's perceived as somewhat of a competitive advantage because comparatively Tesla has a lot of them now. But if you can sell electricity for cars profitably you'll likely see many, many 3rd parties build them. If that happens, the number of 3rd party stations will absolutely overwhelm Tesla's stations.

 

Yes, but it isn't profitable now.  This gives Tesla an advantage to grow now while others can't yet. And it will always be a nice perk for S & X owners that they can get free charging at a Tesla station.  Something that will be unlikely to be available for BMW or Jaguar owners.

 

Also I don't know if there is a standard yet for charging as fast as Tesla's stations charge their cars.  As far as I know public generic charging stations are very slow compared to Tesla's stations.

 

[rb]

I'm not sure that it's unprofitable now. There's a store close to my house and it has 8 charging stations in the parking lot. The stations belong to an unaffiliated private company. You have to pay for the juice. Those stations always seem to be busy. So i figure that this company is making money, not doing it just for fun. But I agree that it's likely not profitable to do it at a large scale. However as the number of vehicles increases then the profitability should change as well.

 

There's nothing magical about charging fast. If you raise the voltage the battery is gonna charge faster. A Tesla supercharger works with 400 V @ 250A. That is A LOT!. Here's the thing though, you don't really want to charge you car fast, because that's not good for the battery. You want to do it slow. Once in a while, you're doing a road trip and you supercharge to get going on your next leg it's ok, but you don't want to make a habit of it. If you have time, you would want to charge slower.

[A Dhandho Investor]

So Tesla just released its lower cost (45k), mid-range Model 3.

 

Seems again to be news where both longs and shorts find evidence of their theses. My take (as a bear):

1. The announcement seems to coincide with increasing evidence that the US / Canadian backlog of the more costly versions of the M3 is exhausted

-> Since the European homologation process is not yet final this version had to be released to "keep the growth story going"

2. Delivery of this version is already in 4 to 8 weeks: more evidence from point 1

3. Posts from Tesla sales reps on Twitter seem to indicate that sales reps were not informed prior to the announcement: also more evidence of point 1 + indication that internal organisation is clearly a mess

4. The Full Service Drive option has disappeared from all models: word is out that this could be due to DoJ investigation (Tesla misleadingly claiming that FSD is close to happen + asking 3k for this option)

 

Any thoughts from the longs / fans on the news?

[Dynamic]

My thoughts as an EV enthusiast, who has never held a position on TSLA, long or short.

 

If I had a position, I'd want to understand the best version of my opposite number's argument (steel-manning their argument before looking at my counterargument, rather than straw-manning their argument and deluding myself).

 

So Tesla just released its lower cost (45k), mid-range Model 3.

 

Seems again to be news where both longs and shorts find evidence of their theses. My take (as a bear):

1. The announcement seems to coincide with increasing evidence that the US / Canadian backlog of the more costly versions of the M3 is exhausted

 

I agree that it's a sign that the high-end high-margin customers in USA/Canada who want AWD, long range and performance versions and want them and can raise the money by December may have substantially reduced. There would doubtless be some who want it but not just yet, and probably a vast number who really are only looking to spend $35,000 to $45,000 tops.

 

Tesla have admitted that they're not yet at the volume or the battery cost reduction where the $35,000 200-mile Model 3 could be made profitably and to sell it too soon "would kill the company".

 

It could be taken that (either accounting for backlog or not) they realise that a lot of early reservation holders are a little frustrated with the delay, because they do want the RWD model at around the $35,000 price point and cannot justify or afford spending $45,000 to $60,000 or even more on a premium or performance model.

 

Equally it's cleverly positioned so that someone with the full benefit of the full Federal Tax Credit could get the basic Mid Range Model 3 in black with aero wheels for $35,000 USD effective cost (once they have the benefit of their tax rebate during the 2017 tax year), and they might still upsell them on a few thousand bucks of autopilot, metallic paint, fancy wheels or premium audio that keeps the price within their affordable budget and probably boosts the margin. They're then perhaps trading off the likelihood of getting the full $7,500 EV tax credit instead of $3,750 from January 2019 against the increased upfront cost, and effectively getting a worthwhile boost in range and probably a mild improvement in performance "for free" compared to waiting a year more to get only a $3,750 reduction in their Federal taxes and at least a few months more to get their car.

