I am not a Tesla fanboy but I think Lutz has it wrong on a few counts.
1. The Tesla losing 4,000 per car is like the 660k lost per car for Fisker. It is not based on what it costs to produce the vehicle but all expenditures divided by vehicles sold. Flawed math.
2. Gasoline prices fluctuate far more than electricity prices and if you fit a pair of panels to your home or business + superchargers this negates the issue. Tesla Model S is the fastest charging vehicle on the market and getting from Detroit to Chicago can be done without a long charge.
3. With the dealership model I think Tesla did it right almost to a fault. If you look at the richest person in any city it is usually the owner of a dealership and that is not because of what Lutz claims. In my area some of the largest homes belong to car dealership owners. Reason is that all the profit losses Lutz claims are losers actually make money for a dealer
1. Finance is a cash king for car dealerships this is where they make most of their money.
2. Inventory is seldom purchased and still on the books of the manufacturer for a predetermined time. This leverages the manufacturer to limit exposure on over-head.
3. Service is also a cash king for dealerships. The manufacturer ends up paying a ton for labor or there is a fixed cost passed on to the consumer.
The thing that is killing Tesla is over-expansion.
As a Volt owner, I remember drinking the Lutz Kool-Aid of the ER-EV, which is why I also have a Karma Nonetheless I can't help but sense a self-serving tone in this article; "wasn't my championing of the Volt when I worked for an established, conventional, car maker brilliant?". Frankly he sounds like a Luddite, tied to a 'traditional' car maker mentality, resistant to change and so will inevitably be proven quite wrong sooner or later. Tesla is a very brave company and we should all be rooting for it.
I have been following TESLA since I placed my reservation for a Model X in 2014. Not just casually, but daily reading everything about the company. I went to the Model X reveal in San Jose a month ago, just to get a sense of the excitement.
I am concerned about TESLA's expansion, but they may have the right timing to be successful. Tesla's Power Wall and Power Stations are sold out. When they finalize the Giga-Factory in 2016 they will have the capacity to leverage pricing on batteries for Power Wall and Power Stations, the Model S, Model X and the up-coming Model 3. Tesla also provides the motor assemblies for Mercedes hybrids. Although there are advantages to EV/ER vehicles, Tesla built a network of Charging Stations (owned and operated by Tesla) for its owners to charge across the US for free. These are high powered DC charging that can charge a Tesla 90 KWH batter in an hour or 50% in 20 mins. Although they are exclusively Tesla, they are an asset that Tesla can garner revenue from manufacturers who have DC charger capability (I.E. Leaf). As a point of reference that is like charging a Karma in less than 10 minutes.
As we await release of 530, Tesla has over-air updates, and just modified all the fleet (approx 100K) in 7 days to Auto Pilot and updated parts of the CIU. Not only Auto Pilot, but they upload road information from each vehicle to cloud storage and process updates daily to improve maps and vehicle response and then download that information to the fleet for continuous improvement. That's 100,000 beta testers and mappers. Telsa will have more miles input in a week than Google gets in a year.
Sure, if one takes their total cost and divide the number of cars, it is a net lost. This is no secrete. One needs to look a little further.... Technology leverage -- Giga Factory, Software expertise, Safety, World-wide charging network, etc.
Lutz sees the current and past, Elon Musk seems to view the future. After riding in the Model X 30 days ago and accelerating from 0-60 in 3.2 seconds (yes I screamed), I have no doubt that Tesla has a great formula. If they financially manage their businesses they will succeed.
