Tesla’s Fast Charging Stations: Game Changer or Fast Path to Bankruptcy?

Earlier this year, Elon Musk announced his plan to build solar powered, fast charging stations across America, available to Tesla Model S owners to use for free. A lot of my colleagues were very excited about this prospective announcement. To me, it seems downright impossible: high fixed capital costs, and no revenue from the stations.  Additionally, these charging stations aren’t even compatible with Tesla’s other model, the Roadster, and you can forget about cross manufacturer compatibility.  Solar panels are not just plug and play either, they require maintenance and cleaning if you want them to perform up to their specified manufacturer standards of efficiency.

Even if the solar panels operate at optimal efficiency, the fast chargers will draw more power than the solar panels can produce at one time, so unless Tesla has on-site electricity storage, the company will have to buy electricity at a higher rate than they can sell back to the grid.

Another challenge is the fact that utilities will often charge a hefty “demand charge” per month because of the high load these chargers can put on the grid, says Arindam Maitra, a senior project manager at the Electric Power Research Institute. Fast charger owners will have to pay that fee even if no one uses the station. At least one DC fast-charging system charges $7 per charge, which is more expensive than buying gasoline for the equivalent range in a conventional car. -Technologyreview.com

Despite the economic pitfalls, Tesla charged on this year.  They built 6 charging stations in SoCal and have already begun their electric corridor in the northeast.  The station pictured at the top is in Milford, Conn.  Whether anyone has actually used it for its purpose remains to be seen.  These stations will charge between 4 to 6 cars and the initial capital investment ranges from $100,000 to $250,000 This could be a substantial financial liability for Tesla, which has already announced that it needs to raise more money to keep operating. When you think about the infinitesimal amount of people that actually own the Model S currently, and then they have to be driving on that specific route, the logic seems ridiculous.  Yet they are still building charging stations, and they need to sell a lot more cars for this plan to be remotely logical or we will get another Solyndra ordeal.  Project Better Place seems to be turning in a bad direction in the final quarter of 2012, asking for emergency funding from investors and laying off hundreds of employees.

Fast charging is a great idea in theory. You can drive a few hours, stop, have lunch or stretch your legs and browse a shop, then get back on the road. Existing rest stops and commercial centers will see the value in drawing electric vehicle owners to their area for 30 minutes. Drivers can plug their car in for free, and businesses can lure in generally higher income patrons that buy electric vehicles. There is a possible business model to building fast charging stations that provide free or cheap electricity. However, that is not Tesla’s business model. They hope to increase the value  a very expensive car by creating a free charging infrastructure for one specific model.

I just don’t think this type of widespread endeavor can possibly work, given that only one luxury model is compatible, and given that Tesla will not receive revenue to sustain the service.  Provide me one example of a capital intensive, widespread, exclusive, free service that has worked in America. But this is what Elon Musk does: he creates things before we appear to need it (PayPal, SpaceX). I would like to be proven wrong. So if Elon or anyone has a brilliant defense of the plan, please feel free to discuss in the comments

Sources:

http://www.technologyreview.com/view/429348/teslas-fast-chargers-could-be-a-financial-liability/

http://wheels.blogs.nytimes.com/2012/12/21/tesla-begins-east-cost-fast-charging-corridor/

http://www.technologyreview.com/news/429283/will-fast-charging-make-electric-vehicles-practical/

http://www.motorauthority.com/news/1081336_teslas-supercharger-fast-chargers-spread-to-east-coast

http://www.motorauthority.com/news/1079383_tesla-supercharger-fast-charging-system-has-landed

Tesla Motors to use Panasonic Batteries

In a recent press release, Panasonic and Tesla Motors announced they will collaborate to develop the next generation of batteries for electric vehicles.  Panasonic is the world’s largest producer of Lithium-ion battery cells and Tesla is the only current manufacturer of a highway capable EV.

PRESS RELEASE

Tesla and Panasonic Collaborate to Develop Next-Generation Battery Cell Technology

The Tesla Roadster is faster than an Audi R8 yet is six times as efficient as conventional sports cars. With an EPA-estimated range of 244 miles per charge, it costs less than $5 to charge.

2010 Tesla Roadster Sport

This is a pretty cool video on the Tesla Roadster Sport.

First, there is a pretty informative overview of the interior. The Roadster now has a working glove compartment, alright! The transmission selector is now four buttons on the center console instead of a traditional lever. You can select from drive, neutral, reverse, and park. The console also features a port for your ipod or iphone, which from experience, really comes in handy nowadays. Accents on the car are all true carbon fiber, which is rare, because of how commonly it is faked.

The host also gives the battery of the Tesla Roadster Sport a once over. Giving the predictable, “There’s not much to look at here” quip. The Tesla Sport only has a single speed, so there is no complicated transmission bungling up the power to the wheels. He notes the car has 288 hp as apposed to the 248 of its predecessor; which gives it a 3.7 0-60 acceleration, .2 second quicker.

The best part of this video in my opinion is the host’s explanation of the Roadster’s regenerative brakes. When you hit the brakes, you are still using friction braking. The regenerative braking is when you lift off the gas, and you are slowed down by the regen brakes to give a “synthetic compression braking”. So it gives you that pulled forward feeling like you get when you lift off the gas in too low a gear in a regular vehicle.

Oncars.com’s Sweet Model S Video Preview

OnCars.com has produced a very informative and stylish video preview of the Tesla Model S. It is split into three parts: Design, Pure Electric, and Showtime.

Part 1: Design

Franz Von Holzhouzen, Chief Designer of the Model S Project, and Elon Musk, CEO of Tesla Motors, provide an in-depth description of how the electric drive train allows for unique design opportunities. I was unaware that the battery pack flat between the wheelbase this time. The Tesla Roadster’s is a vertical box located in the rear portion of the car. Also, the Model S has many hidden design elements that reduce the drag coefficient, like the retractible door handles, flat underbody, and air diffusers.

Part 2: Pure Electric

Elon and Franz emphasize the importance of keeping the Model S purely electric as apposed to creating a hybrid sedan ala the Fisker Karma. With a 300 mile range, the Tesla Model S should have no trouble being a daily driver, and will hopefully extinguish any doubt in the minds of those who don’t believe electric cars are fully capable vehicles.

Part 3: Showtime

This covers Elon’s appearance on Letterman and reactions from New York City.

Tesla Motors to Receive $465 Million Loan from the Government

From: OnCars.com

DoE giving boost to start-up electric car company

The DoE loan is reported to be $465m. Added to the $50m invested last month by Daimler plus the debt and equity already invested in the company, Tesla now sports a $700m capital war chest. Tesla plans to use $365m of the DoE monies to bring the Model S into production with the remainder going to customer power train development.

The sticker on the Model S should come in around $50k, or roughly half the price of the groundbreaking Tesla Roadster which absorbed all upfront development costs for the sporty little electric car.

Video of Tesla Model S Unveiling and More

Edmunds Inside Line recently posted this neat video on Youtube. Not only do you get to see Tesla Motors finally pull the sheet off this gorgeous ride, but there is also some footage of the 7-passenger sedan in action on the road.

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