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
I strip away the old debris
That hides a shining car
A brilliant red Barchetta
From a better vanished time
I fire up the willing engine
Responding with a roar
Tires spitting gravel
I commit my weekly crime
When I can get 14 hours at 70 MPH out of an electric vehicle, get it recharged in an 8 hour period, have it reasonably priced at around $35,000, and have it able to be worked on for a reasonable cost at the neighborhood garage, then I will consider buying an electric vehicle.
They are currently under producing to demand. There is a 2 - 3 month wait for North American customers when you order one. As they open doors in EU and Asia, that demand is projected to triple.
If you listen to their 2Q earnings call, you will hear that they are worried about their suppliers not keeping up with demand.
They took out a $465M loan that was available to all car companies when G.W. was in office and repaid it with interest 9 years ahead of schedule. It did not provide a competitive advantage and they paid us back in full. If they screwed all bond holders and tax payers to help the unions like GM did, I will not be supporting them.
They took out a $465M loan that was available to all car companies when G.W. was in office and repaid it with interest 9 years ahead of schedule. It did not provide a competitive advantage and they paid us back in full. If they screwed all bond holders and tax payers to help the unions like GM did, I will not be supporting them.
They took out a $465M loan that was available to all car companies when G.W. was in office and repaid it with interest 9 years ahead of schedule. It did not provide a competitive advantage and they paid us back in full. If they screwed all bond holders and tax payers to help the unions like GM did, I will not be supporting them.
If you want to hear from current owners, you can visit: http://www.teslamotors.com/forums
In that case, it is included in your automobile price.
In that case, it is included in your automobile price.
In that case, it is included in your automobile price.
A few years ago my girlfriend and I filled up a Dodge Caravan in Albion Michigan and drove straight through to Whitefish point on Lake Superior. It was about 6 hours total driving. We then went and spent a couple nights at Tahquamenon falls and another couple nights at Grand Marais. After leaving Grand Marais we went to Munising where we finally filled up again.
Its about 450 miles and we weren’t empty when we filled up the second time.
Wonder how a Tesla would do on such a trip. I also wonder how it would do if the trip were in February.
Apologize for the multiple posts.
They are pretty cars
But
I never liked the band
That is wrong. Hopefully, that does not happen.
Fair enough. Have you heard of why the suppliers may not be able to keep up?
So what do you suppose the chances are that a kid starting his first job will save $500 to $1500 to buy a good used Tesla.
The Teslatards are typical liberals. Their real goal is to eliminate affordable transportation for all but those who can afford their approved transportation. Kinda like cash for clunkers. It drove used car prices up while giving a tax break to people who could afford a new car anyway.
It’s FR. Having trouble with page build today.
The vendors did not believe that Model S will be as successful as it is today. They were expecting it to file for bankrupt like Fisker.
Tesla uses the same battery we use in laptops. If Tesla wants to operate in full capacity (500,000 cars per year) at its current facility, Panasonic has to double the current battery production across the world to support. We are talking about not increasing shifts, but building new factories. So for the next few years, Tesla will be producing below demand. Hopefully they can release a mass market $35,000 automobile in 3 - 4 years.
I agree with you that you cannot sell volume with $70K base price, but for the foreseeable future they will sell all the cars they can produce.
This is a point I've been trying to make that's gotten lost in the past few posts: Tesla is for higher-end buyers, there is no way it's going to penetrate the low-end market, which is where the "gas guzzlers" (I hate that term) are. A glance at the headline of this entire thread suggests that's what the argument's about (Hooray! Teslas are saving fuel by taking gas-guzzlers off the road! Rah, rah!), and Tesla loses it hands-down.
Fanbois is off on an irrelevant tangent about overall cost-effectiveness and how they sucked off the government teat less than GM, and I'm finished with that primrose path. I live in Realityville, where I own a hybrid SUV that I like a lot, but am going to have to unload before the battery warranty blows up in my face.
About the same as kid saving up to buy a BMW, Mercedes, Porsche, Lexus, etc., etc.
The Tesla Model S is a high performance, luxury sports sedan and is priced like one.
Tesla does plan to intro a much more affordable model in 3 to 4 years. The Model S was never intended for the middle class, but their next sedan will be.
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