The only moment in last Wednesday’s presidential debate that grabbed my attention was when Mitt Romney called Tesla a loser, and implied that the government’s $450 million loan to the automaker was the worst government investment since the days of $11,000 toilet seats.
Romney’s remarks come as Tesla is rolling out its Model S, a car that Dan Neil described in the Wall Street Journal this way, “This Tesla Model S thing you’ve heard so much about? You know, all-electric sedan, Silicon Valley, that guy from SpaceX? This is one amazing car. I mean, hard-core amazing. But first and foremost, gentle reader, it goes like the very stink of hell.”
Heck, that’s never going to catch on.
Kim Reynolds, writing in Motor Trend, observed, “There just might be a revenge of the electric car after all, courtesy of the only major electric car builder producing EVs without being forced to: Tesla.”
Reynolds’ review ended this way, “Tesla — like Apple in the electronic device realm — is the sort of ambitious and fearlessly innovative company this country needs a thousand more of.”
That’s what I was thinking just after Romney dumped on Tesla. If I had to name the next Apple, the next company capable of utterly redefining the customer experience, it would be Tesla.
This potential is all the more remarkable when you consider that the car industry has been around for more than a century. It is an industry that almost by necessity moves slowly and that demands huge amounts of capital. Quick — name the last truly revolutionary car.
The electric Model S has no engine. None. The Signature Performance version can go from zero to 60 in 4.4 seconds. (Competing electrics like Ford’s Focus EV are more like 9 seconds.) The entire car is built on top a giant battery that stretches the length and width of the car, giving it an unprecedented 300-mile range between charges. Nissan’s frugal Leaf, by comparison, is lucky to make it 138 miles under perfect circumstances.
On nearly every important metric, the Model S not only leads, it laps the competition. This graph from Motor Trend puts it into perspective.
Each measurement corner of the graph represents a metric, such as range or acceleration. The closer to the outer edges, the better. The Model S stats are in dark blue, at the outer edges of the chart. No other electric car comes close.
To top it all off, the car comes with a 17-inch touchscreen. Anton Wahlman, writing for The Street, put it this way. “Forget all other cars you’ve experienced to date — this 17-inch screen feels like a 100-year jump in automotive technology.”
The last time I saw as many positive reviews as the Model S has received was, well, when Apple released a new phone.
This might be a good time for a reality check. The Model S is expensive, with a base price of $49,900 that leaps upwards when you increase power and range. Tesla expects to deliver just 3,225 of these cars this year. The firm isn’t going to be mass market anytime soon.
But that’s the path Apple followed, too. Its products have long been more expensive than the competition’s. When the Apple Lisa launched in 1983, it sold for $9,995. In 1983 dollars. Of course, it was also the first personal computer to offer a graphical user interface, a quantum leap forward in design that we’re still using today.
When Apple started to open retail stores, lots of people — myself included — wondered how the hell Apple could hope to use so much floor space when all they sold was a few digital devices. Last week I walked through an Apple store near Hartford, CT and it was jammed. This is no surprise; Apple stores are always jammed.
Guess what? Tesla isn’t opening traditional parking lot-style auto dealerships. Instead it’s opening sleek retail stores that bring to mind, yep, Apple.
Justin Hyde, the first journalist to test-drive a Model S, observed that the “last successful American startup automaker was Chrysler, founded 87 years ago. Every genius, huckster, and combination thereof who’s tried since has been ground into a fine powder by massive up-front costs combined with meager profits and ruthless competition.”
Tesla has already beat them all. It’s a far smarter company than most, and I’d gladly bet on them. Now if I can only convince my wife to let me sell our SUV and minivan…
Bruce Kasanoff is a speaker, author and innovation strategist who tracks sensor-driven innovation at Sense of the Future. Kasanoff and co-author Michael Hinshaw teamed up to explore more of the opportunities unearthed by disruptive forces in Smart Customers, Stupid Companies.
It’s amusing that we want to tout Tesla as a worthy recipient of a taxpayer ‘loan’, when the product they are building is only attainable by the very wealthy, at the same time that the Democrats attack Republicans and Mitt Romney for only caring about the ‘wealthiest Americans’. Is this the future we should be striving for – when so called ‘green’ products are so expensive nobody can afford them? Even if the price were to come down to something realistic and everybody got one, have we quantified the impact of, say, rare earth metal availability on the viability of these as a long-term transportation strategy? Somehow I don’t think so – not much seems to be thought out these days, especially when projecting a good image seems to be the most important criteria for anything and everything.
Mark, new technologies are always more expensive when they first appear on the market. Remember when flat screen televisions were $10,000? As production volume increases, prices come down. Tesla already has a reasonably priced model on the drawing board. You don’t have to be a democrat to appreciate the importance of Tesla’s groundbreaking technology. As for “rare earth metals,” I can’t imagine what you are referring to. There are no such substances in the battery pack or the motor. There may be trace amounts in the on-board computer, about the same amount found in your cell phone.
Hey Todd, it sounds like Tesla did well to avoid rare earth metals then. Other cars are a lot worse. Thanks for pointing that out. Overall it seems like Tesla is on the leading edge of what it takes to make a viable electric vehicles but the main constraint seems to be the need for cleaner overall energy sources and a smarted power grid, since the chief impact seems to be from the increased power usage of a car. I still think it would make more sense to try and make a vehicle that impacts everyday people struggling to pay for $4+ gas, not a car that only the wealthy can afford. $475M is an awful lot of money.
