Pennies vs $70-ish for the same miles...It's a no brainer. Plan on the tax incentives disappearing soon.
Posted on 08/18/2013 10:38:44 AM PDT by ckilmer
Last quarter, Tesla (NASDAQ: TSLA ) delivered 5,150 cars, which was well above its expectations of 4,500 deliveries. The company did so by boosting its production rate by 25% to 500 per week. If everything goes according to plan, the company's deliveries for its award-winning Model S could reach an annualized rate of 40,000 by the end next year, which is nearly double this year's expected rate. That's simply stunning growth. However, it's only the tip of the iceberg for where this company plans to be in the future.
The company has a very long road ahead of it to reach its goal to produce 500,000 vehicles annually, which is the rate CEO Elon Musk believes it can eventually reach. To get there, the company needs to capture lightning in a bottle again and produce a car that can be a mass-market success. That will happen only if consumers can drive a car off the lot in the $35,000 range -- something Tesla believes will be possible in as little as four years. While that's a bold dream, if Tesla has taught us anything, it's that it's OK to dream. So let's dream together of a world were Tesla can sell half a million cars each year.
No more pain at the pump? Americans as a whole are driving less, but we still drive a lot. Last year alone, the average American drove 9,363 miles, which is 7.5% down from the peak in 2004. While there's no telling how much we'll be driving by the time Tesla takes 500,000 gas-guzzlers off the road, we could conservatively assume that each one of those cars would have driven 10,000 miles per year. Even with using 2025 CAFE standards of 54.5 MPG as the average gas mileage of the cars being taken off the road, that's 183.5 gallons of gas being saved per car.
Overall, that's a savings of nearly 92 million gallons of gas each year. For perspective, that's just about a quarter of the 367.08 million gallons of gas Americans use per day. Thought of another way, if gas was $4 per gallon, it would save Tesla owners a collective $367 million, or about $733.94 per year. Swapping in a more gas-guzzling car would certainly boost the savings, so just think of these numbers as ballpark figures.
In fact, let's just say that Tesla was able to replace 500,000 true gas-guzzlers and knock off one day's worth of America's annual fuel consumption, or roughly shave the demand for a million gallons of fuel per day. Let's take a look at those numbers. anImage
*Based on an average of 10,000 miles driven and $4 gasoline
How much of a pinch would that be for refiners such as Phillips 66 (NYSE: PSX ) or Valero (NYSE: VLO ) ? In 2012, Phillips 66's refining and marketing segment produced $4.5 billion in earnings on $173.3 billion in revenue. Similarly, Valero's total revenue last year was $139.3 billion and its operating income was $4 billion. Clearly, the $1.47 billion in gasoline that Tesla could save each year won't put either out of business.
Oh, by the way Further, while taking a million gallons of gasoline per day out of the equation would still have some impact, odds are it would find somewhere else to disappear. In fact, just last quarter, Phillips 66 highlighted that it had increased its refined product exports to 181,000 barrels per day, or more than 760,000 gallons. By the end of this year it should have the capacity to export 370,000 barrels of refined product per day, or more than 1.5 million gallons. That additional capacity means Phillips 66 alone could easily export the amount of gasoline per day that 500,000 Teslas would save.
In fact, the U.S. has now become a net exporter of refined petroleum products because of lower U.S. demand and our competitive advantage in the marketplace. This situation is putting U.S. refiners with a strong Gulf Coast presence like Valero in a key competitive position to take advantage of future demand outside the United States. Tesla might actually be doing these companies a favor, as refined petroleum product exports are more valuable than those sold in the domestic marketplace.
Final Foolish thoughts Tesla's bold goal to sell 500,000 cars per year is a great dream, but it won't put gasoline refiners out of business anytime soon. Instead, these companies will simply have more gasoline available for the export market, which is a real positive for our economy. That's not to say half a million Teslas won't affect the energy markets, so tune in next week for a look at how that many Teslas could affect the electricity marketplace.
The only problem as far as investors are concerned is that Tesla is currently priced almost as richly as its Model S. That means investors looking to profit from the revolution in the energy markets need to look elsewhere
Charged by what? Closed coal plants? No nuke plants?
Replacing gas-guzzlers by coal-guzzlers.
Thought of another way, if gas was $4 per gallon, it would save Tesla owners a collective $367 million, or about $733.94 per year.Yeah, that's great, as long as they have free electricity to charge the battery.
I keep predicting that this guy will fail.
Hmmm. Maybe time to rethink that.
He keeps hanging around and making progress. If I’m counting right he is selling his car at about the same rate that GM is selling the Volt.
And replaced them with inefficient coal (via electricity) burners?
How will the government make up for the expected loss of gasoline tax revenue?
If that many cars were “taken” off the roads by Tesla, we’d immediately see the states and Fed’s enact a pay-by-mile tax to replace the lost gas tax revenue. I know that is part of their, (Government) plan. Get used to having to have a transponder follow your every mile...the parts are in place now to make it happen in all the Western States. Just need the political will.
By installing tracking devices on your car and charging you per mile. They're already on it.
So the ANNUAL SAVINGS are 1/4 of ONE DAY’S TOTAL FUEL USE. That’s 1/1460 or 0.07%, and isn’t significant.
Except for the most part, I’m guessing Teslas are not really “replacing” anything so much as they are being “in addition to.” There may be a few die hard purists but for generally I would guess the folks buying these are getting the Tesla as 2nd, 3rd, 4th or 5th cars for the novelty of ownership, or short mileage trips. It may be fashionable to show up for the Oscar,sor your Sierra Club fundraiser in your Tesla, but I doubt that it’s the actual, serious daily driver for most owners.
Fool’s gold. There’s no such thing as a free lunch or free electricity.....
Except for the most part, I’m guessing Teslas are not really “replacing” anything so much as they are being “in addition to.” There may be a few die hard purists but for generally I would guess the folks buying these are getting the Tesla as 2nd, 3rd, 4th or 5th cars for the novelty of ownership, or short mileage trips. It may be fashionable to show up for the Oscar,sor your Sierra Club fundraiser in your Tesla, but I doubt that it’s the actual, serious daily driver for most owners.
I am amazed that so many people still think electric cars are environmentally ‘friendly.’ They create huge carbon ‘footprints’ before they are even driven and they need electricity to run. How the hell do these greenies think the electricity is made? By wind?
Wind? Solar? Magicial Unicorns?
Convert those BTUs (or whatever your preferred unit of energy/power) consumed by your average car times half a million and put that load on the power plants and wait for the brownouts to commence.
And then, wait for 20 years for new technologies that may or may not work, or the enviros or the “not in my backyard” liberals to fight bringing online any other source of energy other than windmills and solar which are completely inadequate for suppling the power/energy gap.
Pennies vs $70-ish for the same miles...It's a no brainer. Plan on the tax incentives disappearing soon.
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