Consumer Reports reports diaper rash

The magazine has written a follow-up article pointing out that Tesla’s retroactive expansion of its drive-unit warranty — a radical move totally alien to Big Auto — is irrelevant to the “body hardware” issues in the CR test car. You may recall it was Edmunds.com, not CR, that had drive unit failures. This follow-up action by CR invites questions, but this time the questions are about CR, not Tesla.

1. Are you pouting because Tesla seemed to respond to the Edmunds experience, but not CR’s?
2. Should every automaker extend its warranty on every problem experienced by CR, even if those issues were covered under the original warranty and might never recur?
3. If not, what’s the point of the follow-up article?

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Franz > Steve

Saleen FourSixteen TeslaMondoThe Saleen FourSixteen is a thing of beauty, for three reasons.
1. Saleen’s interest in the Model S bridges a gap between the old school of auto performance and the new. That’s good. The electric vehicle segment needs more of this assimilative legitimacy.
2. It suggests the Model S has a long shelf life in its current iteration, since it’s considered creative fodder even two years in.
3. It fails to aesthetically improve the stock Model S. That’s the best news of all, for it means Franz von Holzhausen’s slippery, eggy design is darned good right out of the box. Anything added looks superfluous, and anything subtracted is dearly missed.

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Tesla kills another bug dead

The Model S warranty expansion reminds us that Tesla deals with potential crises of confidence the same way you might deal with discovering a house centipede on the bedroom wall at night. You don’t just coax it to crawl onto a piece of paper and then politely flick it out the window. That treatment is for cute bugs like ants. And you don’t merely smush it with a paper towel. That’s for silverfish and spiders. No, you grab the Consumer Reports 2014 Auto Issue, roll it up into a baseball bat, and you pulverize that big prickly prick until it’s reduced to a omelette of organic dust and scrambled legs. If you need drywall repair due to excessive force, it’s well worth it. Then you immediately put your house up for sale and begin scouting real estate in an area outside the geographical reach of scutigera coleoptrata. That means Nuuk, Greenland.

Such was the reaction of Tesla Motors to the road debris spook a few months ago, and now to the drive unit spook. Maybe a little overkill, but at least we can sleep. Well done.

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The disappearing ad from General Motors

If you scroll down, you might see an ad that purports to sell you a Cadillac ELR in lieu of a Tesla Model S. Then again, you might not see it. It seems to be visible only to certain people. For example, GM’s head of global product development is totally unaware of it. How else can we explain this quote in the Detroit News?

Cadillac ELR not a Tesla competitor, TeslaMondo

And now, below, the ad that apparently does not exist, espousing a sales angle that apparently doesn’t exist, about selling you a Tesla competitor that GM apparently does not have. Hurry up and look before your eyes fail you they way they’ve failed Mark Reuss from GM:

Cadillac ELR vs Tesla Model S TeslaMondo

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Mid-cycle refresh? We ain’t mid-cycle.

Tesla aftermarket TeslaMondoThe Model S hit the market in June, 2012. It’s now August, 2014. For an ordinary car produced by an ordinary car company, the two-year mark often brings a mid-cycle refresh. That means a minor update, mostly exterior, to keep it “fresh” for another couple of years until a full update comes. For Tesla, however, it seems the Model S should enjoy a much longer “cycle” without any refreshing. That’s because:

1. The aftermarket is just now getting its hands on it. That helps the Model S maintain freshness by showing it’s still very fertile creative ground, not a lame duck.

2. The car is just now debuting in overseas markets including China, a biggie. While the S might be quite pedestrian at this point in California, it’s a thrilling novelty in much of the world.

3. The car gets regular updates like your smartphone or computer software. Smell that freshness?

4. Franz von Holzhausen’s design is not timeless, but pretty close. It’s a super-smooth muscular sedan, never overbearing. Extreme designs tend to wear on the eye after a short time, and might make the more conservative motorists among us feel like they’re begging for attention. Wouldn’t be prudent.

