Dissecting Tesla's ZEV Mythology

Nov.17.13 | About: Tesla Motors (TSLA)

As a blogger, the only thing I hate worse than making a mistake is having that mistake caught by another blogger who exaggerates my error to perpetuate a mythology that can't withstand careful and thoughtful analysis.

Last week, I published an article titled "Why Long-Range BEVs Are An Economic, Energy And Emissions Abomination" that had two mistakes in the underlying data. My first mistake was using graph digitization software that I hadn't previously used and didn't properly calibrate. My second mistake was a simple formula error in the Excel spreadsheet I used to create new graphs from my inaccurately digitized data. In combination, those mistakes made my graphs inaccurate to a degree that merits an unqualified public apology. My readers deserve better.

SA Contributor Mark Hibben noticed my errors and published a counterpoint article titled "Tesla Cars Are Not An Environmental Abomination." Mr. Hibben's graphs are much better than mine when it comes to quantifying the lifecycle energy inputs and CO2 emissions of the two vehicles I discussed, a Versa and a Leaf from Nissan Motors (OTCPK:NSANY). They accurately highlight my calibration and calculation errors in the discussions of both cars. My problem with Mr. Hibben's graphs is the addition of "Petersen Surplus" errors for two cars from Tesla Motors (NASDAQ:TSLA) that I didn't specifically analyze. While I'm happy to own the occasional mistake in my work, I find it deeply troubling when others expand those errors to include calculations I didn't make.

This is Mr. Hibben's graph of the energy inputs for six different vehicles: a Nissan Versa, a Nissan Leaf, a Toyota Prius, a Mercedes E350, a Tesla Model S-60 and a Tesla Model S-85.

Click to enlarge

With the sole exception of the "Petersen Surplus" blocks for two cars from Tesla, I think he did a superb job of expanding the scope of my original article by estimating the lifecycle energy inputs and CO2 emissions of four cars that I didn't analyze. Under the circumstances, I'm sure Mr. Hibben won't mind if I rely on the data embodied in his graphs but ignore the "Petersen Surplus" for this article. Since I was duly embarrassed by my first set of mistakes, I've triple checked the calibration of my digitization software and scrupulously avoided any data extrapolation. This article is all about pulling values out of graphs and deciding what those values mean.

If one assumes that Mr. Hibben's estimates of the lifecycle energy inputs and CO2 emissions for the Mercedes E350 and the two Teslas are accurate, the Teslas will enjoy a modest lifecycle energy input and CO2 emissions advantage over a 15-year useful life, but the front-loaded energy inputs and emissions will take several years to amortize. While I'd rather see detailed disclosures from Tesla than fuzzy estimates from other bloggers, I know that's not going to happen.

My first table summarizes the manufacturing and use phase energy inputs for the three vehicles used in UCLA's original "Lifecycle Analysis Comparison of a Battery Electric Vehicle and a Conventional Gasoline Vehicle."

Lifecycle Energy Use

Versa

Prius

Leaf

Manufacturing phase inputs

37,200

46,600

128,700

Use phase inputs

817,800

506,900

374,500

Total lifecycle energy

855,000

553,500

503,200

Manufacturing phase increase

9,400

91,500

Use phase reduction

(310,900)

(443,300)

Payback on energy investment

33.07

4.84

Click to enlarge

By adding 9,400 Mj of manufacturing phase energy, Toyota delivers an HEV that saves 311,000 Mj of energy during the use phase. Nissan, in contrast, adds 91,500 Mj of manufacturing phase energy to save 443,000 Mj of use phase energy. In both cases, the manufacturing phase impact is immediate while the use phase advantage is deferred. Since the Prius offers an energy payback period of less than 6 months compared to 37 months for the Leaf, its advantage couldn't be clearer.

My second table summarizes Mr. Hibben's estimates of the manufacturing and use phase energy inputs for three vehicles that were not included in the UCLA report.

Lifecycle Energy Use

Mercedes E350

Tesla-60

Tesla-85

Manufacturing phase inputs

46,700

332,900

429,200

Use phase inputs

1,208,300

530,400

530,200

Total lifecycle energy

1,255,000

863,300

959,400

Manufacturing phase increase

286,200

382,500

Use phase reduction

(677,900)

(678,100)

Payback on energy investment

2.37

1.77

Click to enlarge

By adding 286,000 and 383,000 Mj of manufacturing phase energy, Tesla delivers a pair of BEVs that save 678,000 Mj during the use phase. While the vehicles from Teslas are cleaner than a Mercedes, they have energy payback periods of 76 to 102 months and are a full order of magnitude less energy efficient than a Prius.

