Archives for August 12th, 2013
Although the Tesla Model S is due in the near future, unless you are in a very small minority, you may have a long wait ahead of you before you can pop into your local dealership to pick one up. Unless of course you among those that dropped a $40,000 deposit to reserve your very own Model S, or perhaps you recently purchased an expensive new home near Chicago and got one for free. Regardless, it looks like California’s Tesla Motors is gearing up and preparing to roll out the first batch of its Model S cars from its Fremont plant.
The electric-powered Model S is the second model from Tesla, after the Roadster, and will be priced at around $57,400 (before the $7,500 federal tax credit) for the 160-mile range version, with deliveries beginning in the fall of 2012. Meanwhile, the first 1,000 all-electric sedans to roll off the line in July will be the limited edition Model S Signature Series equipped with a 300-mile range (85 kWh) battery pack, and priced around $87,900 after a $7,500 federal tax credit.
Lucky customers who reserved the Signature Series have reportedly been sending in their specification requests, which is a good indication that Tesla will indeed be hitting its July delivery target. If you happen to be a reservation holder, Tesla will personally deliver your vehicle to the destination of your choice — giving you a personalized one-on-one introduction to the car and all its features. Reservation holders also have the option of picking up their Model S from the factory and getting a personalized tutorial after taking a tour of the electric automaker’s facilities.
Tesla has also announced the addition of three colors for the Model S’ interior: Piano Black, Lacewood, and Banana Leaf. Making wonderful use of that vivid 17-inch infotainment display, Tesla also confirmed internet connectivity will be offered on all models. No official details yet on what connectivity options will cost, but it looks like Tesla will offer multiple plans and packages.
According to Tesla, the company has also been working on an information packet for its customers in regards to the electric experience. The “Go Electric” experience — as it has been referred to — aims to educate current and prospective owners by answering the five most frequently asked questions about the Model S: how far can I go, how do I charge, how do I take a trip, how much does it cost to charge, and finally, where does my electricity come from? According to Tesla, the “Go Electric” experience will answer these questions, as well as explain to consumers “how and why electric vehicles fit perfectly into people’s day to day lives.”
Tesla Motors is used to doing things in a big way. Its Model S sedan owns nearly every superlative in the EV realm and gets recharged from something called a “Supercharger.” The company also invented a radical new way to sell these cars, so radical that it’s illegal in many states.
Given that, it’s not surprising that Tesla is extending that same mentality and excellence to one of the less sexy aspects of car ownership: warranties and dealer service.
Tesla says Model S owners will benefit from the “world’s best service and warranty program,” but what does that actually mean?
First off, Tesla is making maintenance cheaper and more convenient. The $600 annual service contract required to preserve warranty coverage is no longer mandatory. Even Tesla CEO Elon Musk had to admit that it was a bit excessive for a car that doesn’t need oil changes.
“We made a slight mistake,” Musk said in a recent press conference, ”in making the service fee mandatory.”
Tesla will also offer valet service and loaner cars free of charge when Model S owners do need to bring their cars in for maintenance.
The loaners will be top-of-the-line 85-kWh Performance models, and each Tesla Service Center will have between two and 10 of the cars. The Service Centers are standalone facilities, separate from Tesla’s mall-based showrooms.
If owners decide they prefer the loaner car to their own, Tesla will sell it to them for its MSRP minus one percent for each month it’s been in service and $1 for each mile on the odometer.
This may sound excessive, but dealers do sometimes have problems getting customers to return loaner cars that are the same as, or in newer condition than, the cars they sent in to be serviced. Tesla might even get a few owners of lesser Model Ss to upgrade.
Critically, Tesla is also expanding its warranty coverage to include “user error,” a complete about-face from the company’s response to the “bricking” of Roadsters, in which battery packs were accidentally allowed to fully drain and were destroyed, rendering the cars immobile.
At the time, Tesla stated that “bricking” was the equivalent of an internal combustion car being run without its oil changed, clearly placing the problem into the “user error” category.
While Musk did not explicitly mention the Roadster bricking problem in his remarks, he did say that the changes to the warranty were made to address concerns over battery packs.
“We want to say, don’t worry about the battery, it’s going to be fine,” Musk said.
It’s hard to say what makes an automotive warranty the “world’s best,” but Tesla’s changes to it coverage and service programs should make people feel more comfortable owning the company’s cars, which is no small feat for vehicles packed with technology that is about as new as new gets.
After having previously shown you how the Mode S’ body panels being formed out of sheets of metal, this week Tesla are showing us the process through which the sleek lines of the sedan’s body come to life – paint.
The Model S currently has a rather limited color palette, but all 10 available colors are great, and if we were to hypothetically buy one, we would have a very hard time choosing the one we thought looked best. The painting procedure is fully automated, judging from what we’ve seen in the official video, using robotic arms to apply paint uniformly all over the car’s body.
