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Is Tesla Really the EV King?

by Neal Dikeman, chief blogger, Cleantech Blog

Tesla Motors (NASDAQ:TSLA) has been the electric vehicle darling since almost the day it launched.  I’d argue there are some really neat aspects to its product and strategy, but it is far from a resounding market leader in EVs.

The Range and Battery Scale Advantage

There are a couple of really exciting things to like.  Pulling a quick summary of the prices of all the pure electric vehicles currently selling in North America, I ranked them by EV Price/ Range.  Tesla is and always has been the leader here.  Down in the <$300/mile range, half of the  i3.  Quite frankly it’s been the only game in town for a 200 mi electric car.

And as lithium batteries are the big ticket item in an EV, and Tesla loads up on them, that confers some advantage to go with that high ticket price.   It drives up its price and its range, and puts it still in a class by itself on range. But as you see when graph range vs price, packing all those batteries in also gives Tesla a huge nominal advantage over its competitors compared to where one would project it to be on price.  Tesla talks like this is all technology and battery management that is hard for competitors to match, I think it may be just as much a combination of purchasing scale and simply an illustration of relative cost absorption in a high range EV (at the lower 70-90 mi range of everyone else, the car cost swamps the battery cost, and differential cost of a few mi in range is much less important than the luxury premium).  You can see this illustrated in flatness of the PHEV version of the curve, and the wide differential between the i3 and LEAF, both very close in range.  Of course, as we are largely comparing prices not costs, some dirt in the numbers is also certainly present.

EV $ per Mileage

EV Price vs Range

 

 

 

 

 

 

PHEV $ per eMileage

Plug in hybrids as you’d expect show a much less dramatic differential and flatter curve, with most of the differential driven by luxury vs mass consumer car class than range.  The game in PHEV’s appears to be minimize battery for maximum consumer taste and performance output.

 

 

 

Future Impacts of Scale?

The interesting bet however, is what happens in the future.  Lithium ion batteries are one of the few fast falling cost items in a car, Tesla ought to be able to ride that curve down faster than the others, since it has both more purchasing power than its competitors (several x more battery kwh per car and one of the volume leaders in cars adds up), as well as a larger exposure in its vehicle unit cost structure in batteries than any of its competitors as the batteries make up such a major portion of its vehicle cost.

However, its attempt to vertically integrate upstream into  batteries with the gigafactory might well work against it here, as it gains leverage on the materials in the value chain, but loses leverage against the manufacturing cost, locks in on a single battery design, and has to recover significant capital outlays its competitors do not.

If the rest of the lithium ion industry can cost down as fast or faster than Tesla, it loses out quickly.  Alternately, when another car company rolls out a high range vehicle, Tesla’s advantage can erode fast.  And finally, it is unclear whether either the PHEV or short range EV strategies, requiring fewer costly batteries, simply continue to outpunch Tesla with consumers.  Like its zero emission credit advantage supporting profits when it first launched, this battery scale advantage may also be more short term than sustainable.

North American Market

But possibly most disturbing is trying to tie out this advantage to how Tesla is actually doing with this strategy in its core North American market.  It’s now been hot and heavy in North America for a couple of years.  Should be delivering results, but  things are not quite that rosy for a $20 billion market cap “market leader”.

It was not first, Nissan with the LEAF and GM with the Chevy Volt beat it to the market.

Its core initial US market has seen basically flattish sales growth YoY going on 2 consecutive years now, ostensibly as it scrambled to open new markets overseas, including its struggling Asian market.  But struggling to drive high growth in your first core market is never a good sign.  One wonders how much excess demand per month actually exists for an $80K electric sports car, and if some of Tesla’s shift of production to seed overseas markets is simply a strategy to keep its domestic demand levels pent up, out of concern that there is not adequate growth possible at this price point in one market to satisfy Wall Street’s valuation.  Not a bad idea, but does have implications.  In counter point, while GM and Toyota also struggled for growth, Ford and Nissan delivered strong double digit growth in Tesla’s home market while it stayed flat, and BMW has started to chew the mid luxury market in between.  One wonders if the strategy of twinning a low range low cost EV with PHEVs doesn’t simply deliver better product line punch than the high mileage high cost strategy.

Tesla is not the largest, and has never worn the crown of most EVs sold for a year, coming in 3rd and slipping to 4th in 2013 and 2014, and only barely edging out Ford so far for 2 months of 2015 and helped by weak Chevy sales months so far. Also probably helped as Tesla apparently had to shift about a month’s worth of car production into Q1 from production issues according to its annual letter.