And so we might see Tesla break yet another industry tradition with a ridiculously long product cycle, at least for this model. Who knows — maybe for the Model 3 you’ll be able to choose your own styling from several online templates, allowing an even longer product cycle due to built-in variety. Try it, Tesla!

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Reuters: Tesla weighing carbon fiber

Tesla naysayers often point to BMW as a big bad bully, with lots of money and carbon fiber in its new i-series cars. Well, Tesla might be looking at carbon fiber also, according to Reuters. An “industry source” says South Korea’s GS Caltex plans a sit-down with Tesla. Nobody will talk openly about it.

Carbon fiber makes sense in the context of high-end EVs, cutting weight by about 50 percent with no compromise in crashworthiness. The i3 weighs about 1,000 lbs less than the Chevy Volt, partly due to carbon fiber. The material is expensive, but when has Tesla shied away from expensive stuff? Back when the company was young, it could have gone for a cheap battery solution for a cheap EV like other half-assed players. But instead of scrimping, it sought to produce the highest-performance EV anyone dared imagine, and priced the car accordingly. So the Roadster was born, and EVs became sexy overnight. Scrimping isn’t a Tesla habit.

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JB Straubel talks battery storage

JB Straubel Battery talk TeslaMondo

Obscure heavy metal reference. Sorry.

J.B. Straubel is Tesla’s chief technology officer, and also a Solar City board member. He will one day become Tesla CEO*, when Musk steps aside around 2019 to focus on Mars. ** Around the same time, Tesla will either drop “motors” from the name or spin off its energy storage unit under a different name.  ***

In May, Straubel delivered an hour-long filibuster on energy storage at the 2014 Silicon Valley/ SEEDZ Energy Storage Symposium. Style-wise, it falls well short of history’s greatest speeches. He doesn’t raise his voice or whip up audience emotion. He fails to even tap his lectern, never mind pound it. But importance-wise, especially to TSLA shareholders, it’s a great speech indeed, for it colorizes Tesla’s relationship with batteries, past, present and future. One could argue there is no more crucial relationship in the industrial world at the moment. Certainly none more watched. And yet, you probably haven’t seen the video. TeslaMondo will save you some time. Here are the highlights:

General context:
“I really love batteries. I think I might love batteries more than cars. It’s kind of a passion of mine.”
“It’s kind of amazing that even in the 90s we were building electric vehicles with lead acid batteries.”
“Tesla was the first one to actually commercialize and sell a lithium ion car to consumers.”

The pace of battery improvements: “There was nothing, and still is today, nothing that’s clearly starting to plateau . . . We’re seeing something close to doubling in performance, of energy-density performance, every ten years . . . Model S was introduced maybe five years after the Roadster and we saw improvements of around 40 percent, on the battery technology, the fundamental chemistry, the packaging of the battery pack itself. And that directly translated to how we can get close to 300 miles range in a model S, almost 85 kw of energy storage, in a pack that’s actually smaller than the Roadster pack. And again, these improvements are not standing still. We’re continuing to watch the same doubling every ten years out for at least another 10 to 20 years. And it’s incredibly exciting on the car side, because, you know it doesn’t take many more, even tens of percent improvement, before the competition with ICE just spreads everywhere.”

Non-automotive Gigafactory business: “I’m pretty bullish that stuff can actually scale faster than the car market. The grid storage market is kind of slow to mature but once you cross some critical price thresholds, you’re really dealing almost more in commodities. You know, nobody really cares that much about how sexy your stationary battery pack is, what the styling looks like, you know. It’s a much easier sales proposition. If it saves money for the customer, and you can clearly do that in a bankable way, you’ll sell it. It will scale.”

Solar backup: “Most people today still think that if they install solar on their house, they’re off-grid. I could take a poll of most people and I’d say that’s about a 75 percent assumption, even though it’s totally wrong. You’re absolutely on grid, in fact, totally dependent on the grid for the solar to even operate.”