I have nothing against the Model X or Tesla for that matter and feel they certainly have excellent cars and products to offer. However, which shopping mum or Hockey dad or family wants to accelerate in an SUV in 3.2 seconds to 60 mph? Yes, it is technologically possible but what is the purpose of a large SUV doing that exactly? Apart from snapping your neck into the head rests and drawing unwanted laughter attention to your grey hairs (if you are lucky enough to still have hair) and a few open mouths from shocked passengers who may have soiled themselves on your brand new seats, what is the exact need or purpose of this insane, ridiculous? or whatever function they call it? NOTHING!. Sure, all of us have a need for speed from time to time, but come on guys. A large seven seater SUV? This is subject of laughs and ridicule than a useful function. Specially so that the typical buyer of this hefty pricey machine is well into the fifty's or late forties with teenage kids or older and possibly teetering on having a heart attack every time they push the accelerator pedal to test the so called ridiculous or ludicorous or insane or mad function. ****, you even risk losing your hair piece due to the fast acceleration. What a waste of good battery range!!!! If you want Zero to sixty in 3.2 seconds or something more civilized that is not bound to give you endless neck pain because you are over fifty, then get a Lambo, Aston Martin or something that roars, looks and feels the part, not a nicely dressed and expensive shopping trolley. This to me is a gimmick, and something that will fade away as fast as it excited people in the first place. Tesla will not fail, and they will hopefully succeed as their success only pushes others like Karma Automotive and others who will come on the scene a few years from now to be even more successful. Honestly, they don't need these silly toys of fast acceleration, etc. I know some people who were actually put off by this and saw it as it was, i.e. a gimmick. I was put off. I am not telling Tesla not to do it, but do it in a properly designed and purpose built sports car, not a bank safe! Will you give the keys of the Model X to your teenage son or daughter? Not likely as they are bound to try this silly function and get into a crash god forbid. Oh, wait, I forgot. Kids have left home already so it will be the grand kids then!
Much as I like my Karma better, I too want Tesla to succeed. But, I have to agree with what FiskerZee said. No reason for an SUV to snap your neck. Nor, is there a reason for giving them gull wing doors that are smarter the Apollo spacecraft. It's cool, but it adds a lot of totally unnecessary expense to the vehicle. And, how is it an SUV if you can't drive it down a dirt road? It doesn't seem to sit (significantly) higher off the ground than the model S. The floor is so low that the wheel wells come up into the passenger compartment so that it doesn't even look like you could fit a 4' wide sheet of plywood or drywall in the back like you can with my Traverse. It actually looks like it wouldn't fit a lot of today's HD TV boxes.
The S is a fine automobile for its purpose (as a sedan), if on the plain side for its cost. The X while certainly different ... has a lot in it that an SUV buyer doesn't need: neck breaking speed, doors that have more radar/sonar than Norad, and a windshield that goes over your head with a ridiculously complicated (and probably ineffective) sun visor (important to those of us in sunny climates). And, it falls short of what people want an SUV for (4-wheeling, ground clearance, large item cargo capacity, driving visibility from sitting high up). It's a cool toy, but I worry that it won't sell. And, I'm in favor of EV in general, and want them not to fail.
FiskerZ an JC... I agree with the point of "need". The question I get the most with the Karma and electric vehicles is "do they have power". We have been consumed over the years with muffler exhaust sound equating to speed and performance. Manufacturers "tune" exhaust to impress. Mustang now has a commercial with a mic at the tail pipe (held by a pretty woman, of course) to demonstrate its power and sound.
Tesla didn't have to build a 700+ HP SUV or sedan. But they had to destroy the myth that electric cars are slow, lack power and range. Tesla built a all-wheel drive SUV with front and rear electric motors. The by-product was speed and handling. Second to the US, Tesla's largest market is Norway. Go figure! The Karma is rated at 400 HP and 900+ ft pounds of torque. Plenty powerful for most.
Destroying the myth of slow, sluggish golf-cart like vehicles help place electric driven cars in a better light. No, we don't need a 3.2 second SUV. Nor does Dodge need a 760HP Hellcat. We could all drive a Prius. It gets the job done. But since Tesla's prime mission force all the manufacturers to build electric vehicles, they must and are destroying the myths and objections. The model 3 will be a modest 200-300 Hp sedan for the masses.