NA EV Company Ranking

NA EV Company Ranking EVobsession.com

 

 

 

 

 

 

Source: Insideevs.com tracker 

Also pictured is the results from a second tracker with slightly different estimates claiming Tesla is actually ahead so far this year.

But almost as interesting to me has been the rise of the BMW.  That i3 which is almost double Tesla’s price/mile is doing rather well.  By some trackers has edged Tesla in sales of its i3 and i8 EV and PHEV in North America in 3 of the last 7 months, with less than a year under its belt.  Arguably the i3 was aimed more at the Volt and LEAF than the Model S, but getting even remotely close to caught by an upstart short range BMW product this early in its cycle was I am sure never part of Tesla’s plan.

BMW vs Tesla

 

 

 

 

 

 

Do note that all Tesla monthly numbers are somewhat suspect, as the company does not publish anywhere near the detail that other automakers do. Charitably it is just playing cards close to the vest?  Not just making it harder to analyze hidden growth misses?

All in all, a quite decent performance for a new auto maker, but far from the dominance you’d expect from a $20 billion market cap brand name.

The author does not own a securities position in TSLA.  Any opinion expressed herein is the opinion of the author, not Cleantech Blog nor any employer or company affiliated with the author.

Chevrolet Volt and Nissan LEAF Electric Cars Earn Highest Safety Ratings

Volt IIHS Front Test Chevrolet Volt and Nissan LEAF Electric Cars Earn Highest Safety Ratings

The Chevrolet Volt and Nissan Leaf earn the highest safety ratings from the Insurance Institute for Highway Safety in the first-ever U.S. crash test evaluations of plug-in electric cars. The milestone demonstrates that automakers are using the same safety engineering in new electric cars as they do in gasoline-powered vehicles.

The Volt and Leaf earn the top rating of good for front, side, rear, and rollover crash protection. With standard electronic stability control, they qualify as winners of Top Safety Pick, the Institute’s award for state-of-the-art crash protection. The ratings help consumers pick vehicles that offer a higher level of protection than federal safety standards require.

The addition of the 2 electric cars brings to 80 the number of award winners so far for 2011, including 7 hybrid models. That lifts General Motors’ current model tally to 12 and Nissan’s to 3.

“What powers the wheels is different, but the level of safety for the Volt and Leaf is as high as any of our other top crash test performers,” says Joe Nolan, the Institute’s chief administrative officer.

The dual-power Volt and all-electric Leaf not only surpass benchmarks for protecting occupants in crashes but also exceed current fuel efficiency andLEAF IIHS Side Test Chevrolet Volt and Nissan LEAF Electric Cars Earn Highest Safety Ratings emissions standards. Both models are brand new for 2011. The Volt is a plug-in battery/gasoline hybrid that can run in electric-only mode with a range of about 35 miles on a single charge. A gasoline engine kicks in to power the electric motor when the battery is spent. The Leaf runs on battery power alone and has an Environmental Protection Agency-estimated average range of about 73 miles on a single charge

“The way an electric or hybrid model earns top crash test ratings is the same way any other car does,” Nolan says. “Its structure must manage crash damage so the occupant compartment stays intact and the safety belts and airbags keep people from hitting hard surfaces in and out of the vehicle.”

The Volt and Leaf are the first mainstream electric cars the Institute has tested. Last year engineers put 2 low-speed electric vehicles through side barrier tests for research purposes. Results for the GEM e2 and Wheego Whip were starkly different from results for the Volt and Leaf. Crash test dummies in the GEM and Wheego recorded data suggesting severe or fatal injuries to real drivers. The GEM and Whip belong to a class of golf cart-like vehicles that aren’t required to meet the same federal safety standards as passenger vehicles. Although growing in popularity, these tiny electrics aren’t designed to mix with regular traffic.

“Eco-minded drivers keen on switching to electric would do well to buy a Leaf or Volt for highway driving instead of a low-speed vehicle if they’re at all concerned about being protected in a crash,” Nolan said about the electric cars.

Small but safe: The Volt and Leaf are classified as small cars, with their overall length, width, and passenger capacity in line with their peers. But their hefty battery packs put their curb weights closer to midsize and larger cars. The Leaf weighs about 3,370 pounds and the Volt about 3,760 pounds. This compares to about 3,200 pounds for Nissan’s Altima, a midsize car, and about 3,580 pounds for Chevrolet’s Impala, a large family car. Larger, heavier vehicles generally do a better job of protecting people in serious crashes than smaller, lighter ones because both size and weight influence crashworthiness.