Battery role in green energy storage: “Almost everyone realizes that in the very long term future we have to get to 100 percent renewable grid. You know, that seems logical, right? Is it going to take 50 years, 100 years, who knows. As you start adding more and more solar to get to, you know 50, 60, 70 percent renewable, you’ve completely morphed and changed around your whole concept of when the peaks happen. You know there would be negative midday demand. There would have to be, in order to have 100 percent renewables. You’d have to over-generate, clearly, when you have the energy. Storage just becomes an absolute imperative to get there. At some point, there isn’t a choice.”

Humanity’s motive: “It’s not something where fear over Co2 or fear over other things will be the driving reason for change. The economics and the compelling technical merits of this solution will be what drives it.”

Wind backup: “If you look at the price of wind generation today, it’s cheaper than anything else that people can install. You can sign power purchase agreements in Texas that are under three cents per kilowatt hour. You know, that’s incredibly cheap. But it needs storage in order to drive it to a higher percentage of the mix.”

Lithium supply: “There’s plenty of raw materials. There’s a lot of hype about lithium shortages, but you know, we’ve dug into that pretty deeply and it’s just not true. There’s an overabundance of lithium that takes us way, way beyond these projections.”

Regulatory change: “Tesla is an innovation company at the core. And we really focus on creating products that end up driving the need for change in a regulatory environment. That’s kind of our cycle of chicken and egg. I think it’s very hard to create and educate people on the need for new regulations based on hypotheticals.”

Selling stationary storage to utilities: “That’s kind of why we’ve come into this on the back of the automotive industry. So we can say, ‘This is very low-risk.’ We have many gigawatt hours of cars zooming all around different countries doing duties that are enormously more aggressive than these stationary packs. This is, like, where an automotive pack goes to take a nap.”

Li-ion’s obsolescence. “It definitely is not lithium ion forever. You know, forever is a long time. But I think it is lithium ion for five, maybe 10 years. And I’m the first person that’s hoping and rooting for battery improvements in whatever form they come . . . But we’re not waiting. That’s another dangerous game that people get into. When you look at any technology that’s improving, there’s always a temptation to just wait and do nothing, but we’re seeing an ability to get to the price points and the economies and business models that just make sense on their own right.”

TeslaMondo editorial interjection on battery tech shelf life: Note the continued success of the Prius, which is predominantly NiMh for Cripes’ sake.

* A guess
** Another guess
*** And another guess

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Got Gremlins, have we?

AMC Gremlin TeslaMondo Edmunds had issues with its long-term Model S. Now Consumer Reports says it’s having issues with its long-term Model S. Tesla touched on the Edmunds experience during the July 31 earnings call, saying Kaizen has already exorcised the gremlins that might have plagued that early-production specimen, but TeslaMondo suspects that behind closed doors, perfectionist Musk is cracking the whip at Tesla QC.

Considering the level of service Tesla provides, which increasingly involves a team attacking the car at the owner’s home or office, akin to an F1 pit stop, the company surely has a strong incentive to curb that kind of expensive behavior pronto, before Tesla’s sales volume requires too many pit stops. Also, Tesla purports to make zero profit from service, citing a conflict of interest in benefiting from product failure. And, of course, the Model X will share much with the S. It would be nice to show refinement.

Consumer Reports rates the Model S “average” for reliability. Seems the 2012 fared better in the magazine’s surveys than the 2013. The latter year Model S earned black marks for body integrity and body hardware. Body integrity means “squeaks, rattles, seals, and/or weather stripping, air or water leaks, wind noise.” And body hardware means “windows, locks and latches, tailgate, hatch or trunk, doors or sliding doors, mirrors, seat controls, safety belts, sunroof, convertible top, glass defect.”

Unfortunately, it’s hard to judge the Model S against its peers at the top of the sedan totem pole. Most competing sedans are new designs and therefore escape the CR endoscopy. Only the Lexus LS460L and BMWLi have reliability ratings. The Lexus is flawless, and the Bimmer is average, like the Model S. No ratings yet on drop-drawer offerings from Porsche, Maserati, Jaguar, Benz, Audi.

