tesla

Reports / Anne Summers Reports
S’electric
The super snazzy Tesla roadsters have their ardent fans
but the electric auto industry in the US and around the
globe faces formidable hurdles before it can oust the
conventional car, reports David Hay.
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Reports / Anne Summers Reports
IT WAS FIFTY YEARS AGO THAT THE NEW
Ford Mustang became such a sensation in
the US that it graced the covers of both Time
and Newsweek. But now American automobile
enthusiasts have found another car to dream
about: the Tesla Model S. What’s more, their hope
is that this all-electric Tesla, manufactured in
California, will disrupt the traditional American
auto industry and force manufacturers to change
the way they think about motoring in the twentyfirst
century.
The company derives its name from Nikola Tesla
(1856–1943), the Serbian inventor and engineer
who created the induction motor and alternatingcurrent
(AC) power transmission. When it was
founded in 2002, Tesla Motors set out to be as
inventive, albeit perhaps a hundred years later,
so it’s no surprise that its Model S is all electric.
Thus, with a motor that has perhaps half a dozen
moving parts compared to hundreds in an internal
combustion engine, the Model S not only alters the
way you drive—there’s no engine noise—it offers
the consumer a longer-lasting product.
As such it’s a radical and welcome change for the
American driver, and has won plaudits from both
drivers and auto critics since its introduction in
2013. Jake Fisher, Consumer Reports’ director of
auto-testing, for instance, called the Model S “the
very best car I’ve ever driven”. And late last year,
when Tesla Motors opted to put its next model in
one of its Silicon Valley showrooms—a gullwingdoored
crossover, the Model X, not due to be sold
until, at the earliest, the middle of 2015—hundreds
showed up, causing absolute pandemonium.
But while this admittedly wonderful car has
acquired an impassioned fan base, the company
has a long way to go to change the way the giant
American auto industry makes cars.
At US$70,000, the price puts the Tesla in the
heart of the American luxury-car market, where a
no-frills, medium-sized Mercedes E-class starts at
around US$55,000. (The bestselling Honda Accord
runs to just over US$21,000.)
Electric vehicles (EVs) make up a tiny portion
of the American auto market. In 2013, 97,507 EVs
were sold in the US. That’s 0.6 per cent of the over
16 million cars the auto industry as a whole expects
to sell this year.
Tesla’s first offering, a two-seater called the
Roadster, introduced in 2008, has sold only 2400
units. Governor Arnold Schwarzenegger purchased
one, although later quietly returned it, finding the
car hard to get into for a big man. “He’s more of a
Hummer guy,” reported Gawker.
Last quarter, Tesla reported that it increased
production of the Model S to an annual 25,000
units, with nearly 5000 of these
slated for export. Despite the wild
enthusiasm of the tech industry—
echoed by Wall Street, which has
boosted the price of Tesla stock
from US$34 in January 2013 to
over US$200—and the positive
Nikola Tesla
astonished
the world by
demonstrating
the wonders
of alternating
current
electricity in
1893.
SOURCE:WIKIMEDIA
reception from the marketplace,
can the Tesla really be the gamechanger
its fans want it to be?
One could never admit to such
doubts when talking with a Model
S owner. Undeniably handsome,
the luxury Model S is not overly
flashy. It is not designed to make
an overt statement about class or
power like a Maserati or Jaguar’s
new F-type. Being electric, only the tyres and the
wiper-blades need regular replacement. Without
valves, cam-shafts, connecting rods, a crankshaft,
gears, clutches or any of the other complexities
of a car with an engine and a transmission, it
needs almost no servicing. Even its brake pads last
longer since the bulk of its stopping is done via
regenerative braking, which turns the electric motor
into a generator to recharge the battery pack.
WHAT DIFFERENTIATES THE MODEL S
from previous electric cars and its gasolineusing
competitors is how it drives. Unlike other
electric cars, or such hybrids as the sluggish Prius,
or VW’s mass-market diesel models, Tesla goes like
a rocket. Phillip Thomas, from the website The Truth
About Cars, says “the driving experience—devoid
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Reports / Anne Summers Reports
of gasoline, piston-actuated thrust, and multigear
transmissions, is startling in how it delivers a nearsilent
freight train of torque from the rear wheels”.
