Tesla Motors destroyed another myth

Tesla Model 3

 

The Tesla Model 3 is the motor of the electric revolution.

 

It’s not the first time that I write about the battery cost myth. This myth is still strong and it’s the most used to delay the electric car revolution.

We all remember when electric cars were:

  • Slow
  • Ugly
  • Difficult to charge
  • Low range vehicles
  • Impossible to be affordable
  • Inevitably undesirable, nobody wanted them

Then Tesla Motors appeared and destroyed those myths. Tesla Motors proved that if automakers wanted they could make fast, high range, easy to use and cool electric cars that people would want. Now traditional automakers hold on to the last remaining myth, electric cars are inevitably expensive because of high battery costs.

I roll my eyes every time I read a battery cost report made by some uninformed or biased analyst. The worst part it’s that many people, even electric car supporters believe them. They actually believe that automakers don’t make affordable electric cars because they can’t and battery costs get the blame…

The real reason traditional automakers don’t want electric cars is because of their logic of planned obsolescence. Cars with internal combustion engines have many moving parts and are a lot more prone to failure than a well made electric car.

The story in the link below actually made me happy, because when a so called analyst tried the push the battery cost myth, Jeff Evanson, that is Investor Relations at Tesla Motors intervened and destroyed the analyst’s agenda.

This is what Jeff Evanson said:

“1) Jeff stated that the Model 3 will only be partially aluminum, not all-aluminum

2) Jeff stated that the Model S’s all-in pack cost today is already <$190/kWh and that the Model 3 will have a battery size below Jon’s estimate of 60kWh.”

 

Jeff’s intervention was made because the analyst was telling that it was impossible for Tesla Motors to make money by selling the Model 3 at the advertised price of $35.000.

Guess who the UBS analyst called to try to prove his point!? A former GM’s employee. We all know that GM never tried to kill the electric car…

Well, now it’s official, Tesla Motors battery’s cost is already below $190/kWh at the pack level. And actually Tesla Motors battery packs are very complex and hard to make, they are made with thousands of tiny cells connected, monitored, cooled and protected from fire by ballistic grade aluminum armor plate. For example, the battery pack of Nissan Leaf made with larger and fewer pouch cells is a lot simpler and cheaper, around $150 at the pack level. Yet Nissan has the nerve to make the Leaf cost three times more than a Versa/Note.

Giving government subsidies to buy electric cars only reinforces this myth. The way forward is to make a lot harder to sell polluting cars. Either by taxing them and fuels higher and/or prohibiting them in cities. Automakers prefer to sell cars with internal combustion engines, but if they can’t they’ll switch to electric cars. Not because they want it, but because they’ll have to. Selling electric cars is better than selling nothing. Governments need to understand this and push legislation this way.

 

 

More info:

http://www.streetinsider.com/Analyst+Comments/UBS+Sees+Telsas+%28TSLA%29+Model+3+As+Unprofitable/11540932.html

Pedro Lima

More than natural resources, are wasted human resources that bothers me the most. That's why I'm a strong advocate of a society based on cooperation, not competition, that helps every individual to reach his full potential so that he can contribute back to society. "From each according to his ability, to each according to his needs".

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5 Responses

  1. Ralf K says:

    If Jon Bereisa spent 35 years at GM, he is probably close to retirement. And being a traditionalist engineer at a traditional car maker: he focuses on hardware costs.

    Tesla has enourmous capabilities to charge for software features, either later or as options with the car. These features do not need additional hardware, shipping, mechanical installation all that, but can create much additional income. From a managable programming effort. This revenue stream of software features, and eventually services and content should not be underestimated. In fact, the LeEco founder intends to base much of its income on such services at a later point in time. And also Faraday Future wants to exploit this kind of business model.

    It’s like Apple: one part is their income from iPhone hardware but what comes on top is the revenue from all of their content shops and accessories.

    • Pedro Lima says:

      I see your point and I can see a future when we might have to “jailbreak” the cars. Being a Linux advocate/user myself I would prefer an open-source car, wouldn’t mind having an Ubuntu car 🙂

  2. Peter says:

    Below 60 kWh is dissapointing, Bolt is more practical and has 60 kWh.

    • Pedro Lima says:

      Even with a smaller battery the Model 3 will have more range than the Bolt since it will be more aerodynamic and efficient. Not to forget, bigger batteries will be option for the Tesla M3. The Chevy Bolt has the practicality advantage by being an hatchback.

  3. NoNo says:

    Tesla Model X and Model 3 are ultimate ugly.

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