However, defore the actual painting starts, the naked aluminium body is submerged in a tank of electro-coating solution “to enhance the appearance of subsequent paint layers.” Afterward, the still-unpainted body is baked inside an oven to create a layer of corrosion protection all throughout the body. All these procedures apparently give an excellent-looking and long-lasting paintjob – a definite nod in favor of quality here from Tesla.
We can’t wait to get more details on the Model S, the first EV which has made us genuinely excited and the first one we’d love to own and drive on a day-to-day basis and feel cool, instead of smug (like some ‘green’ drivers).
The Ford Focus Electric has now received its EPA rating and things are looking great for the green compact, as its 105 MPGe (miles per gallon equivalent) and 76 mile range make it the most efficient five-seater on the US market.
To be more specific, the electron-driven focus gets and EPA rating of 110MPG3 on urban roads and 99 MPG3 on the highway. To get an idea of what that means, we’ll tell you that the 2012 Chevy VOlt gets 94 MPGe, the Toyota Prius Plug-In Hybrid offeres 95 MPGe, the Mitsubishi sits at 112 MPGe, the Nissan Leaf retursn 99 MPGe, while the Tesla Roadster offers 119 MPGe.
Ford highlights the fact that the Focus Electric beats the Nissan Leaf both in terms of efficiency and range, but we also have to keep in mind that while the Blue Oval’s vehicle will set you back $39,200, the Leaf can be yours for $35,200.
By Andrei Tutu
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Right now, we seem to get news about Tesla Motors or Fisker Automotive almost every day. Some is good, some isn’t.
Yesterday, Green Car Reports editor John Voelcker sat down with High Gear Media’s social-media manager, Joel Feder, to discuss the two companies in a Google+ Hangout on Air.
The live video chat was hosted by GCR’s sister site for sports and luxury cars, Motor Authority.
Voelcker and Feder began their discussion with brief background on both companies and their vehicles.
The Fisker Karma is an extended-range electric luxury sport sedan that’s assembled in Finland with a battery supplied by A123 Systems. Fisker says the Karma can travel about 50 miles electrically, though the EPA rated the Karma at 32 miles of electric range.
The Tesla Model S is a pure battery-electric car with three different sizes of battery pack, letting buyers opt for different amounts of driving range. The Model S is built in California, and Tesla Motors [NSDQ:TSLA] has just recently ramped up to full capacity.
Both car companies have increased the prices on their electric cars since they were first announced. Fisker’s price increases have been more substantial, while Tesla honored its original pricing for customers who had already placed their deposits.
When it came to driving impressions, both Feder and Voelcker agreed that the Fisker felt like a hand-built car, with more than a few quality control issues. The Karma is also a large car with a very small interior; the most remarkable thing about it seems to be that it was actually built in four years, and–for the most part–it works.
The Model S, on the other hand, felt like a real production car. Its fit and finish is near luxury levels, and fares well against the competition. The interior is spacious and well laid-out. Feder noted that while the central 17-inch color capacitive touchscreen is impressive, he felt its brightness–even at the lowest setting–was distracting to the driver at night.
The video chat wound up with discussions of some of the issues the automakers have faced.
Fisker has clearly had more challenges: The Karma has caught fire more than once, the company hasn’t built a Karma in about six months, its battery supplier went bankrupt, and Consumer Reports tore the Karma apart in its review.
Tesla Model S
That isn’t to say the Model S has no faults, but it has had fewer issues–and we’ve reported on the handful of Model S glitches and quirks. The factory has just reached its full production capacity, and in other news, Consumer Reports just took delivery of its Model S and looks forward to putting on some miles.
Voelcker and Feder closed with a discussion of each company’s future, and whether one or both of these two new American car companies will survive.
Watch the video, and let us know what you think the future holds in the Comments below.
By Joel Feder
Tesla teased us with a mysterious shot of its Model X crossover at the beginning of the month, and now a prototype of the vehicle has been unveiled at its design studio in California. Hot on the heels of the Model S, the Model X is based on the same, but slightly lengthened, platform as the sedan.
Externally, the Model X has more than a whiff of the bulbous BMW 5 Series Gran Turismo about it, particularly at the rear, while the front end recalls the Model S. Inside the space has been put to good use, with seating for seven in total. Despite this, there’s still plenty of luggage space, as the engine compartment can also be utilized for storage along with the trunk.
The Model X uses so-called “falcon” doors at the rear, which lift up like gullwing doors, but hinge in the center to make them easier to open in tight spaces. Are they really any better than regular doors? Possibly for the passengers in the very back, but as the front doors look to be conventional — and massive –any parking space will still have to be pretty sizable.
Interior shots of the car reveal a similar look to the Model S, and while the styling on the outside may be acceptable, the inside is less successful. Leaving aside the unfortunate use of wooden trim, the center console is dominated by a huge 17-inch touchscreen display, which appears to have been stuck there as an after-thought.
There’s still time for this to be improved before the car goes into production though.
But nobody is really going to buy the Model X because of its looks, as it’s all about the electric motor. Right now, it looks like Tesla will offer two battery pack options — 60 or 85 kilowatt-hours — but owners should expect a 10-percent drop in range over the Model S due to the vehicle’s weight.
Performance sounds good, with Tesla CEO Elon Musk saying it’ll do 0.60mph is 4.4-seconds. Both a rear-wheel drive and an all-wheel drive model will be made, with the latter using another set of motors for the front wheels, and a computer to split the power between all four wheels depending on the road conditions. It’s reminiscent of the system Acura plans for the new NSX.
Is it cool?
In a recent interview, Mr. Musk said the Model X was going to be “cooler than any SUV or minivan on the market.” so now we’ve seen it, do you think his team has succeeded? To some, those falcon doors may be cool, but to others they lost their sheen after being featured on countless other cars, all of which are considerably better looking.
As 95% of SUVs are inherently not cool, the Model X may have to rely on its exclusivity and electric power to be desirable. But will this be enough to fend of its biggest challenger, the electric Toyota Rav4? After all, it’s going to be built using the same power plant, looks good and could be more competitively priced too. That’s before we take into account Toyota’s well-established reputation for producing decent electric hybrid cars too.
Tesla plans to start production of Model X in 2013, with the first vehicles going on sale the year after. Pricing will start at $49,000 and could rise to as much as $90,000 depending on the options selected.
By Andy Boxall
Tesla Store – Portland OR
HI-RES GALLERY: Tesla Store – Portland OR
Tesla Store – Portland OR
Tesla Motors [NSDW: TSLA], by nearly all accounts, is an automaker that’s doing things differently. It’s based in Silicon Valley, not Detroit. And it’s transitioning from making a very modest number of Tesla Roadster models to, it plans, tens of thousands of all-electric Model S luxury sedans—with an impressive EPA driving range of up to 265 miles.
And, in what may be surprising to anyone who’s ever bought a new vehicle or been involved with the industry, there’s one other key difference: Tesla plans to do it entirely without traditional dealership franchises.
Instead, it’s building on the success of the ‘store’ strategy fine-tuned and carefully expanded by Apple—fine-tuned actually through the same person who’s now Tesla’s VP of sales and ownership experience, George Blankenship.
But through the years, other such attempts to sell cars from an automaker directly to the consumer have fallen flat. When we caught up with Blankenship last week, just before the opening of the electric automaker’s new Portland store, we asked him why the company is going about retailing its vehicles so differently.
“It’s sort of been that way for a hundred years; that is the model,” said Blankenship. “The model is that they do a bunch of research, hold a bunch of focus groups, and they decide that this is a car we should build; they design that car, they engineer it and manufacture it, and then they sell it to some dealer who then tries to sell it.”
“And it works, it works with thousands of cars sold every single day,” summed Blankenship, who pointed to Tesla’s different development process and revolutionary product. “That’s just not how we’re doing it.”
As we outlined last week, Tesla’s store strategy is clearly working—for informing new people about electric cars, bringing new people into the Tesla fold, and eliciting deposits on the Model S. The automaker has been hitting 11,000 visitors or more in a single week at at least one of its stores, and among its new stores designed around foot traffic it passed a million visitors so far in 2012.
Stores, not dealerships. Does it matter?
But wait. Aren’t dealerships—and our franchise system over them—highly regulated by the states? How can Tesla sell cars this way?
According to Leonard Bellavia, a franchise lawyer and expert in this field, they can’t—even when they avoid following a conventional dealership model. And while the money might not technically change hands at or to the dealership, Bellavia still believes that state and local governments may decide that such ‘factory stores’ can’t operate in their current way.
“Most states prohibit ‘factory stores’ and that is why Tesla is quick to point out that it doesn’t sell cars but rather refers customers to its website,” said Bellavia. “The problems it will encounter stem from the fact that the ‘selling’ of a vehicle does not require the actual signing of a contract and the taking of money.”
Selling, as used in relation to these state statures, generally also includes a long list of associated activities like displaying, test driving, or even demonstrating a vehicle’s features, Bellavia notes. “Tesla admits that it will facilitate the delivery of a vehicle in its locations, which also constitutes ‘selling,’” he adds.
“Every single state, every municipality, that a car company does business in, has a different set of rules and regulations,” said Tesla’s Blankenship, who noted that the company’s strategy has of course been vetted by their legal team. “What I know is that we do what we can do in every area, we comply wherever we go and do what we’re allowed to do.”
Tesla Store in LA
Public safety, consumer protection, and liability not the same?