 

From Tesla's side, it also slightly reduces the number of battery cells going into each car, slightly the reducing the ramp up in raw materials supply required as car production ramps up. It also serves to positions them closer to the price-point of some of the other decent range EV newcomers such as the Kia Niro / Hyundai Kona and the Chevy Bolt, but with the sexiness and Tesla driving dynamics that are still distinctly a premium attraction. For some people's image, driving a Tesla rather than a Kia/Hyundai/Chevy is worth a few grand.

 

It could be taken as a signal that some design and production improvements have lowered the cost about half way towards the ultimate goal of the $35,000 Standard Range base model being economically viable, and bulls could argue that it's a sign of improved production efficiency gradually coming online, boding well for the future.

 

-> Since the European homologation process is not yet final this version had to be released to "keep the growth story going"

 

From the bull's point of view, they could envisage there's quite a lot of pent up demand for both high-end and lower-priced Model 3s in Europe, where the sheer width of the Model S and Model X makes them a bit lumbering and hard to manoeuvre on urban and rural roads built around historic horse and cart traffic (single lane roads in towns instead of three lane streets of modern cities). I really like my tiny city car for town, country and long-distance driving in the UK and northern Europe, especially for parking. I was also happy enough with my Nissan X-Trail before that, even though its width was occasionally awkward. I'd say the Model 3 is more like standard width for a European mid-range to luxury car and will be very popular. At the same time, Renault Zoe ZE40 is also looking pretty attractive for the majority of my driving.

 

2. Delivery of this version is already in 4 to 8 weeks: more evidence from point 1

3. Posts from Tesla sales reps on Twitter seem to indicate that sales reps were not informed prior to the announcement: also more evidence of point 1 + indication that internal organisation is clearly a mess

 

Certainly a possible story, but equally the production rate is getting so much higher, and the middle-ground argument also makes some sense. They wouldn't want rumours of an imminent cheaper Model 3 to surface before they were ready in case they lost customers still willing and able to buy the premium models who decided to wait for the mid-range instead, so naturally, they get ready at the factory and announce it at the last possible moment, still many weeks before the showroom staff will see one.

 

4. The Full Service Drive option has disappeared from all models: word is out that this could be due to DoJ investigation (Tesla misleadingly claiming that FSD is close to happen + asking 3k for this option)

 

Well, that's certainly a possibility. All the YouTubers etc seem to say it's not worth ordering Full Self Driving at this point as it's probably years away, and likely wouldn't cost more than a few grand more to get then rather than at delivery. Perhaps take up of FSD is actually insignificant, so they're simplifying the options process by taking it out with little impact on their cashflows and with nothing sinister behind it.

 

I can certainly see the short arguments and I'm very wary of the capital intensive, highly competitive, profit-crushing nature of the auto industry and that Tesla's stock valuation is very rich, demanding a lot of growth and profitability for many years in the future to provide a reasonable return in the long run. It's also likely to be volatile ride between now and "the long run".

 

Equally, I can see that many Tesla shareholders are there to support the mission or because of the buzz and popularity behind it, with little to no regard to price versus value and the company's accounts and future cash flows. This is reminiscent of the dot-com boom when tech stocks were at lofty valuations that only a few have gone on to justify a decade or two later.

 

And it's almost a pantomime - with hero and the villain being cheered and booed.

 

I think there are longs/bulls and EV enthusiasts without skin in the game, who are hopelessly deluded and away with the fairies, engaging in conspiratorial thinking and all sorts. Then again, I think there are powerful interest groups doing their best to stem the tide of change away from fossil fuels to prolong the return-earning duration of their assets and spread fear uncertainty and doubt as far as possible. But some of the enthusiasts/bulls offer stupid hollow straw-man counter-arguments in far greater quantity than I can take.

 

There's the media in the middle, going for clicks and sensationalism, polarising the stories, focusing minute attention on any Tesla crash or fire, while utterly failing to put it into the context of gasoline car electrical fires, autopilot versus human error and overall vehicle safety.

 

There's Elon doing some seriously ill-advised things, especially of late, seemingly trying to be self-destructive.

 

At the same time there are certain people on the short side who seem to draw faulty conclusions and cherry pick circumstantial evidence to present things in the worst light, especially for Tesla. And some of the famous shorts have continually changed the story of Tesla's impossible challenges after challenge after challenge has been surmounted over the years. Tesla has achieved a hell of a lot that the naysayers said they couldn't.

