At the final day of the CleanTech Forum in San Francisco, Elon Musk pointed out in his keynote that Tesla is “a catalyst in the electric car evolution, accelerating the transition to electric vehicles.” The race has begun: with new concerns over gas prices, the buzz revolved around electric vehicles of the future. The Tesla business strategy has flipped the traditional automobile industry strategy on its head by focusing first on the high-end sports car, and then through refinement and iteration rolling out medium-priced sedans.
Tesla has benefitted from over $400 million in government loans to build electric cars for the masses, and then went public last June to raise more cash to manufacture Telsa electric cars. Right now the two-seater and the sedan are in production. Tesla Motors refers to its upcoming $57,000 S model sedan as the “White Star” in sharp contrast to its existing $109,000 two-seater Roadster, nicknamed “the Dark Knight" after its cameo appearance in the 2008 Batman movie.
Months ago, I had a chance to ride in the Roadster that did not exactly pan out—the passenger side is definitely not designed to accommodate women over 5’9” in miniskirts and heels, which is one of the reasons I eagerly anticipate the arrival of the S model. What stalls the Roadster is that at such a high-price and with no current manufacturing infrastructure to scale, it has been labeled as a niche product suitable for adding to the car collections of only the wealthiest consumers.
In contrast, “the White Star” illuminates the way for consumers looking for a little more in an electric car, but for less cost. What makes the Tesla S model go is an all-electric drive train that is optimized in a way the Roadster is not—with a liquid-cooled, floor-mounted battery pack and single-speed gearbox. According to Musk, the interior of the Tesla S sedan is much more spacious with a capacity similar to that of the 5-series BMW with extra storage in both the front and the back truck.
With a high-energy capacitor, consumers will have the power to extend their lithium-ion battery for a long life and the ability to change their energy source in an instant. “The model S is expected to have [up to a] 300 mile range with a substantial load on board, charge completely in a ten minute timeframe, and take under a minute to swap out the battery,” said Musk. Compared to the 2-seater Roadster, the S model can fit up to 7 passengers. On the exterior, add the sleekness and safety of a stamped aluminum chassis, and the “White Star” shines with the same sophistication as its predecessor.
But Tesla has to face increasing competition from historical auto manufacturers. BMW recently announced plans to address “changing customer needs, including increasing demand for alternative drive trains, such as electric drive systems and hybrids” by forming the BMW i brand of electric and hybrid cars. The BMW i3 will be BMW’s first all-electric powered vehicle. The other, the BMW i8, will be a plug-in hybrid drive. Additional features will include integrated mobility solutions for BMW’s “Ultimate Green Machine.”
Building on the excellent reputation of BMW’s automobiles and the loyal customer-base, BMW founded its own venture capital company, with an initial investment in BMW i Ventures of up to $100 million. By 2013, the BMW i series is expected to generate $560 million in additional investments in plant facilities. The BMW i series is stylish, swift, and powerful. Unlike Tesla electric cars, which have different features and functionality, economies of scale for BMW mean having a common framework for both models of electric and hybrid cars. “Both models are based on a construction concept known as LifeDrive architecture,” recently reported BMW in a press release, declining to comment on ranges.
At the close of the Cleantech conference, Kal Patel, President of Asia Enterprise, EVP at Best Buy, had this advice for all Cleantech companies: “Innovation is 99% execution and 1% idea.” Many analysts are anxious about how Tesla’s “White Star” development will be funded. With the $400 million plus government loan payments due come 2013, Tesla doesn’t have much time and needs to generate enough cash to sustain development.
Who will win the race? Only time will tell. Many argue that electric car companies focus on affordability over aesthetics—such as the Nissan Leaf and Chevy Volt. The Toyota Prius plug-in will also launch soon at about $30,000 each. Still, it is exhilarating to imagine a world where carbon emissions from vehicles on the road are a thing of the past. And while the vision, strategy and execution on that dream might be different for both Tesla and BMW, the goal is ultimately the same: to create great products that inspire consumers to buy them—and not only because consumers want to do the right thing for the environment—but because they’re cool.