Editorial: Tesla = GM, Toyota? Tesla > Phoenix Motorcars?
As my fellow blogger Sam pointed out recently, Darryl Siry, Vice President of Marketing for Tesla Motors, recently wrote on their site's blog that "The Media Need to Toughen Up on the Subject of EVs". This is true on many levels, and it could be argued that the media needs to toughen up when it comes to reporting in general. But, this is not the subject of this particular editorial. But, in the spirit of doing exactly what he asked the media to do, let's consider some of the hard questions facing hopeful electric vehicle manufacturers in the coming years.
Darryl mentioned, as did Tesla Motors CEO Martin Eberhard in Sam's interview, that Tesla perceives themselves as different than other new electric vehicle manufacturers. Indeed, they see themselves as more like GM, Ford, Toyota and Nissan. Are they? I am not sure, as they have yet to produce a single vehicle for public consumption, as compared to the almost too numerous to mention vehicles those other companies have sold. This begs the question, is Tesla getting ahead of themselves? Are they really competing directly with GM and Toyota?
Continue reading my thoughts after the break.
Gallery: Tesla Roadster
I hope not, as I would love to see them succeed. And, as a matter of fact, I do believe that they will, regardless of whether they are getting too far ahead of themselves at this point in time.
However, this next question also bears consideration. Is Telsa different than Phoenix Motorcars or ZAP? This too is unanswerable at this moment. ZAP may appear ahead of the game, as they already offer electric vehicles for sale. However, the vehicles that they offer currently do not compete in any meaningful way with what Tesla is cooking up. They have announced plans for vehicles that will compete with what Tesla plans to produce in the future. Next is Phoenix Motorcars. Their SUT has some pretty impressive specifications, due in part to their high-tech batteries. Martin Eberhard questioned their business strategy, as did Darryl. It has recently been reported that Phoenix is, or at least is planning on, selling their emissions credits to other manufacturers. Tesla is quick to point out that they too will have these credits, and had not included their sale into their business plans or strategy. Should they? I have no idea, to be honest. Here is the question on my mind, however. If Tesla makes money on each vehicle they sell, will they be willing to sell their credits to other companies, as Phoenix plans to do? Will they sell them for less money than Phoenix, thereby hurting Phoenix's bottom line? Again, I have no idea. Until vehicles are sold, it's just conjecture.
Lastly on that topic, is Phoenix Motorcars' business plan to make any sort of profit based solely on the sale of their credits? They have said that they plan to sell them, but have not exactly indicated that this will be their only source of profit. I imagine that anybody who has invested in Phoenix would not have done so with a horribly inadequate business plan, but, as I have no inside information to the contrary, I cannot say. It is certain, however, that AltairNano, the battery supplier, has a stake in the company, and PG&E has ordered a few trucks from them. Here's hoping that Phoenix, Tesla as well as ZAP have "all their ducks in a row", so to speak, and all turn out electric vehicles for our personal, green use.
So, with GM planning to produce an electric car, presumably the Volt, by 2010, Tesla planning on offering their "Whitestar" sedan by then, Phoenix Motorcars set to be producing SUT's and SUV's in full swing by that time, and ZAP planning to offer their multiple platforms, who will be the major players in the electric vehicle race? I, personally, can see Tesla hitting their goals. From what I have seen and heard, they truly appear to have a plan that holds water. ZAP has a head start, with a growing dealer network in place, and Lotus appears to have a hand in their designs. Discussions appear to be taking place with battery manufacturers, but they have shown no real prototypes. Phoenix has vehicles on the road now, and several people have driven them and reported on their experiences. This bodes well, as they at the very least can prove that their vehicles work as advertised. The question remains, will they be able to make money on them? Boy, I hope so. Fleet orders and limited production are one thing, when will they be ready to offer their products to end consumers? GM is a pretty safe bet, in this lowly bloggers mind. Say what you will about their taking and destroying the EV1 - they did make them in the first place. And they must have been good enough for some people, or else nobody would be upset with losing them. They have a great deal of capacity, more experience than any of the start-ups and have made public commitments. In some form, I expect to see their electric (or hybrid with the engine powering a generator, charging the batteries) vehicle on the road. The same monetary question still applies, however: Will they make any money on them?
Gallery: Chevy Volt Concept
What did I just say? Simply put, in my mind at least, here is the electric vehicle "pecking order" as it stands today. GM > Tesla > Phoenix > Zap. Some restrictions apply, and all that other good "fine print". Will another manufacturer step up to the plate? Toyota, Honda, Nissan... Ford? How about Mitsubishi? None have announced any specific plans to create electric cars for the public. ZENN hasn't shown us anything of substance yet, NEVs notwithstanding, so they have been left off this topic entirely. Anybody else?