For years the debate over fuel economy has been about making cars smaller and lighter, changes that could put people at greater risk of dying or being injured in crashes. The Institute long has maintained that advanced technology is key to improving fuel efficiency without downgrading safety.

“The Leaf and Volt’s extra mass gives them a safety advantage over other small cars,” Nolan says. “These electric models are a win-win for fuel economy and safety.”

About the award: The IIHS awarded the first Top Safety Pick to 2006 models with good ratings for front and side protection and acceptable for rear protection. The bar was raised the next year by requiring a good rear rating and electronic stability control as standard or optional equipment. Last year, the Institute added a requirement that all qualifiers earn a good rating in a roof strength test to assess rollover crash protection. The ratings now cover the 4 most common kinds of injury crashes.

Electric Car Reports

Japan’s Crisis Hurts Sales of Hybrid Cars and EVs

The people of Japan are courageously moving forward after the devastation of a 9.0 earthquake, a tsunami that ripped apart buildings and roads, and a nuclear crisis that now threatens their food and water. The Japanese economy depends in no small measure on the success of its automotive industry and its complex eco-system of component suppliers and service providers.

Just when gasoline prices are rising and hybrid cars are again hot sellers, the crisis is making hybrids and new electric cars tough to get. Let’s look at the impact on three big sellers of hybrids and electrics.

Toyota, Honda, and Nissan are hurt less than expected because they have diversified globally, including billion dollar plants and operations in the United States. The most advanced hybrids and electric cars, however, are first produced in Japan. Every supplier must be able to produce for new cars to be assembled in Japan. Once assembled, it will be challenging to move them across roads not ripped apart. It will take time to return shipping ports to normal after the recent tsunami tossed cars and railcars around like toys. Plants and operations require MW of electricity, now constrained by nuclear plant shutdowns.

Toyota

Toyota reports that all 13 North American vehicle and engine plants are running normally, although overtime has been curtailed to maintain adequate inventories of parts that come from Japan. Toyota now makes 12 different models in North America, including high-volume vehicles such as Camry, Corolla, RAV4, and Lexus RX 350, and nearly 70 percent of all Toyota and Lexus vehicles sold in the U.S. are made in North America.

Suppliers in North America provide most parts and materials for Toyota’s North American-built vehicles. Toyota has temporarily stopped all Japanese production of vehicles, but it is restarting production of replacement parts for cars already sold and parts necessary for overseas production. In general, Toyota is seeing adequate inventories at most dealers.

Prius vehicles are built in Japan, Steve Curtis with Toyota told me that the Tsutsumi plant where the Prius is made was not damaged by the earthquake. Production depends on more than the plant condition. It depends on a complex web of suppliers, supply of electricity, roads that can be crossed by employees and trucks deliveries parts. Toyota has delayed 12 Japan plant openings until March 26.

The tragedy in Japan has not delayed the U.S. launch of the new larger Prius V Crossover SUV and the Prius Plug-in Hybrid, not the new Toyota small electric city car. It has delayed the launch of the Prius wagon and minivan models in Japan from the original plan for the end of April. Reuters  Article

Since the production of current Toyota and Lexus hybrids, depends on a complex supply chain, and shipment to the UnitedToyota Prius 37k 150x102 Japan’s Crisis Hurts Sales of Hybrid Cars and Electric Cars States depends on roads and ports, Clean Fleet Report forecasts that shipments of Prius and other hybrids will be delayed and reduced for months.

Only one of three Toyota hybrid battery plants in Japan sustained limited damage from the earthquake. The other two plants are located in central Japan and were not affected. Panasonic and Sanyo are Toyota’s primary suppliers of nickel metal hydride and lithium batteries; their production status is uncertain.

Car dealers are betting that the supply of hot selling hybrids will be tight, especially with gasoline costing $4 per gallon in parts of the country. Auto News reports that dealers that were averaging $1,700 discounts on the Prius are now getting $800 premiums.

Honda

Honda is globally diversified in manufacturing and suppliers. With nine U.S. plants, Honda has invested more than $12.7 billion in its U.S. operations. The company employs nearly 25,000 associates and annually purchases $12 billion in parts and materials from more than 530 U.S. suppliers.

For hybrids such as the Civic Hybrid, Insight, CR-Z and Fit Hybrid, Honda also heavily depends on Japanese suppliers, including advanced battery suppliers such as Sanyo. At the heart of the 2012 Civic Hybrid and Honda’s new electric cars are the lithium-ion batteries built at its Blue Energy join venture (JV) with Japan’s GS Yuasa; the battery plant is in Fukuchiyama, Kyoto, Japan.