Since Tesla does NO marketing, a 2.9 0-60 mph sedan, driving in "INSANE Mode" beating a Hellcat, is free Youtube advertising and informs others of the power and torque of electric motors....quietly leaving a Dodge Hellcat in its wake says volumes in 30 seconds. Not needed (as you correctly point out), but having it produced more sales in the last quarter of 2014 than their capacity to build was a good problem to have. Imagine if Hendrik Fisker could have gotten all the free advertising on You-Tube for the Karma..... It could have been a different outcome...just maybe.
Tesla's performance vehicles will enhance sales of Bolt, Karma, Leafs and other EV's, BEV and EV/ER's. Note: Mercedes, BMW and Audi are now in the mix to catch up. Don't need the speed....but it forced other manufacturers' hand to move away from 100 years of internal combustion. That will reduce CO2 emissions sooner from all. That is our prime objective.
AIJOHN, you make a lot of good points in that Tesla has certainly capitalized on a great deal of these features like speed, etc to push sales and to create a real buzz for their automobiles. I can't deny that whomever I run into talks about the new Tesla Model X and how cool it is with the 3.2 S 0 to 60 acceleration, etc. However, Tesla need to be careful in not allowing some of these features to contribute largely to a reputation for lack of reliability. OK, I can live with the 3.2 S acceleration and after all, indeed if you don't need it and you don't want to suffer from neck pain and back pain for the rest of your adult life, you don't use it so its use or lack of use is controllable according to the driver. However, what's the deal with the Falcon wing doors? I feel this was their biggest mistake with this SUV. It definitely looks cool and draws attention and is really advanced, however what is the purpose of these doors? They say you can park in tight spaces and still be able to get out. True, but what about being able to open the front doors in those tight spaces and other cars that are parked around you being able to open their doors? If they have kids in their back seats, etc they are quite likely to open their doors into your nice and shiny Falcon wings damaging your paint work. I know most people with new cars don't park close to other cars in parking lots for this particular reason, i.e. people are very careless and they will damage your car. So, why advertise a feature that most of us are trying to avoid like tight fitting parking spaces????!!!!! Second thing is obviously the people who designed these doors have never lived anywhere that gets huge amounts of ice, grime, road salt, ice rain, snow, sleet, mud and slush. On a slushy and snowy day, try getting out of the SUV without getting covered in crap dripping on you from the Falcon wing doors. Hello????!!!!!! were they asleep when they designed these? Of course, you are going to get covered in crap, for sure you are. Also, freezing rain, grime, salt and all kinds of garbage will get into those hinges in the middle and over time deteriorate or totally destroy them leading to expensive (really expensive) repairs after the warranty is done on the car. On some really sub zero days, I can't even open the door of my regular car as it is crying out for help due to being frozen solid, so what makes us think we can open doors of these so called falcon wing cars? Why would you want to expose the rear passengers that much anyways and open them all the way up allowing gusts of wind, rain, slush, or whatever hits you to literally shoot through the car and, spray your passengers, and out the other side?? People in colder climates should be having second thoughts about these doors and their effectiveness. Was that a gimmick? Fore sure, it was. There really is no practicality or use to this feature. Mark my word, you will see a lot of complaints in months or years to come regarding these doors and we will see how Tesla handles them. On future models, I expect these to disappear somehow.
Two quick Points... First, the 3.2 Ludicrous up-grade is "what is possible". It is a $30,000 upgrade -- $20,000 to upgrade to Performance model or P90D and $10,000 upgrade to highest performance (seems to be primarily software). That IMO for Tesla is pure profit above the base model. The main cost is an upgraded rear motor. Back to Lutz contention that Tesla looses on each model. To entice buyers to buy the top end certainly is a $30,000 "business" win.