Darryl Siry has said that he reads "just about every article that comes out each day on electric cars, alternative fuels, clean tech, and the automotive industry." I am not so secretly hoping that he reads this one, and would be so kind as to comment on these thoughts.
[Sources: Tesla, ZAP, Phoneix Motorcars and others]
Reader Comments (Page 1 of 2)
greg woulf 11:46AM (3/15/2007)
I agree with most of your points, with the exception of saying Tesla > Phoenix.
I would say that right now Tesla = Phoenix
They both have a niche market currently, Tesla in the sports car, Phoenix in the fleet. They both have working prototypes, they both have a plan and the money to at least start up production. Tesla has a pre-reputation for quality and performance, Phoenix for economics and fast charging.
I think the big issue of which is better comes down to one thing and that's the Altair batteries.
If Altairnano batteries are $75k then Tesla > Phoenix unquestionably. If Altairnano batteries are less than $10k then I think Phoenix > Tesla
Reply
kert 2:37PM (3/15/2007)
Subaru. You forgot the Subaru/TEPCO R1E, also claimed to have the 15-minute recharge capability that Phoenix claims.
Reply
kentavos 1:59PM (3/15/2007)
Instead of approaching the ev industry as a consumer, look as an investor.
Phoenix Motor cars has an interesting but flawed business plan. As others have pointed out, they are selling each vehicle at a loss. Mainly because the battery technology they are using is so expensive. Based on informed estimates, it's a rather large loss.
Their plan for making money, despite their product , is to help offset this loss by selling clean air credits. Ok, but selling clean air credits is risky. We don't know the true value. We don't know how long they will be in existence and we don't know if anyone will actually buy them.
So their business plan in part is dependant on a risky stream of revenue.
Where else does money come from? Well, there is always investment money. This is risky as well. Investors are finicky to say the least. In addition a lot of money will be needed to build out it's infrastructure. Will investors see them through the long years of negative cash flow? Would you invest money in such potential or would you invest somewhere else.
Another x factor for Phoenix motors is their battery vendor. The financials for Altair Nano are pretty bad. They have the same issue as Phoenix ultimately. How long will banks continue to lend them money so they can stay afloat? Will it be enough to allow them to really grow as a business and bring down the cost of their batteries?
Zap is an interesting company. They are first to market and have been trying to leverage that fact to build infrastructure and gain PR. They have also been through a bankruptcy and according to their latest financial report lost over 2 million in a quarter.
Same problem as Altair and Phoenix. How long will you be able to find a bank to loan you money and will it be enough and long enough for you to become the company you need to become?
Companies operate at a loss all the time, so that fact alone is not worrying. But it doesn't happen forever and your future better be real bright.
Now Tesla. There isn't a lot of public financial information for Tesla, so it's hard to judge them. This is probably where someone needs to tougher. However, based on what we do know, Tesla is selling cars at $100,000 a piece. Because they are using fairly standard parts, including batteries, their material cost per vehicle is probably close, if not lower than what they are selling at.
We also know they have a long line of deep pocketed investors and something has attracted those investors.
Unfortunately, that's about all we know, but they seem to be on much better ground financially then the other two options.
Then you have GM which is really the elephant in the room. It is possible that GM can bring all of it's monstrous resources to bear on battery technology and creating the best ever ev. We know financially that GM is a long term player and does not have to deal with infrastructure like Tesla, Zap or Phoenix. We also know their history with consumers and that is probably their biggest weakness.
The fact that GM is more stable financially is probably the reason Tesla really sees themselves in competition with GM and not Zap or Phoenix.
Reply
Tony Belding 12:51PM (3/15/2007)
Electric car makers need to be prepared to compete with GM and Toyota if they are going to survive. The big companies will come late to this party, but they will bring huge resources -- much like when IBM came in late to the microcomputer business with their original IBM PC. They didn't kill Apple, but they did kill off a lot of smaller companies (some quickly, while others lingered for a while).
So. . . I think the guys at Tesla Motors have figured this out, and they are looking ahead and making the right moves to get ready for it. The resources they have put into crash testing, durability testing, partnering with existing suppliers and manufacturers (such as Lotus), setting up service centers, engineering centers, and laying the groundwork for their own factory demonstrates a level of organization, seriousness and (most importantly) financial investment that other EV companies will have difficulty matching.