The downstream effect of EVs on power plant emissions has been a concern, but when you look at the actual CO2 emission from a gas powered car vs. the impact of an EV on power plant emissions, EVs are still a cleaner choice. The actual difference depends on where you live and how your electric power is generated. In states where coal is the primary electric fuel souce, an EV will contribute less than half as much CO2 as a similar sized gas powered car. In states like Vermont, where electricity comes mostly from renewable sources, an EV will have almost no CO2 impact at all.
Tesla is working on a future model with a $30,000 base price, a car that will bring this technology to many more people. But at this early stage, with a lot of start-up expenses to pay for, Tesla must concentrate on the upper end of the market for its survival.
It’s silly to consider a “government loan” a problem. After all, computers would still be in the dark ages if it weren’t for the government blowing billions on primitive computer systems for the military and space programs. Ditto for the fact that Tesla is making cars for the rich. I priced out an Apple system in the early days and we were looking at about $5000 for a system that had less power than most of today’s phones. I”m not really sure how much of a long term transportation strategy these vehicles represent, but they are without a doubt a step in the right direction, and without the direct governmental subsidies that STILL go to oil and gas.
Every time I read something new about what Tesla the more impressed I get. That interior and touch screen are beautiful.
If only that base price can be brought down after a few years of success…
“Is Tesla the next Apple?”
Not hardly. More like the next Solyndra. Like Solyndra Tesla’s real business is scamming government subsidies. Don’t believe it? Then look at the numbers:
Cars sold: 2350
Income from car sales: <$225,000,000
Income from Us Suckers (U.S.): $450,000,000
Two out of every three dollars these hucksters "earn" are wrested from taxpayers who will never even see pictures of one of these cars except when its Asian-sourced high-tech batteries explode on the Nightly News!
Solyndra’s CEO was not a celebrity, nor did they get investment money from the likes of Toyota, Chrysler and others.
Tesla is definitely having a tough time growing into a new segment, but then again, so have others like Fisker and the American auto companies. Electric cars are tough to sell right now since we don’t have a full functioning eco system for them.
I do think Tesla will be around for a while.
P.S. It was Fisker I believe who had the batter problems. Oh, and Toyota has battery problems too. Their batteries only last for about 100K miles before needing to be replaced.
The comparison with Apple is false.
Did the US Government give Apple money to start making computers or their other iDevices?
No they did not.
And why is our government loaning $450 million dollars for such an expensive vehicle?
Like Mitt Romney said our government should not be in the business of picking the winners and the losers. If the Tesla product is that great let the private sector investors like Buffet, Gates, and Soros invest their cash. Please leave the US Taxpayer alone. Before they raise my taxes this kind of crap has got to stop! No more government waste!
There’s a fundamental difference between an investment by the likes of Buffet or Gates and a loan from the Department of Energy. Private investors are looking for an investment. They want to own a piece of the companies they invest in. Their goal is capital appreciation, whereas the DOE’s goal is to promote the development of new technologies. As with many other technologies developed for NASA or DARPA by private companies, these advances would not happen without government loans & grants. This is a very appropriate role for the government to play.
Can you go cry about Detroit getting an actual bailout (not a loan like Tesla got, but a f-ing bailout!!)
Where is your free market capitalism then? Not to mention Oil gets subsidies in the billions, that once again are NOT loans, which in case you didn’t know, are paid back with interest. If you want to cry about government waste, don’t start with a 400 million dollar loan. Cry about the big stuff.
Biggest issue to me is consumer protection. Yes, wealthy customers will buy this car, but one would still expect superior customer support. It’s not clear the company will deliver on that expectation:
Tesla Motors is downplaying a claim that completely draining the battery in its electric sports car “bricks” the vehicle, a problem that could in theory apply to any electric vehicle and is best avoided by simply plugging the car in regularly.
In what is sure to become another rallying cry for critics of electric vehicles, a report published by Michael Degusta of The Understatement claims fully discharging the Roadster’s massive 53-kilowatt-hour lithium-ion pack effectively kills the battery, rendering the car inoperable. This, he claims, can happen even if the car isn’t being driven.
“A Tesla Roadster that is simply parked without being plugged in will eventually become a ‘brick,’” Degusta, who has placed a $5,000 deposit for Tesla’s forthcoming Model X crossover, writes. “The parasitic load from the car’s always-on subsystems continually drains the battery and if the battery’s charge is ever totally depleted, it is essentially destroyed.”
Degusta claimed, without offering proof, the forthcoming Model S sedan could experience the same problem. He notes in the post that he interviewed an unnamed Tesla regional service manager who identified five unnamed Roadster owners who have experienced the problem in a variety of circumstances, including using a 100-foot extension cord to charge a Roadster. One owner, Max Drucker, provided Wired.com with an email he sent to Telsa Motors CEO Elon Musk saying his battery was rendered “dead and unrecoverable” after he left the unplugged car in storage for six weeks.
“I had no idea I could be putting my car at risk,” Drucker told Wired.com by phone. “This was an accident. I didn’t know.”
Tesla Motors downplayed Degusta’s report, arguing the issue he raises isn’t a technical problem so much as an issue of properly maintaining the vehicle. The company likens the need to maintain a minimal charge to ensuring there is sufficient oil in a conventional engine.
Let’s get the facts straight. The Department of Energy did not “give” Tesla anything. They loaned $465 million to Tesla, a loan that Tesla recently announced they will pay back early, by the way. This money is not a “bailout” or a “subsidy.” It’s an investment in new technology designed to reduce our dependence on oil. If Tesla is successful and this revolutionary technology makes it into lower cost vehicles, DOE’s objectives will have been met. Tesla already has a model on the drawing board with a $30,000 base price, so this could happen sooner than you think.
Do you know what a loan is?
Very grateful for all the comments, pro and con. Here’s what I know for sure: innovation is difficult under any circumstances; in an industry this complex, it is exponentially more so.