That’s only a small part of the difference. In a
Model S power, speed and the feel of the road are
not experienced in the same way: there is no engine
noise, a sound that you rely on to tell you how fast
you’re going and how the car is handling. Travelling
inside a Tesla becomes comparable to flying: eerie at
first perhaps, but exhilarating.
Adds Thomas, “what most publications can’t
tell you is how you have to alter your own sensory
perceptions when driving this car at speed”.
The Consumer Reports review says, “the Tesla is
brimming with innovation. Its massive, easy-touse
17-inch touch screen controls most functions.
And with its totally keyless operation, full Internet
access, and ultra-quiet, zero-emission driving
experience, the Tesla is a glimpse into a future where
cars and computers coexist in seamless harmony”.
Indeed, Tesla Motors’ computer system monitors
every car’s performance and readiness post-sale,
and like digital phone manufacturers, the company
sends out “software updates”. Tesla wants your car
to get better with time, not get worse.
In the face of such innovation and service, the
traditional American auto manufacturers have
decided to fight back, especially since Tesla appears
to have the high-end of the EV market all to itself.
Apart from the upcoming BMWi3, nearly all the
EVs for sale in the US are electric versions of small
cars such as the Ford Focus Electric (193 sold last
December) or the Honda Fit EV (51 sold that
same month).
But these car-makers appear not to have learned
a great deal from Elon Musk, Tesla’s flamboyant
CEO. (See page 42.) Earlier this year Cadillac
unveiled a US$75,000 fancy hybrid known as the
ELR. But the luxury car-maker was still hedging
its bets: the ELR was simply another hybrid, which
meant downplaying any innovative edge in their
marketing.
Then the car-maker made a bigger error. The
heart of the Tesla message is that when you drive
one of their cars, you are part of the solution for
the future. Cadillac’s commercials, however, which
aired during the Winter Olympics, branded their car
as a prize worthy only of the brashest of American
strivers: the egomaniacal businessman. The ad was
criticized mercilessly. This marketing misstep proved
emblematic of Cadillac’s entire effort. Sales of the
ELR have proven dismal, with just 241 sold so far
this year.
DOES THAT MEAN THAT TESLA, WITH ITS
glowing reviews and excited fan base, had
opened up a market where its car and its future are
unassailable? Hardly.
For starters, there remain serious questions
about the practicality of the Model S. How far can
it go between charges, and how long does it take to
recharge? Are there charging stations for a long trip?
Tesla wants your car
to get better with
time, not get worse.
To find answers, I visited the Tesla showroom in
the heart of the art gallery district in Manhattan’s
North Chelsea. It is just down from Pace Galleries
and around the corner from Gagosian and the new
Annabelle Selldorf building which is Nicole Kidman’s
New York residence. I wanted to see whether a Tesla
would be suitable for my own driving habits.
In New York I would have to keep the car in
a garage, preferably one that had a 240V supercharger.
There are over 30 garages that currently
have such chargers. Should I live outside the city, I
could have a super-charger installed in my garage—
it’s small and cool-looking and can be affixed to
the wall—or I could simply use a normal electrical
outlet, although charging this way can take twice as
long, a day-and-a-half in some instances.
Many Tesla owners confess that charging their
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Reports / Anne Summers Reports
car is a bit like charging your phone: you just have
to remember to do it. (The company’s blogs are full
of comments about who charges their car where—
parking near an outlet at work, for instance—and
making sure their charge covers the distance of a
commute.)
A drive upstate in New York, a distance of 150
miles (240 km), is easily within the Model S’s top
range of 260 miles (418 km), but on a longer trip
to Cape Cod, I would need to take advantage of
charging stations located at roadhouses either along
or close to the main freeway, the I-95. Obviously
this would take more planning than setting out in a
The availability of
charging stations is
only one of Tesla’s
challenges. The
battery is another.
gas-powered car and expecting petrol to be readily
available, but there is an app—PlugShare—to help
me out. To recharge my battery to give me enough
energy for another 170 miles (274 km) at one of
these stations takes 40 minutes.