Average, eh? Not part of Tesla’s vocab.

UPDATE: TSLA closed up .25% despite a steady drumbeat of negative headlines all day due to CR. This means (pick one):

1. Tesla is a long-term story.
2. Tesla is seen as an energy technology company currently known for cars but eventually known equally for battery storage.
3. High-end sedans can outright flunk CR with no ill effect on sales. Ask Mercedes and BMW.
4. All of the above.
5. None of the above.
6. 1 and 2.
7. 2 and 3
8. 1 and 4
9. 4 and 3
10. Just shut up.

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Future Chevy Volt will fight T3

LG Chem Logo TeslaMondoLG Chem, an wing of Korea’s LG and Chevy’s current supplier of the Volt battery, is prepping a 200-mile battery that will power a roughly $30-35k car by, oh, around 2017. Sounds awfully coincidental, yes? The WSJ says GM is probably the client ordering this battery development, for a future-generation Chevy Volt. Remember, last year GM appointed a special team to study Tesla. LG Chem has a R&D center in Troy, MI.

It all makes sense.

So let’s say this pans out as predicted. For about $35k you’ll be able to buy a Chevy or a Tesla. Cough. Never mind the merits of each. It’s a win for the EV segment and everyone who dwells there.

 

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Car shoppers uttering “T” word

Seismograph TeslaMondoTeslaMondo’s editor sells cars, full time, at a dealership. This means he talks to car-shoppers all day. Which means he is a seismograph for automotive trends. And he often capitalizes on those trends via timely stock investments.

In 2011, Kia was a couple years into a cool ad campaign utlilizing furry little cricetinae. Kia’s products were no longer the laughing stock of reliability studies, crash tests, resale indexes or any other metric. And they looked pretty good. Designer Peter Schreyer, just poached from VW/Audi, was penning interesting stuff for Hyundai/Kia. The Optima no longer resembled an Accord sapped of its mojo (the whole thimble-full). In fact, it suddenly had better pecs, lats, delts and glutes than most midsize sedans.

Then came the rumble, when Kia officially invaded buyer vocabulary in TeslaMondo’s dealership. A customer declared she was unimpressed with the Fit, Yaris, XB and those usual Jap suspects — and was headed to the local Kia dealership to buy a Soul. The seismograph started chattering. The next morning, TeslaMondo called Fidelity and asked about Kia stock. The symbol wasn’t known to Fidelity. Turned out the stock was sold only on the Seoul exchange, and so Fidelity would have to buy the shares through an expensive middleman. Undettered, TeslaMondo put $23k on the table in early 2011. Later that same year, TeslaMondo sold the shares for $49k. You see, 2011 was Kia’s breakout year, just as the seismograph had predicted. Speaking of seismograph, the Japanese earthquake didn’t exactly hurt Korean auto stocks.

Well, here’s some good news for TSLA shareholders: This week, Tesla entered buyer vocabulary. A guy who was taking delivery of an Avalon Hybrid said he REALLY wanted a Model S but couldn’t swing the price. A day later, another customer mentioned his friend was on the waiting list for a Model X. That’s two unsolicited Tesla mentions in a week, at a dealership that does not touch high-end product. Sure, dealers that carry Mercedes, BMW, Lexus and the ilk have heard the “T” word from customers quite a bit over the last year or so, what with the Model S outselling high-end sedans from the incumbents last year. Tesla is old news in those circles. But now we’re talking middle-class dealership selling middle-class iron. That’s the land of Joe Average. With nary a dollar spend on advertising, Tesla is now officially known to Joe Average. The name has trickled into a main artery of the public anatomy. It has tripped the TeslaMondo seismograph and started the needle a scratchin’. And yet the winged monster X hasn’t even peeked from its cage yet. Never mind the mainstream model to follow.

The future for TSLA shareholders? A 10 on the Richter scale.

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