Since I wouldn't want to ignore the equally abysmal emissions details, I'll walk through the same analysis using Mr. Hibben's graph of the lifecycle CO2 emissions for the six vehicles.

Click to enlarge

The following table summarizes the manufacturing phase and use phase CO2 emissions for the three vehicles UCLA studied.

Lifecycle Emissions

Versa

Prius

Leaf

Manufacturing phase emissions

2,300

2,900

9,000

Use phase emissions

60,300

37,000

22,300

Total lifecycle emissions

62,600

39,900

31,300

Manufacturing phase increase

600

6,700

Use phase reduction

(23,300)

(38,000)

Payback on emissions investment

38.83

5.67

Click to enlarge

By adding 600 kg of manufacturing phase CO2 emissions, Toyota delivers an HEV that saves 23,000 kg of use phase CO2 emissions. Nissan, in contrast, adds 6,700 kg of manufacturing phase CO2 emissions to save about 38,000 kg of use phase CO2 emissions. Since the Prius offers an emissions breakeven point of less than 5 months compared to the Leaf's emission payback period of 32 months, its advantage is beyond question.

My last table summarizes Mr. Hibben's estimates of the manufacturing phase and use phase emissions for three vehicles that were not included in the UCLA report.

Lifecycle Emissions

Mercedes E350

Tesla-60

Tesla-85

Manufacturing phase emissions

2,700

24,100

31,400

Use phase emissions

89,100

31,600

31,500

Total lifecycle emissions

91,800

55,700

62,900

Manufacturing phase increase

21,400

28,700

Use phase reduction

(57,500)

(57,600)

Payback on emissions investment

2.69

2.01

Click to enlarge

With emissions payback periods of 67 to 90 months, the Teslas are cleaner than the Mercedes but a full order of magnitude dirtier than a Prius.

When I compare Tesla's energy payback of six to eight years with Toyota's energy payback of five months, I can't help but conclude that Tesla's products are wasteful. When I contrast Tesla's emissions payback of six to seven years with Toyota's emissions payback of five months, I can't help but conclude that Tesla's products are filthy. Abomination may be a strong term, but I don't think it's an inappropriate term.

Battery manufacturing is extremely energy and emissions intensive. When used in moderation, a little battery power can provide huge energy and emissions payoffs. When you add a plug and build a short-range BEV like the Nissan Leaf, almost 80% of the potential benefit is lost. When you increase battery size to provide a range of 200 to 300 miles, almost 90% of the potential benefit is lost. It's the most vivid example of diminishing marginal returns imaginable.

I understand that California has ambitious plans to generate a third of its power from renewable resources by 2020. But I've been hearing about grand California plans since Moonbeam Brown started pounding the table the late 1960s. After years of impressive renewables growth, the EIA recently reported that wind power provided 2.5% of national electricity supply for the month of August and 4.1% for the year-to-date. Grid-connected photovoltaic and thermal solar provided 0.25% for the month of August and 0.20% for the year-to-date.

I also understand that lots of smart people are working diligently to develop better batteries. But I've spent a decade watching Axion Power International (NASDAQ:AXPW) take a new and disruptive battery technology from the laboratory bench to the factory floor and then suffer through years of waiting while first-tier players like BMW and Norfolk Southern follow normal sadistic testing protocols before making an implementation decision. Based on that experience, I know first hand that progress in the battery industry is possible, but it moves at a glacial pace.

I'll be happy to change my views when the facts change, but I left my rose colored glasses in the San Francisco office of a bankrupt IPO client after the 1987 crash.

At September 30th, Tesla had a book value of $4.60 per share and it reported a GAAP net loss of $0.49 for the nine-months then ended. Tesla's widely reported non-GAAP earnings of $0.44 for the period only exist if you ignore lease accounting and treat bank borrowings as revenue. The non-GAAP earnings are fairy tale metric based on a hypothetical business model that bears no relation to the vulgar exigencies of objective truth.

Disclosure: I am long AXPW. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I am a former director of Axion Power International (AXPW) and hold a substantial long position in its common stock. I currently serve as executive vice president of ePower Engine Systems, a privately held company that's developing an engine-dominant series hybrid drivetrain for heavy trucking.