Tesla believes concerns about long-distance EV
travel will dissipate in the next few years. According
to the company, there will be charging stations
housing the electric equivalent of a petrol pump
accessible to 98 per cent of the population by the
end of 2015.
Last February, two teams from the company
drove Model Ses from Los Angeles to New York and
back. Relying on super-chargers that were already
in place their route took them through Arizona and
Utah, then north Wisconsin, and finally through
Ohio and Pennsylvania to New York.
While the Tesla charging network is expanding
rapidly in the US, its absence has impeded
international acceptance. In Norway, where the
Model S is now the country’s bestselling vehicle,
outpacing the Volkswagen Golf and the entire Ford
line, Musk stepped in, paying for more than 50
charging stations. When the company sold their
first cars to customers in China last month, Musk
told reporters Tesla would be investing millions in
the installation of new charging stations. (Tesla is
committed to opening a manufacturing plant in
China within four years.)
But the availability of charging stations is only
one of Tesla’s challenges. The battery is another.
Experts and Wall Street analysts have concerns
that range from the dwindling supply of lithium (a
key battery component) to, more recently, safety.
Late last year, rocks punctured the aluminium plate
under the car that protects the battery and ignited
two calamitous fires. No one was hurt, but Tesla has
since changed the design so that the plates are now
made of titanium.
Tesla is investing US$5 billion in a battery factory
to be located in the southwest. Making such an
investment before there is guaranteed demand
for these highly specialized cars runs counter to
standard practice in the auto industry, which waits
to see higher demand before increasing investment.
But without a guaranteed supply, Tesla, unlike
nearly every other car company since it makes
only electric vehicles, cannot expand. Recently the
Wall Street Journal interviewed four experts in the
field, all of whom considered the magnitude of this
investment by a company that had nearly gone
under once—it was on life support in late 2008—as
being entirely too risky. In May 2014 Standard &
Poor’s gave the company—whose stock had grown
fourfold over the last year—a junk credit rating
because of “‘considerable anxiety’ about its longterm
prospects”.
ANOTHER SIGNIFICANT CONCERN COMES
from the attacks on Tesla by traditional car
dealers upset with the company’s sales model. Like
Apple, Tesla prefers to sell its cars either through
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Reports / Anne Summers Reports
their website or from their exclusive stores located
in upscale areas such as the Chelsea gallery district
of Manhattan. In so doing they are rejecting the
traditional dealership model which dictates that all
cars from American manufacturers have to be sold
through car dealerships.
Trade associations representing these dealers
and their sales monopoly have had Tesla banned
from being sold directly to consumers in four states,
including New Jersey and North Carolina. (In mid-
May the Federal Trade Commission stepped in and
recommended such bans be repealed.)
The dealers, however, are not letting up. Even in
New York State, the company has had to enter into
an agreement to open no more of its own stores,
and to sell additional Teslas through some version of
a dealership. The car dealers maintain that it is they,
by fixing cars that might be recalled, who are the
consumer champions, not Tesla.
Many disagree. But if the dealers are successful,
it will have a negative impact on Tesla’s already
uncertain bottom line. All these pushbacks from the
established auto industry underscore how hard it
will be for Tesla to change the way Americans think
about their cars. For many, the pleasure of driving
has soured. Many younger Americans have sworn
off driving altogether. But Musk argues that to bring
driving back—remember when people talked about
“the art of driving”?—a manufacturer has to be
innovative.
Tesla’s design studio is in suburban Los Angeles,
not too far from Bel Air where Musk currently
lives. His current obsession is the upcoming Tesla
Model X. He is in the studio every day, challenging
conventional wisdom on every detail. Right now he
wants to do away with side mirrors, replacing them
with an exterior camera, and small interior screens
in the door where not only are the objects behind
you shown but their distance and speed from your
car are displayed.
All he needs to do is get the National Transportation
Highway Administration to change their regulations,
a process Musk thinks could take ten years.
But it’s a way of thinking, of challenging long-held
conventions that gives the Tesla fans hope. Not only
are they driving the car of the future now, there may
well be many more of them in that future.
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