On the Falcon Wing doors: Tesla realized what Lee Iacocca knew 30 years ago, women influence the car buying decision. Lee couldn't get Ford to build the Minivan, Chrysler did. Tesla worked with a lot of women to see what they wanted in a SUV/Cross Over. Being able to access the second and third rows more conveniently was at the top of their list, along with storage for things under the second row seats. They could have done the "sliding doors". But who will pay $100,000 for a minivan. By the way, the Doors are larger than the opening -- creating an umbrella effect in the rain and snow similar to the rear hatch door on my current Audi Q7.
Keep in mind the Karma's styling is what attracts us. Its unique styling draws attention. Take the BMW I8 doors, they didn't need those doors to get in and out of the car, they create style and adds something no other car has.
The points you make are practical. if the Karma were styled to be PRACTICAL, we most likely would not be here debating the points -- we would be driving a Volt or Caddy ELR.
The business of $100K cars is the "wow" factor. The Karma has the wow factor, and we tend to forgive its shortcomings. The Model S design was more mundane -- the Model X has the "wow" factor that draws attention to electric vehicles.
I will have my Karma and sometime next year the Model X. No more gas, no more CO2. I really don't expect issues with the doors. Tesla spent an extra year just to get the engineering right. They admit they were a challenge, but never went for the mundane.
Truly appreciate the debate. Love my Karma and this forum. Thanks for sharing.
These points are true, the wow factor is true. You are right in that had it not been for the looks of the Karma, I would never spend that amount of dollars on the lack of practicality that we get. As for practicality, the Karma is definitely less practical than the Model S or the Model X. Yes, I agree that the wow factor is what sells cars more than anything else. I surely hope those doors stand the test of time as I want to buy a second hand Model X in a couple of years or so lol!!!. My other car, the Aston Martin DB7 GT is the least practical one of the lot. Yes, I love the debate. Thanks guys.
AIJohn. I get what you are saying. But, I thought the Tesla business model was the high end sports car, followed by a high end sedan for early adopters, and then start moving towards the more everyday consumer. Not the "wow" buyers. I guess there are "wow" SUV buyers (Escalade/Hummer owners). I wasn't thinking about them as the target consumers for the X in my earlier post. But, if you are ... this makes sense. You can maybe convert them off of gas guzzlers! And, the X is a great people mover.
Any comments on the ground clearance? That was my initial "hmmm" thought when I watched the X release. I agree, you want it low if you're going to do 0-60 in 3 seconds, but ... If you can't just skip over a speed bump without worrying about bottoming out ... it's no so much an SUV, then.
Yes, I love it. There were 190 of them build for the world and mine has 18000 miles on it, it's like new literally. On days when I want to hear the roar of the engine, I take it out and I can also watch my gas gauge go down as I am speeding, lol. But, it's fun nonetheless. My wife says I have two completely impractical cars, but who cares, I am happy, right? I also have a gas guzzling Wrangler Rubicon (real guzzler) with 33 inch wheels and a 4 inch lift, that I gave to my daughter while she's at university. Guess who pays for the gas though. Yes, yours truly!.
Just a comment on the Tesla overview. I recently was on an "EV" wine tour sponsored by Sun Country Highway. They are the largest seller of chargers in Canada (I think) and have a network of stations that reach right across the country. it became readily apparent that "range anxiety" is the "road rage" of the EV community. With only two stations at each winery, there was a race for the spots and a disquiet among the losers about the length of time the winners were taking to "fill up". The need to plan your "range" is ever present unless you are using your vehicle for local functionality, a truly great application. I really see the EV/ER model as the interim go-to with the tech world topping off the EV range and the charging efficiencies to match our rapid petri fillip model. I truly love my lack of range anxiety and the styling uniqueness of our ride. Also like how interested tech folks are active in addressing our own deficiencies.
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Hydrogen or electric: which will drive petrol cars off the road?
As drivers look to the future, will it be hydrogen that is powering their vehicles in coming decades?
Hydrogen offers a longer range than current battery power.
There is a race taking place in the motor industry between two powerful camps to decide what will propel the cars of the future.
