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
A half million idiots would have been identified.
In Ann Arbor Michigan the city offered “free” charging for electric cars. Somebody got a little irritated that the “free” charging came out of their taxes and did some digging.
They found that the car owners who benefited from the taxpayer gift were 6 figure earners who could easily afford their own charge. (Primarily liberal college professors)
Do you know what a Tesla Model S looks like? I ask that question because I've seen the Model S all over SoCal. Down here in San Diego I see them on an almost daily basis now and I think that is a good thing. I want to see Tesla, an AMERICAN CAR COMPANY, succeed in a big way and it looks like they are well on their way to becoming an important company in the automotive world.
Frankly, I don't completely understand why some conservatives seem to be rooting for Tesla to fail. Look, I know Elon Musk, Tesla's founder is a big lib. I probably would not agree with Musk on many political issues. So what? I could have said the same thing about Steve Jobs and I think Apple makes great products. I also know that Tesla has received gov't loans and I don't approve of the gov't throwing money at companies that have little or no chance of succeeding, such as Solyndra, but Tesla is not category, they are the real deal and the company has already paid back the gov't loans, years ahead of schedule. Let's give some credit where credit is due. Musk built a car company from nothing and in a few short years that company produced a car that is in many respects as good or better than anything else in it's price range.
The fact of the matter is that the Tesla Model S is simply great car, regardless of what kind of power plant it has. The Model S does 0-60 in 4.2 seconds and it will blow away BMW's and MB's that cost thousands more than it. The gas vs. electric debate will go on for some time. Each type of engine has it's own advantages and disadvantages, but the Tesla Model S has already ended the debate about performance.
The Tesla Model S is selling in Red States and I expect that sales will soar when Tesla finishes building it's SuperCharger network from coast to coast, which will happen within the next few years. People who simply appreciate great design and performance will buy the Tesla Model S and future models from Tesla if they are just as innovative. There is a reason that Tesla's stock has gone from 35 to over 150 this year. Some investors are recognizing that this company maybe a real game changer. Tesla plans to introduce a much more affordable model within 3 to 4 years, a car that would be in the 30K to 40K range. If that car is as well designed as the Model S Tesla is going to be become a real power in the automotive world.
There are only a handful of moving parts in an all electric. The battery is under 8 years unlimited warranty. The battery is covered even if an owner fails to follow charging guidelines laid out in the owners' manual. "Any product that needs a manual to work is broken," Musk said. Tests in labs have shown minimal reduction in capacity over 400,000 miles of driving or a 20 year equivalent of driving. Today the battery pack costs $12,000, so 8 years down the road it will be priced a lot less.
"I've told the Tesla service division that their job is never to make a profit," Musk said. Most auto dealerships make a large portion of their profits from the service department which, Musk pointed out, creates a conflict of interest when it comes to product quality. "I hate the idea of making money because our product broke," said Musk. "That's just wrong."
http://money.cnn.com/2013/04/26/autos/tesla-service-gaurantee/index.html
Base on all of the above, I would bet on minimal maintenance costs for Model-S
That's idiotic. Teslas are swarming LA. If you haven't seen one then it means that you have closed yourself off from society.
Did you lock yourself in your bedroom for the past 2 years??
Seriously, you have a problem. Fix your problem. Go outside.
What color is your Tesla?
If they under produce to demand, then they are priced too low for the market they are operating in - Adam Smith's invisible hand at play. BTW, they only sell direct, there are no car dealers involved and I do not own one today. As you read more about the company you will start to like them. I was on your side of the fence initially.
“Minimal gas expense”
What does the electricity cost?
It will be Red, if I buy one - may happen if everything goes as planned in about 4-6 years. This company is in the same position as Apple was before the iPod/iPhone/iPad revolution. Another American success story that we should be proud of.
You made my point for me, thanks. Like I said, I have a 2009 hybrid and will be unloading it in a few years only because the warranty is going away. Thanks again for reminding me what it's going to cost, it renews my motivation to dump the car. A massive repair bill of $12K will somehow be reduced to a massive repair bill of an unspecified "lot less." Good news indeed! Upon what economic model is the price of a battery's components going to be "a lot less?" How much less and when? Is the price of Lithium going down? Nickle? The labor cost? This isn't computer chips, you can't count on prices to drop like they do in consumer electronics.
Base on all of the above, I would bet on minimal maintenance costs for Model-S
You keep using the words "minimal maintenance costs." I don't think they mean what you think they do.
Aww c’mon man. Haven’t you heard, the free market utopia of California is “swarming” with Teslas.
I can’t really explain why the rest of the world is swarming with internal combustion powered cars. Its a mystery.
Electricity is free. He has charging stations all over his commune.
“It will be Red, if I buy one - may happen if everything goes as planned in about 4-6 years.”
Right. Call us back when you’ve actually put some miles on one.
I dispute your "if." I haven't seen evidence that is happening at all.
$0.12/Kwh average American rate - equates to $533 for every 12,000 miles if you charge it at home. You can also charge at the Tesla Supercharge for free.
I really doubt I will start to like them. That is like saying I should like GM after they shafted stockholders and took taxpayer dollars.
I can’t wait until he has to replace his first battery, and they screw him on the warranty.
Nothing is "free", someone is paying for it somewhere along the line.
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