Tesla’s Model S: Beginning of the End for the Big Three?


Last week, electric car manufacturer Tesla Motors made headlines with the unveiling of its long-anticipated Model S sedan. The elegantly-styled four-door hatchback has some extremely impressive statistics. As a matter of fact, the stats are so good that it makes me wonder if this could be the beginning of the end for the Big Three. While Ford, GM ,and Chrysler are mired in government bailouts and don’t appear to be offering much in the way of real change, it looks like Tesla is about to prove that it can not only build a niche sports car for an elite few, but can build one that is much more mainstream.

The annoucement of the new Tesla sports sedan had pundits from across the interweb gushing abut its sleek styling, range, charging times, and cargo capacity. The car sports smooth, aerodynamic curves, with a look reminiscent of high-end BMWs or Mercedes.

According to the company’s technical specifications, the Model S boasts the following:
– 300 mile range: This may be the most impressive and important statistic, but it comes with a few caveats. The lowest-cost Model S will only include a 160-mile battery pack, with 230- and 300-mile packs available at higher cost. However, the company is touting the ability to swap battery packs (“5-minute battery swap”), and may be planning on leasing the packs to customers for longer trips, although details are sketchy. Even a 160 or 230 mile range would make the Model S perfect for all but the longest of daily trips, especially since most drivers will start each day with a fully-charged vehicle, and most trips are well below this range.
– 45 minute charging time: According to the press release: “The Model S, which carries its charger onboard, can be recharged from any 120V, 240V or 480V outlet, with the latter taking only 45 minutes. By recharging their car while they stop for a meal, drivers can go from LA to New York in approximately the same time as a gasoline car.” This is not exactly true, at least not in 2009. To achieve the 45-minute charging time, you need a 480V charging station, none of which are publicly available. At the slightly-more-accessible 240V, the charging speed is a more leisurely 4 hours. It seems that Tesla is counting on leasing the swappable battery packs as an interim solution, until public charging stations are as common as gas or diesel.
– Seats 7(!): Once again, not really. It’s more like a “5+2 really small ones”. There is space for 2 rear-facing child seats in the rear hatch. While this sounds a little odd, by todays standards, it reminds me of the jump seats in my parents station wagon, and I’m sure the kiddies will love it.
– 0 to 60 in “under 6 seconds”: While the Model S will probably not be winning any drag races, one still has to remember that electric motors produce all their torque right away, and the power band is continuous. This should make for quite a nice driving experience.
– Storage Space: Locating the drivetrain and battery pack in the floor frees up cargo space where a typical engine would be, and the Model S combines that with a hatchback design and 60/40 split fold down seats. I could not find specific measurements, but the company claims that the Model S can carry a “mountain bike, 50-inch flat-screen TV, full drum set or futon frame”, and has cargo space comparable to an SUV.


The $49,000 (after a $7,500 government rebate) price tag may seem pretty high, but Tesla is highlighting the fact that greatly-reduced fuel costs and reduced maintenance costs bring the Model S more in line with vehicles in the $35,000 range.

Leading the Pack

There was another announcement this week that startup Detroit Electric (an ironic choice of names-the company is based in the U.K.) will be partnering with Malaysia-based Proton to deliver a much more basic all-electric car to the US by the end of 1999 and priced under $33,000. Detroit Electric has an aggressive sales projection of 270,000 cars by 2012, and, if it can meet that goal it would certainly be well ahead of the Tesla’s 2011 delivery date and 20,000 unit per year sales target. It would also be definitive proof that the mass-produced, highway-capable electric car is an accepted, mainstream product.

I think that the announcement by Detroit Electric will only help Tesla, and also helps solidify Tesla’s position as an industry leader. Tesla’s strategy has always been twofold: focus first on building cars for wealthy early-adopters, and build cars that capture the imagination of the public through styling and performance. The former helps pay for technology development, while the later builds Tesla’s brand image and creates a new perception of what an electric car can be. Both pave the way for Tesla, and other manufacturers, to be able to sell progressively lower-priced vehicles to a growing cadre of buyers.

Taking into account the bad news about the US auto industry, along with Tesla’s and Detroit Electric’s announcements, we may look back upon this as the week that the internal combustion engine finally “jumped the shark.

What do you think? Is this week’s news sounding the death knell of the internal combustion engine and the Big Three?


Steve Puma is a technologist, sustainability consultant and strategist. He currently writes for bothTriplePundit and his personal blog,ThePumaBlog.com, about the intersection of sustainability, technology, innovation, and the future. Steve recently received his MBA in Sustainable Management from the Presidio School of Management in San Francisco, and holds a B.A. in Computer Science from Rutgers University.
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Steve Puma is a sustainable business consultant and writer.Steve holds an MBA in Sustainable Management from Presidio Graduate School and a BA in Computer Science from Rutgers University. You can learn more about Steve by reading his blog, or following his tweets.

14 responses

  1. There is an enormous difference between building a few prototypes – or even custom cars – and mass producing a consistently reliable and inexpensive vehicle. Tesla won’t even start production until 2011 – assuming they get a $300+M federal loan. If we let the existing automotive food chain collapse in the meantime, we’ll all be bumming rides (of 300 miles or less) from the few venture capitalists who were able to afford the prototypes. When you hear Tesla, think McLauren.

  2. Nickd: Tesla is far from a company that only produces a “few prototypes – or even custom cars”. The company’s Roadster model is a production car with over 300 already on the road, and over 1,000 on order. This is pretty good for a car that costs $100,000!
    As I mentioned in my article, Tesla is not positioning itself to produce an “inexpensive vehicle”. That niche will most likely be filled by companies like Detroit Electric.
    Like many technologies in their early stages, the wealthy few pay for the development of the technology in its infancy. The lessons learned trickle down to mass produced, cheap products for the masses. This was true for the cell phone, the computer, and even the original automobiles, and it will be true for the electric car as well.
    The importance of a company like Tesla is that it has captured the imagination of the public, and introduced the possibility that an electric car is more than just a golf cart.

  3. a) By their own admission, Tesla is not in production yet (they make it clear they need taxpayer money to do that). Ergo, they are still making prototypes.
    b) 300 is a very very very small number when it comes to car manufacturing. GM, Ford, Toyota, Honda make millions of vehicles each year.
    c) Interesting to refer to the manufacture of millions of electric vehicles for real people in the real world as a “niche”
    d) Untrue that Tesla is not positioning itself to make inexpensive vehicles. Just listen to their positioning as they introduced the Model S. It’s key to their pitch for taxpayer money.
    e) Motor vehicles are hardly “technologies in their early stages”. Millions and millions of cars have been made, and everybody from the Chinese to GM are getting ready to release electric cars. It’s a mass production problem – not one well suited to startups.
    f) Tesla is a classic serial entrepreneur vanity play that has captured the imagination of Sand Hill Road, not America. It happens. Even the great Jim Clark ended up investing in Florida real estate.

  4. I think there’s some truth to this, but not with the government bailing out Detroit the way it has been. Tesla is still a tiny player (so is Fisker for that matter). I’m not saying those companies need massive taxpayer money, but the playing field is definitely not level yet – think about the Tucker, that still applies.
    The good news is that with Obama’s recently heavy hand toward the big three (or the big 2 1/2 I should say) we’re likely to see some innovation coming – maybe they’ll start buying up the little guys like Tesla.

  5. “Malaysia-based Proton to deliver a much more basic all-electric car to the US by the end of 1999 and priced under $33,000.” — With the retroactive ten-year rebate of $3000 a year, the net cost is only $3000. They’re going to sell a bundle of these!!!

  6. Nickd: I take issue with two of your statements:
    “By their own admission, Tesla is not in production yet”
    According to this press release, the company disagrees with your statement:
    Tesla Motors Begins Regular Production of 2008 Tesla Roadster
    In any case, Tesla cannot sell prototypes. By U.S. law, a “prototype” vehicle cannot be sold to customers. As a matter of fact, they must be destroyed, something I was shocked to hear when I toured the Tesla factory. Unfortunately, this is the price to be paid for developing a production car.
    “Motor vehicles are hardly “technologies in their early stages”. “
    The auto as a whole may not be an early-stage technology, but lightweight rechargeable batteries that can power a car definitely are. Especially with the range needed for the U.S. market.

  7. Exciting as this is, there is no beginning of the end until these companies are shipping these cars in quantities. We’re all sick of prototypes and demos and auto show dog and pony shows. We want to pick these up at the dealerships and drive them off the lots. Til then, less talk, more shipping.

  8. Semantics. They are still building custom cars. Tesla can’t build a factory to mass produce without a $350+M loan guaranteed by taxpayers. Even with taxpayer money, we have to trust that they can re-learn or re-invent the art and science of mass production. That’s a bad bet.
    It’s very rare in startup culture to see the patience and temperment for that kind of systems thinking, and it’s particularly unlikely in startups that are clear vanity plays.
    Best case scenario is that Tesla is bought at a discount by a company that actually has experience building and selling millions of units.

  9. So captain haterade (NickD) what Detroit car company do you work for?
    A)They don’t have to “re-learn or re-invent” mass production. They have to hire someone who knows how, not hard with how the other car manufacturers are doing.
    B)Vanity play? If it was just a vanity play they would have stopped when the owners had their roadstars, they have them, and they haven’t stopped.
    C)you keep going on about how they need 350M loan, well how much has Detroit taken in the last couple months? 100 times that? They’ll get the loan.

  10. Pingback: Infineon Raceway Shows Speed Freaks that Green Means Excitement | Bright Puma

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