Reply
Michael 3:30PM (3/15/2007)
Zap has sold 90,000 NEV's and 300 EV's since 1994, they deserve a higher spot in "the pecking order".
Just my two cents. =)
-Michael
Reply
Rick 4:38PM (3/15/2007)
Altair has it. Forget about Phoenix, it's just a way to get the battery on the road. The Altairnano will drive Phoenix:
1) top speed 95mph
2) range 130 miles
3) recharge time 10 minutes
4) Battery life of 12 years
5) A second gen coming this year that will double the range!
Since they are not a manufacturer, expect somebody to buy them and hammer down mag costs.
Reply
shmooopy 7:00PM (3/15/2007)
they should build PR and biz however they can. I love Tesla's product from pictures and web. let them enjoy a bit of hype - but of course it will all depend on the product, hopefully it will be good.
I looked at an elise to check out the size of the car - pretty small and its trouble getting in and out. I imagine that the tesla is similar. This is from a former miata owner. still its cool - I want one badly....
Reply
flabby 1:09AM (3/16/2007)
Volt is electric? I thought it was Hybrid.
Reply
Jeremy Korzeniewski 1:18AM (3/16/2007)
Flabby - that depends on who you ask. GM has consistently said that they consider the Volt to be an electric car with an on-board gasoline charger/generator. If that is the case, it is an electric car with a 40 mile range. Others say it is a hybrid, just set up different. Me? I just hope they release it and let us decide how to use it best!
Reply
Ben 7:13PM (3/17/2007)
I enjoyed your comments on tesla and pheonix
I agree that the two aren't really even competitors
they seem to be going towards two completely different markets
I hope there is more to the Pheonix business plan than selling credits
what a viscious cycle
one point that would be worth considering is the way the cost of new technology drops with widespread use.
I remember when Pioneer was selling a dvd burner for $17000 - I believe it was 1998
So if the Altair batteries are $75000 - Pheonix sells cars - batteries are mass produced - cost goes down
Pheonix is then drastically increasing profit
I hope they make it
Reply
siry 1:39AM (3/16/2007)
Jeremy - indeed I read most things - particularly when my name or the company's name is mentioned because google alerts are pretty good. I think you are asking a lot of the right questions and most were answered on this blog in recent posts or podcasts. I'm happy to do another interview as well to address your questions, but right now I am tired and need to go to bed.
One thing I will say that is part of the point I make in the original blog is that people need to stop comparing charge times in isolation because it is meaningless. Charge time is mostly a function of how big (in kWh) the battery is and how much voltage and amperage you have available to put into it. Two batteries of equal capacity with the same power source are charged at the same rate, regardless of who makes them or the technology. It does start to get different when you talk about very fast rates of charge, but then the real question is who has a 480V, 1200 amp power source available to charge their battery in 10 minutes? There is no free lunch when it comes to energy.
Reply
Jeremy Korzeniewski 2:06AM (3/16/2007)
Darryl, thanks for the comment. Hopefully in short order, we will be able to discuss some of these questions. Namely, at what point is a company truly a competitor to the established players?
I am interested in getting more of your thoughts on battery technology. As I understand it, not all batteries are created equal. No matter where the charge is coming from, some batteries break down at a much faster rate when charged too quickly.
You make a good point regarding where one would be able to make use of such a charger. I imagine that special arrangments would need to be made with the local power company, unless you were very industrious and set up a battery powered charging station in your garage... DC to DC, I mean. Anyway, have a nice night, perhaps we can continue our discussion soon.
Reply
Jeremy Korzeniewski 2:26AM (3/16/2007)
It just occured to me that I should note the difference between batteries and battery packs. As Tesla has done, it is possible to take a battery of any given size and capacity (amp hours, kilowatt hours etc.) and connect them to raise either the voltage or capacity... and then do it again and again to raise both. This will increase the power and capacity of the pack, making the ammount of power it can take in charging and how much it can give back in discharging increase. Anyway, all these details will flesh themselves out in the coming years as the vehicles come to market.
Reply
kert 4:13AM (3/16/2007)
but then the real question is who has a 480V, 1200 amp power source available to charge their battery in 10 minutes?
TEPCO, as in Tokyo Electric Power Company apparently has, and plans to have in many places. Read the news and presentations on the R1E
http://www.fhi.co.jp/about/english/csr/pdf/2006/E_03.pdf
http://www.fhi.co.jp/english/news/press/2005/05_09_02e.pdf
Reply
kert 10:52AM (3/16/2007)
More on fast charging, ZAP just came out with a press release claiming to have a fast-charger for their trucks available.
http://www.zapworld.com/ZAPWorld.aspx?id=4664
"he new charger can be ordered through ZAP for about $9,000"
So .. care to comment on that ? Are both TEPCO and ZAP blowing bubbles ?
