Wednesday, December 29, 2010

Tesla and selling its all electric sedan....

Today's post: Wednesday, 12-29-2010


We need an 80% reduction in fossil fuel use by 2050 to avoid the worst global warming effects. And, practically speaking, we need to also double our electricity generation and double the useful work done per unit of electricity & other energy sources as well during that same time to have a decent economy.

At some point, the oil that we’ve been using to power much of our economy will begin to run low enough that our world economy will shrink due to lack of supply or excessive costs or both. Kuwaiti scientists recently predicted peak oil in 2014 – just a bit over 3 years from now.

And, once the demand for oil picks up again with the apparent economic recovery or supply begins to plateau or drop, the prices will again go back up. That will cause more hard times economically unless we have enough alternative sources of energy to turn to.

Today’s post: Tesla and selling its all electric sedan....

Tesla’s stock fell recently now that early investors and the like can sell the stock and some will do so.

Since it may have been over-valued, that may be a good thing.

But the analysts also said that they thought Tesla would be outdone by the wave of plug-in hybrids and cheaper electric cars.

That could happen. But I don’t expect it to happen.

Tesla does need to do some pretesting and quality control to help ensure the model S will have trouble free and bug free operation right away or within just a couple or three months of its initial release.

But if they do that, they have three markets that I think they can sell to or even dominate.

1. Because of the recession, people forget there are still people who can afford and want upscale cars and will pay for them. The Model S design is quite stylish and it has good acceleration for an upscale sedan. It appeals to buyers of BMW, Mercedes, Acura, etc. The cheaper electric cars are not really in the niche the Tesla Model S fits. Tesla already has some of these buyers and is known by them due to its Roadster which has upscale buyers around the world. The Tesla Model S can easily be competitive with BMW, Porsche, and Mercedes.

2. Many people who work in technology jobs are early adapters and like buying the latest technology. And, these people have incomes that are well above average. They will be a strong market for the Model S and all over the country or even the world, NOT just in the Silicon Valley.

3. Within 2 years or less after the Model is scheduled to be available, in 2014, the Kuwaiti’s have predicted peak oil. Plug in hybrids and cars still burning gasoline will have much higher fuel prices and maybe less availability of supply. With new renewable energy sources for electricity coming online and more efficient use of electricity, all electric cars may sell at a premium since they still will be able to get power and for less money. Plug in hybrids will be more competition than cars burning gasoline. But they too are not yet here. And, by the time they are, they may also have these fuel problems.

What if gas lines come back? What if gasoline goes to over $6 a gallon? Wouldn’t it be nice to have a car where you don’t have to worry about that? Tesla Model S owners will escape all that. And, it does look like these two things are on their way here!

So, my take is that working the bugs out of the Model S and selling it well to these three markets, will make it very competitive indeed.

In short, if Tesla does these things well, the analysts will be so wrong as to look a bit foolish.

We’ll see how Tesla does!

No comments: