Who will win the electric race? The White Star meets the Ultimate Green Machine

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.

Comments

[Mukul Bakshi]

A catalyst for electric cars for the masses? Hardly? Even though Musk touted the sequel to "Who Killed the Electric Car." I wouldn't launch accalaids so fast. Frankly Tesla's strategy to get to the masses is annoyingly slow, especially when you know there are now waiting lists of consumers wanting to buy 'all' electric cars but the makers are not producing enough quantities to meet their needs.

Just last year when NUMMI shut down their manufacturing facility and laid-off workers in Fremont, Tesla had an opportunity to step up their production capacity. Did they jump on it? Hardly? They feebly bought into 20% of the capacity of that plant leaving the rest of the plant and the laid off workers to languish. Why? Because it didn't fit their production schedule which still works for building boutique' $140,000+ electric roadsters! Enough! Produce for the mass market now and use the stimulus dollars for which it was given -- not just boutique high-end electric cars!!

[Ph L]

I don't see how Tesla is making electric cars for the masses. Instead, Musk makes high end electric cars for the wealthy - and particularly for wealthy men, since as a woman, it's difficult to get in and out of the roadster, let alone manually steer it to the left or the right.

In my opinion, it would be difficult to compete with BMW. I think many Tesla employees are leaving the company after their stocks vest; and thus, it will be difficult for Tesla to fix bugs and handle recalls (with talent loss). In addition, I think many of their parts came from vendors in Taiwan and they're cheap. To top it off, I believe Musk micromanages the company like a dictator, instilling too much fear thus limiting creativity and mindsets of growth.

If Tesla cares about making cars for the masses, it would make electric cars that the masses can afford. I don't think its employees can buy the Sedan S solely with their annual salaries, even though it's more cost effective than the roadster. Why not produce a lower end electric car that the mass can afford first? It may save the company.

[NY October]

The company that will win the race will be the one with the best product that the consumers love. In this instance, only time will tell.

Can't wait until the Sedan-S comes out. It will be a better alternative to the roadster. The roadster is like an arrogant, handsome man. He's pretty, intelligent, desirable but insecure. You think you want him. You think he's the one. Yet, he never cares to begin with. He doesn't give. He's hard to obtain.

The Sedan-S, on the other hand, looks like he's a bit more practicable. He's less arrogant, less pretty but more confident. Yet, he's still intelligent. He gives. And He cares. You think he's not the one at the beginning but he grew on you. You find comfort and security from him. But you may not have appreciated him as much as the roadster until he's gone. You may not realize that you're in love with him until it's too late. Thus, appreciate him - now.

Between the roadster and the Sedan-S, I would prefer the Sedan-S.

[Larry]

Your article rocks!

[Kelvin]

As we move into the age of cars with no carbon emissions, I for one will miss the sounds and (yes!) the SWEET smell, of exhaust of a gas burning engine - I sometimes do not miss an opportunity to draft behind a 60s Mustang/Camaro/or other muscle car to get a whiff of that distinct nostalgic smell that only cars of that period emit...
It will be interesting to see if Tesla's business model of first introducing a $100k-ish high-end model, followed by a $50k-ish midrange model will succeed. Common wisdom tells me that one must at least also offer a entry-level model having a price point in the $9-15k-ish range.
I value 1) affordability, 2) looks, and 3) reliablity - if you can nail all three - I'm SOLD.

[Michelle]

Another interesting article! Can't wait until the Ultimate Green Machine comes out! I would love its warranty program and at the same time it would allow me to help the environment!

[Karlbar]

From a numbers standpoint, hybrids don't necessarily make sense. That is, the money saved on fuel doesn't offset the price difference for the hybrid engine unless fuel prices start to cross $4.00/gal and remain at those levels over 5 years. (I'm using reasonably conservative assumptions on miles driven, fuel economy gains and financing options.)
Aside from price, practicality is the other driving (no pun intended) force behind the slow adoption of hybrids by the masses. That is, people are used to/want/need space in their vehicles, whether it's to haul their family or their stuff, and most hybrid vehicles can't accommodate that.
Lastly, and I'm still doing my homework on this, so I don't have too much info, there has been some prototype development on nuclear powered vehicles. As I understand it, however, the challenge in bringing them to market is the infrastructure to support the vehicles (i.e., nuclear gas stations). The first company to solve that one will have a competitive edge like no other.

[electric bob]

Electric car technologies are ready and waiting for investors

Check company like 3xE in Europe (http://3xe-electric-cars.com). With few $ investors could make them global players and win leading position.

[Simon Schempp]

Exactly - car buyers will want cars like this because the word "cool" is written all over it. It's more than just zero carbon emission and cutting down on greenhouse gases. Electric and hybrid cars are quite futuristic in their own right. Just plug it in, wait for a few minutes or hours, and off to the road you go. Let's all hope that this is a continuous effort to produce electric types and hybrids that have all the stuff drivers wanted, and affordable, at the same time.