On one side sit some of the big names of car making: Japanese giant Toyota; its domestic rival Honda; and their Asian neighbour Hyundai, who are all betting big on the potential of hydrogen power.
The other camp, smaller, but more vocal, is being led by tech visionary Elon Musk, who is convinced that electric cars powered by batteries represent the future and is sticking with them for his Tesla cars.
Toyota has put billions into research to deliver the Mirai, a saloon powered by a hydrogen fuel cell. A handful of these cars are now on UK roads as early adopters such as Transport for London investigate their potential and Toyota examines how the concept could be scaled. Hyundai’s ix35 and the Honda Clarity are also on the road.
The range of Toyota's Mirai, which is powered by a single hydrogen fuel cell
Hydrogen fuel cells work by using a “fuel stack” to mix outside air with the hydrogen they carry in pressurised tanks in a chemical reaction which creates electricity, with the only emission being water. This electricity is used to charge a battery or drive electric motors to power the car, known as a fuel cell electric vehicle (FCEV).
While this clean power might seem to be the obvious choice, Musk is less than convinced. Hydrogen power is “extremely silly” according to the billionaire PayPal founder, who is expending much of his fortune constructing a “gigafactory” to produce the batteries that power his Tesla electric vehicles (EVs).
“Hydrogen is an energy storage mechanism, it’s not a source of energy,” he told a conference earlier this year. “So you have to get that energy from somewhere. It’s extremely inefficient.” He believes that hydrogen is limited in that to create it, water needs to be electrolysed and the power to do this has to come from somewhere. It then has to be pressurised so enough can be stored in a tank to drive a car.
Tesla founder Elon Musk is critical of hydrogen fuel cell technology Photo: Getty Images
“If you took a solar panel and used that energy to just charge a battery directly, rather than trying to split water, take out the hydrogen, dump the oxygen, compress the hydrogen and then put it in a car to run the fuel cell, it is about half the efficiency,” he said. “Why do that? It makes no sense.”
Musk is the most outspoken in his doubts about hydrogen power but he’s not alone. This summer Hideyuki Sakamoto, a Nissan executive, also claimed that the future was electric – and that electricity would be stored in batteries.
“Our zero-emission strategy centres on electric vehicles,” he told Nissan’s AGM. “We are pursuing improved electric powertrain technologies which will enable us to mass produce and market EVs that equal or surpass the convenience of petrol-powered cars.”
Nissan already produces the Leaf, the best selling EV on the market, and Sakamoto’s statement indicates hydrogen will continue to play only a small role in the company’s future.
So is the future battery or hydrogen?
In hydrogen’s favour are its similarities to petrol. It takes a few minutes to fill a tank with the gas in a process similar to topping up a conventional car and many have a long range – the Mirai’s is 340 miles. Against it is the huge and costly task of developing the infrastructure to support hydrogen, from creating enough of the gas, transporting it and building a network of filling stations – there are just four in the UK at present.
EVs powered solely by batteries have shorter ranges and charging them takes longer – even “rapid” chargers take 30 minutes – but the infrastructure to support battery charging is seen as easier to introduce.
Cost remains a factor for both. FCEVs’ infancy means prices are high – Toyota’s Mirai lists at £66,000 – and EVs such as Nissan’s Leaf and Tesla’s cars are priced at a premium over similar-sized conventional vehicles.
Toyota is open about the challenges of hydrogen, but has set itself the target of delivering more than 30,000 FCEVs within five years. “Fuel cells are part of our corporate vision,” says Neil Spires, of Toyota. “We buy into the idea of a hydrogen society because it’s such a good way of storing energy.”
Fuel cells are part of our corporate vision. We buy into the idea of a hydrogen society because it’s such a good way of storing energy
Neil Spires, Toyota
This involves networks of hydrogen filling stations which can generate the gas through renewable power such as wind turbines, and in the longer term an industrial base creating the gas. “It’s a major challenge but if the auto industry comes on board, hopefully it will grow mutually,” Spires adds. “The EU buys into it, and we could end up with a smarter society where countries can control their energy needs.”