 

This is fascinating to watch, and for the sake of the planet, I hope Tesla's mission succeeds (and the mission statement is about hastening adoption of cleaner technology to reduce reliance on fossil fuels and make progress towards combatting climate change, not making a profit commensurate with their stock price).

 

Economics wins out in the end. If it all works out more cost-effective for the consumers (whether or not externalities are appropriately priced), green tech will replace fossil fuels.

 

I think the evidence that climate change is likely to have serious consequences is very compelling (though my Physics PhD and career means I'm not fully versed in the field, but I've found no compelling flaws in the argument), and even if it turns out to be less serious than predicted, it can do no harm to develop all the great new technology to preserve fossil fuels as chemical feedstock and capture, store and use energy more efficiently and cheaply with less reliance on politically unstable regions.

[Cigarbutt]

Whether right or wrong, the world benefits from people like Elon Musk.

Whether right or wrong, this Board benefits from people like you, Dynamic.

[oddballstocks]

Dynamic,

 

Nice post.  It's interesting, I'm short, but not because I hate EV's, they have a terrible capital structure and some major headwinds with real cash liabilities coming due.

 

I like the idea of EV's in general, but adoption will be tough.  In a metro these make sense, but in rural areas the drive is too long.  I can't imagine a road trip where I have to stop every few hours, wait in line at a charger then wait 45m for a charge.  I know people justify this by saying it's great to take a break.  I agree, I can get gas and use the restroom in 10m or less.  I prefer to not just waste the day standing around, and I can't imagine trying to entertain four whiney kids for 45m while we refuel.

 

EV's don't seem economical yet. And outside of CA I worry about the environmental impact too. In the mid-atlantic our electric comes from coal and gas. Coal is polluting, and gas drilling destroys the environment.  In a lot of ways I'd rather have someone drill for oil in the middle of the ocean than mar the landscape everywhere we look.

 

The second thing is in a metro where an EV makes sense what makes even more sense are electric trains.  We need more electric trains to carry people on high density commuting routes, not more electric cars clogging the roads.

 

All that said. I'd llve an electric Tundra with a ton of torque that can last 500mi and charge in 10 minutes.  They need to solve range, charging, and make batteries weigh less.  With a truck the payload is a really important factor, the heavier the batteries the less you can carry.  If they solve all of that and offer for $35k I'd pick one up for sure.

 

My thought has always been that we need to go nuclear with power, and once the grid is off coal and gas then we electrify everything.

 

[Dalal.Holdings]

Shorting this thing seems to require a much greater burden of proof than going long (as short positions usually do). 1) asymmetry is working against you as your downside is limitless and upside limited (even if buying puts, option premium is pretty high here); 2) cost of borrowing shares is expensive; 3) cash flush tech firm likely to take this whole thing out at $20-30B valuation creating a floor for stock price (consider the fact that a few years ago, FB bought WhatsApp--that's right, a messaging app--for $20B), 4) this is a "hot" stock driven a lot by underlying bullish speculation, leaving shorts vulnerable to potentially devastating losses.

 

The Model 3 has become the best selling luxury car in America and broken to the top 5 of all cars sold. Let that sink in. And thus far, it's been selling the high margin high ATP models and still beat out much cheaper equivalent sedans in sales. There is a lot more demand out there and most sales have only been to U.S. customers (yet a global market exists for the model). Don't know what shorts have to stand on when they point out that only $45K+ models have been selling thus far (that is bad as an indication for demand and profitability how?).

 

Through SpaceX and Tesla, Musk has significantly impacted the world in a positive way whether you like his behavior or not.

[Dalal.Holdings]

EV's don't seem economical yet. And outside of CA I worry about the environmental impact too. In the mid-atlantic our electric comes from coal and gas. Coal is polluting, and gas drilling destroys the environment.  In a lot of ways I'd rather have someone drill for oil in the middle of the ocean than mar the landscape everywhere we look.

 

A coal power plant's production of electricity and transmission of that electricity to your home is still a lot more efficient than an internal combustion engine where a lot of energy is lost to heat, vibrations, etc (ignoring all the energy it took to get that crude out of the ground, refined, and transported to the gas station). An electric car, even if powered solely by a coal power plant, is a lot more efficient in CO2 emissions per mile driven than an ICE vehicle. Now add the fact that many regions use natural gas (which is much cleaner than coal), hydroelectric (Vegas), nuclear (NYC among many), renewables like wind and solar (midwest/West) to derive a good chunk of power and driving an EV only gets cleaner.