Reply
Hunter 3:53PM (3/16/2007)
I think the point that is glossed over here with respect to Phoenix is that the batteries that go in their vehicles cost more than the selling price of the vehicles. You can hope that they have a good business model all you want (and that's basically your only defense of them..."I hope they have a plan") but we can see that they don't.
Of course Tesla will sell their credits too...what else would they do with them? But the key difference is that Tesla consistently claims that their cars will be sold at a profit, and further that those revenues are what will pay for the development and production of whitestar. That is a sensible plan.
To some of the comments:
About the Zap "fast" charger. The press release you link to says the new "fast" charger will fully charge a Xebra in "under an hour." The Xebra goes 25 miles per charge at a maximum of 40mph on lead-acid batteries. My cursory glance didn't turn up the kWh of the pack, but something tells me that this charger is not even as high-rate as the Tesla home charger. What Zap thinks is "fast" doesn't line up with anybody who wants cars to still be real cars. Which is why I think Darryl's contention that they aren't serious competition is fairly reasonable.
And about TEPCO/Subaru. That's great, if you happen to work for TEPCO and drive their fleet vehicles...in 2010 or so. For the rest of us, that was just a press release about an experiment that won't happen for years and won't affect us when it does. We all know that theoretically power companies can deliver big current. That doesn't mean it's practical for the early, very small EV market.
Basically, Darryl's point is that Phoenix and Zap and the like don't really pose any kind of threat to Tesla. Their sole danger is from the big carmakers. Tesla is hoping to jump in right at the inflection point of battery technology that makes this doable. But if it gets good enough that it's obviously superior, you can bet that every last car company will be building them. So, in other words, the fight that poses a mortal threat is with Toyota, GM and the like, not with Zap and Phoenix.
Reply
Jeremy Korzeniewski 6:30PM (3/16/2007)
Currently, evidence leads all of us to believe that the Altairnano batteries cost too much. Nobody knows what the future holds, though. Does anybody commenting here actually have inside information on Phoenix, their business plan, cash reserves etc? If not, assuming that they have no plan is not good enough for me. Please bear in mind that neither Tesla or Phoenix is making any money selling vehicles at this time. Tesla is very open about their plans, Phoenix is not. All we can do is wait and see at this point.
So... the question still remains, at least in my mind... Tesla > Phoenix?
Reply
Jeremy Korzeniewski 11:07PM (3/16/2007)
A quick note from Phoneix's site:
Q: Doesn’t a 10-minute charge cause a neighborhood black out?
A: The grid is quite capable of taking this load. The key is a power refill pump and we are working with infrastructure suppliers to achieve a distributed network. Also, remember the NanoSafe™ batteries can also be trickle charged either in your garage at night or at work.
Just to reiterate, this posting is really about Tesla, though. But it is an interesting side point about the batteries. Who's is better? Tesla's approach with the mass quantities of already mass-produced li-ion batteries or Altarinano's new tech batteries?
Reply
Roy 1:04AM (3/17/2007)
The main reason Tesla believes they are different from Phoenix and Zap is because they are becomming a manufacturer, not just converting existing cars. All other small EV "manufacturers" buy chasis designed for ICE engines from Asia or Europe, put electric motors, batteries and a controller in them and don't even do their own crash testing. This is a sound approach, as they can go into design and manufacture if they get the sales up high enough.
Phoenix has agreed to purchase up to 500 battery packs from Altair Nano for $42million. Each battery pack consist of 35 12volt batteries so this is 500 x 35 = 17500 batteries at $84k per battery pack or $2400 per 12volt battery. Phoenix sells their SUV with the battery pack for $45k.
I think the Phoenix business plan is obvious, despite the enormus cost of batteries to-day they must be expecting huge reductions in that cost in the future when volumes become high enough. They know that they cannot keep losing money forever but they have to prove they can sell large numbers of vehicles to justify Altair Nano's requirement to be highly automated and lower costs by large volume purchases of their materials.
Reply
Mauiviper 12:55AM (3/19/2007)
Why is Tesla using Lobbyist against Phoneix Motorcars and the ZEV Credits they get at The State Capital...?
Because they don't meet the ZEV requirments...
Phoenix has the Batteries!
Mahalo Nui Loa
Reply