Franchise lawyer Bellavia has another argument, though: that the states might have a legitimate public-safety issue because stores aren’t licensed dealers. “The advantage of a franchised system is that independent dealers have a vested interest in their business, with many millions of dollars invested,” he argues. “There is a financial incentive to abide by laws, and satisfy customers as the penalty is the loss of a huge investment.”
The Tesla buyer in states other than California “does not have the same protections, and may be told that they are dealing with a California company and therefore have a far more difficult time seeking redress,” Bellavia believes.
Franchised dealers are under contractual obligations to franchisors (either manufacturers or distributors), and accept legal liability under state and local laws applying to licensed dealers.
Dealerships bring dollars to the local economy
There’s also the fact that our franchise sales system, like it or not, pumps a lot of money into the economy and employs far more people than all of the automakers, combined, do directly. U.S. new-vehicle dealerships (there are about 17,540) employed a peak 1.1 million people in 2008, and with the economic recovery it’s on the rise again, to about 933,500 in 2011, according to the NADA.
The amount of money that dealerships bring to local economies is rather astounding as well. The average U.S. dealership in 2011 had an annual payroll of $2.6 million, split over 53 people, for an average annual amount of more than $49,000 per employee. Nationally dealership payroll totals $45.8 billion—11.7 percent of the total U.S. retail payroll. And on a local basis, dealerships provide extensive support to civic and charitable organizations.
2012 Tesla Model S Signature
Enlarge PhotoFor Tesla, a viable model
For now, no states or municipalities have decided to pick that fight with Tesla, and as a niche player Tesla doesn’t pose a major threat to the franchise system. And for Tesla, keeping it simple, keeping their overhead and liabilities low, and keeping its structure simple, is looking like a strategy for survival.
“We have the car; it costs a certain amount to build; and we have that margin, and we don’t give any of that up,” said Blankenship. “We look at it more as a retail model, as a business, where we will make a margin on each car, not ‘How much can I make and put this car on the road?’”
“That’s how we’re going to bring cashflow into the company, to specifically do business like a retailer, not like an auto dealer.”
2012 Tesla Model S, brief test drive, New York City, July 2012
2012 Tesla Model S, brief test drive, New York City, July 2012
After nothing to sell for nearly six months, an age of anticipation, media hype and short, chaperoned rides, Tesla began official deliveries of its all-electric 2012 Model S sedan just over a month ago.
So its hardly surprising that the fledgling car company has just posted net losses of $105.6 million for the second quarter of 2012, up from $58,9 million for the same quarter last year.
Losses widen, revenue down
According to the official financial results released by Tesla [NSDQ:TSLA], sales revenue during the same period has dropped by 54 percent to $27 million.
Of that $27 million, Tesla reports, $22 million came from automotive sales, up by 15 percent from Q1 2012.
While some of that will have been raised from early Model S sales, Tesla also sold 89 of its remaining Roadsters to International customers.
Research revenue down
Because the 2013 Toyota RAV4 EV is now entering production — a car Tesla designed the drivetrain for — Tesla reports its developmental revenue has dropped dramatically compared to its previous quarter.
However, with a new project now underway to build an all-electric drivetrain for Mercedes Benz, this should be a temporary glitch.
Tesla also notes that it received some of its Q2 revenue from powertrain component sales to Toyota for its soon-to-launch electric crossover SUV.
In its official investor documentation, Tesla reports that it plans to draw the remaining $33 million in low-interest loans available to it under the U.S. Department of Energy’s Advanced Technology Vehicle Manufacturing Program “in the next few months”.
However, with a waiting list of 10-11 months for its 2012 Model S, and the top-spec 2012 Model S Signature Series already sold out, Tesla is predicting that it will be cash flow breakeven by the end of 2012, commencing Loan repayments as early as December 2012.
Model S on track
Both in its official financial report, and in its subsequent earnings call, Tesla was keen to reiterate that its production plans for 2012 remain at 5,000 cars, despite a drop in scheduled production during the third quarter.
CEO Elon Musk said during the earnings call that the automaker plans to to make “at least 20,000” Model S cars next year, with the possibility of a second shift to push that to 30,000 if needed.
With more than 11,500 confirmed orders for the all-electric sedan, Musk isn’t shy about his expectations.
“This accelerating pace of reservations makes us confident that demand will surpass 20,000 Model S units for full-year 2013 deliveries,” he is quoted as saying in the report.
Next few months critical
With Tesla buoyant about the coming months, the automaker is hoping to transition from a small, boutique automaker into a slightly more mainstream automaker.
However, it’s worth noting that even with production volumes of 30,000 cars a year, Tesla is likely to remain one of the smallest volume automakers in the U.S. for many years to come.
Regardless of production volumes however, the next few months — including the continued rollout of the 2012 Model S — remain critical to the company’s future.