[Dynamic]

Aww, shucks, Cigarbutt.  :-[ ;D

 

Actually, this thread, with the diversity of opinion from long to short to interested observers, and the courtesy among members with different opinions is a testament to the quality of community and discussion Sanjeev has helped cultivate. There are a number of people whose names I see on a Topic reply notification email and I'm sure something interesting will be waiting for me. Cigarbutt and oddballstocks are just two of those names. Dhando, Ericopoly, Liberty, Spekulatius and rb are among numerous others who are making this thread so fascinating, and I'm sure to have missed out many other great contributors. The geographic diversity at CoBF helps me improve my mental models all the time.

 

Oddballstocks, I'm certainly a very cautious bunny about shorting and anything where I don't just have to be right, but I have to be right in a certain timeframe especially when using borrowed money or have a potentially unlimited downside (Dalal.Holdings beat me to it). To me the prospect of irrational longs with no concept of Intrinsic Value on the other side of my trade means the price of a stock like Tesla could be wildly unhinged from economic reality, but I applaud you for finding the conviction in your analysis to short. I think shorts play a worthwhile role in capital markets, but I don't think I'm cut out for it personally. Elon seems to think the shorts are out to get him and takes it far too personally when he'd be better served ignoring the stock price and concentrating on the business. I can see his infamous $420 tweet was supposed to be his coup-de-grace in the "ultimate short squeeze".

 

I'd say a number of EVs are getting to be economically and practically viable for a large subset of users for either all or the majority of their use, and it depends on the EV and the types of travel undertaken in terms of Total Cost of Ownership, but not initial purchase price.

 

In Europe, commuting even as much as 50-100 miles per day by car is not very common, especially with higher population density and closer distances. In Europe fuel duty is pretty expensive compared to the US, partly to pay for roads, to encourage economical driving and vehicles, and partly to encourage environmental improvement (perhaps by putting at least some price on the pollutants, even if it doesn't truly cover the costs of the externalities). With grants on top, EVs with around 150-200 miles of range tend to be considerably cheaper in Europe for people leasing new cars in total cost of ownership with little impact on convenience (except for saving trips to fill up, if they can charge at home). Most weekend trips wouldn't exceed 150 miles return trip, and maybe 4-8 times a year they'd want to exceed 300 miles in a day. The money saved could easily be used to hire a car either to make the trip or at the destination after taking a train or plane.

 

Providing there are places where demand is sufficient now, and I think Europe is one, China is another, innovations in reduced cost, increased performance and rapid charging rates will continue apace for many years to come, bringing increased volume and reduced prices with them. It may not be there yet for your trans-continental road trips with 10 minute breaks that many people imagine they do on a monthly basis but probably do 2 or 3 times a year.

 

But in a few years it could well be cheaper to buy the EV than internal combustion, far cheaper to run it, and take a similar time to refuel it. If recharging rates are fast enough, overall range isn't such a problem - maybe 150-200 miles would suffice - so the battery cost could be reduced at the expense of fitting Tesla-grade thermal management. Even in the next couple of years I wouldn't be surprised to see 100kW-300kW charging rate chargers being installed at most en-route highway service area charging stations (just starting now with CCS for cars like the Jaguar iPace and Porsche Taycan), with normal rapid chargers installed at popular destinations. That could provide about 150 miles of range (~35-50 kWh) in about 8-25 minutes and soon become standard at charging stations and be widespread within about 5 years. In the 15-85% charge area where Li-ion batteries are at their happiest, this should be no problem, and a full 100% charge (50-71 kWh full capacity) would be equivalent to about 215 miles. 15 minutes break after the first 3½ hours of driving and every 2½ hours thereafter (averaging 60 mph) is about what I took on my once-a-year 300 mile journey in the UK last weekend. The journey took me about 5½ hours including the break, even though I didn't need to fuel up on the way (and there were ample Tesla and generic rapid chargers at the motorway services)

 

