If lower-end electric vehicles can't sell, what's to say high-priced models from Tesla Motors...

If lower-end electric vehicles can't sell, what's to say high-priced models from Tesla Motors (TSLA -2.2%) will ever move at the scale needed to support profits, rants the bear case against the stock. A fair point to be sure, but bulls clamor equally loudly that demand is strong and the leadership is visionary. As for that nasty A123 Systems bankruptcy, they note the tech landscape was littered with "losers" before the Googles and Amazons of the world emerged.

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Comments (5)
  • Randy Carlson
    , contributor
    Comments (3299) | Send Message
    It isn't lower end, but rather lower performance electric vehicles that will be a hard sell. The reason this is true is that electric batteries and drive trains have greater advantage compared with ICE systems in the high performance design space. In other words, a high performance electric car like the Tesla Model S can actually be a better car (quicker, quieter, smoother, better handling) than a comparably sized / priced ICE car.


    Hybrids, while offering substantial fuel savings in urban traffic situations have yet to be realized as outstanding vehicles in comparison to similarly sized ICE cars. The complexity and compromises inherent in a hybrid seems to preclude excellence in performance and handling compared to either performance oriented ICE cars or high performance electric cars such as the Tesla Model S.


    By doing nothing more than shrinking their Model S to the passenger / luggage capacity of a Volt and taking advantage of the steady decline in battery cost and weight, in four years time, Tesla will be able to deliver a 300 mi range, 0-60 under 5 seconds 'Volt' for $30-35k, sans subsidy. And, doing this or something quite similar appears to be Tesla's strategy.


    All that the A123 bankruptcy shows us is that building custom batteries for low volume, early stage vehicle applications is a waste of money and an unsustainable business model unless supported by large corporate or Government "deep pockets". Tesla has mad the very wise choice to use batteries very close in design to current production, high volume Li-ion cells used in the electronics industry. The Tesla approach gives them access to the latest commercially viable technologies and excellent pricing with assured volume availability from proven suppliers. The result is Tesla's batteries have about twice the energy density of other electric car batteries and Teslas cars deliver much longer range and better performance.
    18 Oct 2012, 12:57 PM Reply Like
  • juicejack
    , contributor
    Comments (88) | Send Message
    If Yugos won't sell, who'll buy an Audi?


    I'd guess lots of people. And they have.
    This is just more bafflegab from worried oil-ists
    18 Oct 2012, 01:16 PM Reply Like
  • gdavidson1731
    , contributor
    Comments (159) | Send Message
    I believe 2 factors are at play here.
    1. Culture. Americans are in love with there gas engines. Despite the fact that we have made so many enemies, gone to war over oil.


    2. Jobs and salaries. The workers of today are jitery. So they don't want to explore something new, when you don't like your job and not sure of the job.


    But EVs are the future. EU are ready to dump their gas EU. I think EU & Canada will be more EV before it takes hold in US. We are more in decline than progressive at the moment. I have not heard one republican speak of EVs as a way of getting off the gas nipple.
    18 Oct 2012, 01:58 PM Reply Like
  • AnnieGitUrMon
    , contributor
    Comment (1) | Send Message
    The extra cost for an electric vehicle with today's technology, is almost 50% extra when you are talking about a lower end vehicle. People who buy lower end vehicles do so because they can't afford more, so paying 50% more doesn't work. You put the same extra cost on a luxury vehicle and it is only 10-20% extra for electric--and the potential buyers have more money to spend. Tesla is smart to market to those who can afford their vehicles.
    18 Oct 2012, 05:49 PM Reply Like
  • Dan Fichana
    , contributor
    Comments (1918) | Send Message
    Most, if not all inventions,new technologies and new consumer products typically start with a top down approach when it comes to pricing and cost. This is mainly to make money back from R&D. It's economics 101. Throughout history new technologies enter the market at a higher price and then drift into the price range of the common man.


    Examples include: Blu-rays, DVDs, flat panel TVs, CDs, digital cameras, refrigerators, cell phones, computers, telephones and even the lowly ballpoint pen.


    It is rare for a new product to be priced low and bank on volume to make up for the R&D. Typically those products that take that approach are more prone to fail.
    19 Oct 2012, 08:58 AM Reply Like
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