It’s a huge leap, especially as Spires expects to sell just 15 Mirais in the UK next year – but it was Toyota which made the hybrid mainstream with its Prius, which it introduced in 1997.
“Current hybrids like the Prius are a stepping stone to the longer-term goal,” says Spires. “We’re not saying hydrogen isn’t a bigger challenge, but when we introduced the first Prius we were laughed at.”
Tesla has developed a robot chargin device
While infrastructure issues are significant, in the long term it makes economic sense to tackle them, according to Henri Winand, chief executive of Intelligent Energy, a Loughborough-based company that makes fuel cells.
“Fuel cells are a ‘one to many’ system, but plugs to charge electric cars are ‘one to few’,” he says, likening charging a battery to “filling a fuel tank with a syringe” because of the time it takes, meaning many more plugs are needed.
Germany is planning 500 hydrogen filling stations
“People want cars that give them freedom, not take it away,” says Winand. “They do not want to plan their lives around their car’s range, they want to fill up and go.”
Germany is planning 500 hydrogen filling stations, showing the infrastructure is achievable and once a critical mass of FCEVs are on the road, a hydrogen network will be economic in a way that EVs cannot be for car manufacturers, Winand claims.
“An EV just can’t achieve the same range,” he says. “It’s simple: you want to go further so do you put in more fuel with a bigger tank or do you add heavy, expensive batteries. That battery is hardware which is capital expenditure for car makers, it’s just not economic when you are talking making masses of cars.”
Less sure of a hydrogen-driven future is Paul Newton, auto analyst at IHS. “While a more complex technology, fuel cells are a genuine solution to the almost unbreakable model of filling up and driving off. But it’s unlikely they will take over or compete with EVs on a cost and complexity basis.”
Where most experts broadly agree is that motorists of the future are likely to drive a mixture of vehicles. “No one is really gambling one way or the other,” says Newton. “Fuel cells or pure electric cars won’t completely replace hybrids or petrol engines for decades.”
Both Hydrogen and Electric charging are a challenge. Gas for ICE models gasoline is readily available. Thus the points on Range Angst.
However, Tesla has its own Charging Network in the US, Europe, Asia and even Australia. It is growing based on Owner's locations, with typically 6 charge stations at each location, which are software linked to Tesla Hq and free to Tesla owners for life. Whether EV or Hydrogen, some network of support is needed to sell the cars.
What people writing these kinds of articles often fail to consider is how cars are really used every day. When Car & Driver or Road & Track gets an EV, the first thing they want to do to "test" them, is take them on a long drive. And, they utterly fail to consider that 95% of the time in the real life operation of their cars, an EV owner would come home at night, plug in, and have a "full tank" to start the next day almost every day of their lives. So, the time/stress saved not needing to buy gas twice a week should be measured into the "anxiety" of the 2 times a year you might have to sit for 30 minutes at a quick charger.
Now, we're back to the Karma actually being the best of both worlds. We do "charge every night" (pretty much) whenever we drive it. So, we are always starting out "full" and worry never. Whereas, a Tesla (or any EV with 200+ mile range) is likely to only charge every few days, and will (soon or later) as a consequence be caught with less charge on some day that he/she needs more than normal expected range (or by forgetting to plug in). Again, though, I still see those times as rarities in how EV drivers actually uses their cars. The assumption that this would be a regular "real world" experience is (in my mind) often over-stressed. The best thing to help would be more access to chargers at places that make sense like: large business offices, hotels, parking garages, mall/theater parking lots, etc ... because those are the places where people leave their cars for hours. My company (Wells Fargo) is installing them in a lot of our office buildings here in the Phoenix area, and it's great. I used to have to use about a gallon gas when I take my Karma to my office, now I do not. I just park & charge after lunch, and I'm full to go home at 5:00. (And, they're free to use for us employees!)