The environmental impact of EVs seems to be OK over the lifetime of the vehicle, both on an immediate basis and a cradle-to-grave analysis. The Union of Concerned Scientists released and updated studies of this that showed that even in the worst states of the mainland USA for fossil fuel power generation, EVs produce lower emissions on an ongoing and on a cradle-to-grave basis. Better still, as the grid gets greener, your EV's effective emissions will reduce. And now that solar and wind are getting so much cheaper than coal/natural gas/nuclear and still falling, it seems economically inevitable that at least a solid proportion of electrical demand will be supplied by renewables and that new fossil fuel capacity is unlikely to be added at even a replacement rate as old plants are shut down. On-shore wind was cheaper first, and carbon payback is much less than 1 year. Solar is now getting cheaper than wind and still falling in cost per kWh fast, with carbon payback of 2-4 years typical. Off-shore wind costs a little more up front but uses the talents of laid-off oil-rig workers (especially in the UK and Norway) and often benefits from truly enormous turbines with high efficiency and output. And also falling in price is battery backup. Hydro pumped storage is good but there aren't enough sites to provide full grid smoothing. Grid scale batteries are continually proving their worth, currently with Li-ion and soon quite possibly with flow batteries. Their speed of response is actually an enormous benefit to grid stability and they really seem to be earning their keep, so I think your EV truly will get lower emissions as it gets older.

 

Regarding public transport the last analysis I saw suggested buses were lower emission than trains, oddly enough. I think electric trains could change that, but then so could electric buses.

 

I still think 500 miles range on one charge is not necessary for a large pickup like the Toyota Tundra (cost about $33k-$45k). Normal use would probably be fine with 150-200 miles range, maybe 70-100 kWh for such a beast. With battery costs falling still, around $100/kWh, I think you could hit a similar price point in just a few years. Torque would be ample as an EV. I think with good thermal management, you could support 300kW charging, giving you about 10 minutes of charging time every 120-150 miles on those more unusual long trips, while you'd never need to charge up in normal daily use, just plugging in overnight and charging to maybe 85% unless you have a long drive planned. Another option, especially in a flat-bed, is to hire a small gasoline Anderson cycle range extender just for the road trips. The battery would handle the peak output, and the REx running economically at optimal speed would provide a bit above the average cruising power needed to overcome drag - maybe 30-60kW with the battery absorbing the excess or filling the shortfall. You could fill that with a modest amount of gasoline in 3-5 minutes every 2-3 hours and probably charge the battery half way simultaneously or while you use the restroom.

 

I agree that nuclear is a decent interim solution for steady baseload supply (but it cannot turn off and on quickly) and a complementary but pricey interim step to slashing carbon emissions, and it produces a lot less radioactive contamination than coal (and much less than living in an area with granite rocks). The externalities (such as end of life safe storage and the costs of implementing safety procedures and cost-overruns on commissioning plants) aren't well priced in, but at least it's nearly zero carbon (depending on how the uranium is mined and transported). We cannot expect fusion energy any time soon (it's always a harder problem to crack than it looks), but that could become far superior to fission in the very far future, but by then I dare say renewables plus grid storage will be considerably cheaper than fission by the time fusion comes around and possibly within 10 years, which might mean it's hard to plan new fission projects now. Perhaps fusion will help satisfy further increases in demand for power in the distant future. Fission works well also for long-duration constant power generation as proven by nuclear-electric submarines and ships. Fission plus a modest battery could be a decent interim solution to decarbonise long-haul marine shipping, while batteries could be good for ferries. I think it could be part of the suite of solutions for the different sources of carbon emissions, but probably not close to 50% of capacity.

[Liberty]

EV's don't seem economical yet. And outside of CA I worry about the environmental impact too. In the mid-atlantic our electric comes from coal and gas. Coal is polluting, and gas drilling destroys the environment.  In a lot of ways I'd rather have someone drill for oil in the middle of the ocean than mar the landscape everywhere we look.

 

A coal power plant's production of electricity and transmission of that electricity to your home is still a lot more efficient than an internal combustion engine where a lot of energy is lost to heat, vibrations, etc (ignoring all the energy it took to get that crude out of the ground, refined, and transported to the gas station). An electric car, even if powered solely by a coal power plant, is a lot more efficient in CO2 emissions per mile driven than an ICE vehicle. Now add the fact that many regions use natural gas (which is much cleaner than coal), hydroelectric (Vegas), nuclear (NYC among many), renewables like wind and solar (midwest/West) to derive a good chunk of power and driving an EV only gets cleaner.

 

This is is true, and there's more. The comparisons between EVs and ICEs are usually partial and cherry pick facts.

 

Fact is, ICE get dirtier as they age.

 

EVs are likely to get cleaner as they age, as the grid becomes cleaner over time.