Last week, Honda had announced plans to resume production of major Japanese plants on March 20. Now these openings are delayed to March 27 or beyond. Like all major manufacturers, Honda depends on a complex eco-system of suppliers and joint ventures. Some plants have been damaged and roads to move parts have been ripped apart.

Nissan

Nissan has delayed March 21 plans to restart production of parts for overseas manufacturing and repair parts, based on parts availability from suppliers, at these plants Oppama, Tochigi, Kyushu, Yokohama, Nissan Shatai. Vehicle production will be constrained by inventory availability. The Iwaki engine plant remains closed.

LEAF battery 150x150 Japan’s Crisis Hurts Sales of Hybrid Cars and Electric CarsNissan recently shipped 600 Nissan LEAFs before earthquake and tsunami damage. At the Port of Hitachi, however, Nissan lost 1,300 U.S.-bound Infiniti and Nissan cars to the tsunami. Nissan had plans to soon have 10,000 LEAFs built at the Oppama plant. Now Nissan’s hopes of catching-up with U.S. deliveries of the Chevrolet Volt have faded in the near term.

Starting next year, Nissan’s Tennessee assembly plant will have the capacity to build 150,000 Nissan Leaf electric cars per year, and 200,000 lithium-ion battery packs per year. The lithium packs could also be used in future Nissan hybrid cars. The Tennessee battery production is by AESC, a joint venture of Nissan and NEC.

Once production returns to normal, U.S. shipments could still be delayed. Japan faces a fuel shortage. Fuel is needed to transport cars to ports, to run port drayage trucks and lifts, and to run ships. Even electric cars still depend on diesel to move them to market.

Nissan LEAF with Baby Car Seats

Keo, at age 3 months, started his Nissan LEAF test ride with a yawn, gurgled his approval during the ride, then wisely left the car buying decision to his parents.  Grace and Susan Stanat brought their son along for the test drive. They arrived with Keo, baby seat, and stroller. Although three adults can squeeze into the back seat of the LEAF, two babies are another matter.

Grace told me of his high-hopes for getting an electric car, because he cares about his kids future and because he works in Silicon Valley high-tech and is excited about our electric future.

Nissan is taking about a dozen LEAFs around the country, letting people take a LEAF for a driven. To its credit, Nissan allows people to bring their family. When Grace and Susan were ready for their test drive, Nissan patiently allowed the baby seat to be placed in the back and secured with the seat belt, allowed Keo to be secured in his car seat, and even allowed the stroller to go in the new trunk. Nissan wants people to know what they’re getting and to decide without any pressure if this new compact electric vehicle meets their needs.

When I talked with Grace and Susan, it was clear that both cared a great deal about the future for their two children. The parents want to minimize their greenhouse gas emissions and be appropriate role models for Keo and Exie, who also requires a car seat. Living in the university town of Palo Alto, they find that they can walk to many stores, services, and schools. Like many university towns, Palo Alto has bike lanes and transit that connects to regional rail. Grace and Susan have reduced their carbon footprint by sharing a single vehicle.

After the ride, Grace and Susan were disappointed. Although the LEAF handled well and meets their range needs, it was a little too small for a couple with two young children. Yes, the back seat will hold the two car seats needed in this family, but the seats press against the front seat. They can already feel their two-and-a-half year old Exie’s kicking in their Honda and worried that it would be the same problem in the LEAF.

Nissan LEAF trunk stroller 150x150 Nissan LEAF with Baby Car Seats and StrollersThe LEAF’s trunk, however, was too small for two strollers. Grace commented, “The trunk was almost too small for one stroller.” This is a common issue in compact cars and smaller. Although Nissan has done an excellent job of packaging the 24kWh battery back under the floor and behind the back seat, it has a small trunk. The 60/40 fold-down rear seat expands cargo space when only one or zero people are in the back seat.

Nissan Leaf Review and Specs

Even though Susan and Grace are on Nissan’s wait list with their $99 deposit, they have decided to look at bigger hybrid cars; they do not see a currently available electric car that meets their needs. We discussed the Toyota Prius and Ford Fusion Hybrid as possibilities. I said that it was too bad that Chrysler cancelled the plug-in hybrid Town and Country. Grace replied, “Yea, but with a minivan we would need to get a white picket fence.”Best Hybrids

Grace and Susan may lease for two years, or until they no longer use car seats and strollers.

By the time that Keo is ready to drive, there will be hundreds of choices in electric cars of every shape and size. California’s energy mix will be at least 33 percent renewable, with most smart charging occurring when the wind is blowing or the sun is shining. Thanks to choices made by families like the Stanats, the future may be a little brighter for all of us.