 

As you said, even when charged in places where the grid is dirty, EVs have big benefits because they're way more efficient than ICEs (thermal efficiencies in the real world ranging from 20-40%, so 60-80% of the energy in a gallon of gas is wasted as heat), but also the location of the emissions isn't right next to people (no millions of tailpipes in urban centers and next to people's homes).

 

The batteries used in EVs can be recycled, and made from recycled materials. When you extract a gallon of gas or a ton of coal from the earth, it is then destroyed by use and cannot be recycled. Over time as EV markets mature, a large portion of battery materials will come from recycled battery packs.

 

EVs have fewer moving parts, don't need oil changes (more pollution) and brake pads last orders of magnitude longer because of regen braking (lowering the amount of brake pad dust in the air of urban areas, another pollutant that gets overlooked).

 

Etc etc.

[rkbabang]

Dynamic,

 

Nice post.  It's interesting, I'm short, but not because I hate EV's, they have a terrible capital structure and some major headwinds with real cash liabilities coming due.

 

I like the idea of EV's in general, but adoption will be tough.  In a metro these make sense, but in rural areas the drive is too long.  I can't imagine a road trip where I have to stop every few hours, wait in line at a charger then wait 45m for a charge.  I know people justify this by saying it's great to take a break.  I agree, I can get gas and use the restroom in 10m or less.  I prefer to not just waste the day standing around, and I can't imagine trying to entertain four whiney kids for 45m while we refuel.

 

EV's don't seem economical yet. And outside of CA I worry about the environmental impact too. In the mid-atlantic our electric comes from coal and gas. Coal is polluting, and gas drilling destroys the environment.  In a lot of ways I'd rather have someone drill for oil in the middle of the ocean than mar the landscape everywhere we look.

 

The second thing is in a metro where an EV makes sense what makes even more sense are electric trains.  We need more electric trains to carry people on high density commuting routes, not more electric cars clogging the roads.

 

All that said. I'd llve an electric Tundra with a ton of torque that can last 500mi and charge in 10 minutes.  They need to solve range, charging, and make batteries weigh less.  With a truck the payload is a really important factor, the heavier the batteries the less you can carry.  If they solve all of that and offer for $35k I'd pick one up for sure.

 

My thought has always been that we need to go nuclear with power, and once the grid is off coal and gas then we electrify everything.

 

 

I feel the same way. But how often do you do long road trips?  I already have a commuting car (Hyundai Elantra 38mpg) and a much less used family car for vacations or when we need a larger vehicle (Toyota Sequoia).  I put about 30K miles per year on the Elantra and about 5K miles per year on the Sequoia.  If I ever buy a Tesla, it will replace the Elantra not the Sequoia.  I will drive it around town and for commuting to work, and I'll just use another vehicle when I go on a long road trip, but I'll put far more miles on the Tesla than the SUV.  There are plenty of families that have more than one car and could do this sort of thing too, I'm sure I am not unique.  I don't think the road trip charging situation will be a factor in electric car sales for a long time.  When the 2-car-families market is completely saturated and you are now trying to sell electric vehicles to the families with only 1 car, or a second electric car to the multi-car families who already have 1 electric car, then this will become an issue.

 

 

[Liberty]

Range anxiety is psychological for 98% of people, not an actual real-world range problem. If you have 300 miles of range, that's over 4 hours of driving even at 70 MPH. If you don't feel like stretching your legs and eating something and using the bathroom after 4h+, you're in a very small minority of people (certainly not people with kids).

 

If you're frequently driving hundreds of miles a day, you probably do that for work, which is a specialized case, or you need to move closer to the things in your life because you're wasting your life driving, which is bad for your health, wallet, and the environment.

 

And for most people who will only drive hundreds of miles in a single day maybe once a year, maybe less, trading having to stop at a fast-charging station once a year for all the benefits the other 364 days isn't much to ask for. I'd certainly take that over having to go to the gas station 40 times a year or whatever.

 

People compare the gas tanks of ICEs with the battery capacity of EVs, but that's a flawed comparison.

 

ICEs are designed so that you don't have to go to the gas station every day. The idea is that you drive multiple days and then when you're maybe at 1/4 or 1/6 of the tank, you go to the gas station.

 

EVs are designed so that every morning you wake up with a full charge.

 

This means that one average, EVs probably have as much if not more range capacity as an ICE (unless you're weirdo who fills up the gas tank before hitting 1/2). Only in rare instances of driving all day does the range dynamic change.