The Dream of the Electric Car Runs Out of Juice...for Now

For many people, Tesla's electric Roadster redefined the whole concept of sustainable mobility. Electric cars weren't supposed to be sleek and sporty, with acceleration that rivaled Porsches and Ferraris. They were supposed to be virtuous eco-rides--sober extensions of the Prius paradigm. They certainly weren't supposed to be designed and built for ultra-affluent environmentalists who had $109,000 burning a hole in their carbon footprint.

Tesla Motors challenged assumptions and produced a car that had emotional oomph aplenty. That made electric vehicles seem incredibly cool. The press ate it up. Celebrities plunked down deposits to take delivery of the first models.

That's why last week's news that the startup carmaker would lay off half its work force and delay the already delayed delivery of more than a thousand pre-ordered Roadsters was, at one level, depressing. Even as youthful Chairman Elon Musk slipped in to the CEO's chair, the flashiest name in electric vehicles was beginning to looks as if it was going under.

But even though the downfall of Tesla seems like a disaster for boosters of all-electric vehicles, it should be a welcome development for the green-transportation movement. Tesla symbolized a science-fiction view of our future: it seemed like an instant cure for the problems of oil consumption and greenhouse emissions. In reality, it was a well-marketed distraction from a strategy that would yield more immediate results.

Don't get me wrong--vehicles that run entirely on electricity, conveniently drawn from the existing power grid, should be a component of any plan to achieve sustainable mobility. But with capital increasingly tight at the moment, and with the federal government facing an unprecedented challenge given the sheer size of the financial crisis, we need to put environmental dollars where they can do the most good, right now.

Tesla Motors has always represented an idiosyncratic, romantic chapter in the history of electric vehicles, which have been around as long as cars propelled by internal combustion engines. The big knock on electrics was always that they lacked the range of IC-powered cars. Then Tesla came along and not only unveiled a vehicle that could travel hundreds of miles on a single charge, but that could do 0-60 in four seconds. The gorgeous two-seater design, provided by Lotus and crafted in exotic carbon fiber, also didn't hurt.

Tesla's for the middle-class were on the way: a sedan priced in the BMW/Audi range, and a versatile crossover, which would sell for substantially less. A $250 million plant was announced for San Jose, CA. All is now in doubt, as Tesla appears to have been nailed by the credit crunch and manufacturing problems. This is all happening as both GM and Chrysler have rolled out their own less expensive electric cars, and as Toyota is ramping up development of so-called plug-in hybrid vehicles.

This is where we should direct our efforts: the less glamorous proposition of getting fuel-efficient, environmentally friendly vehicles in the driveways of as many people as possible. The big Detroit carmakers, even with their current struggles, and the automakers of Japan and Europe already have the manufacturing capability to shift a majority of their production over to clean diesel, gas-electric hybrids, and plug-in hybrids.

Tesla has tried to distinguish itself from the traditional carmakers by espousing a Silicon Valley attitude toward its mission. See the car not as a car, but as a technological product. Advocate sweeping, rather than incremental, solutions. Musk himself described Tesla's new service center in Los Angeles as being modeled after the Apple Store. It was a neat trick, this attempt to reinvent the great American car as a planet-saving ticket to exhilaration that jettisoned all that grimy old dirty fingernails under-the-hood stuff.

At base, however, the dream was impractical. We'll all be driving electric vehicles some day, because we'll eventually run out of oil. But by trying to force the timetable on electrics, we're not doing ourselves any favors. And now that capital is scarce, we need to stop wasting it on quixotic undertakings. Tesla shouldn't receive anymore financing, and the celebs who ordered Roadsters should ask for their money back.

Tesla won't have been a total loss. It proved that battery technology could power a car that's both fast and has decent range. Battery R&D should form a significant component of our overall sustainable mobility project. Better, cheaper, smaller batteries means hybrids that achieve higher and higher mileage and emissions standards--and that will eventually allow the IC engine to be phased out. By then, we will be fueling mobility not with oil, but with new nuclear reactors, solar and wind power, and perhaps a few electricity generating technologies not yet invented. That will be the time for the electric car to finally come online and assume its rightful role.

UPDATE: Darryl Siry, Tesla's Marketing VP, corrected some facts and confirmed some new information. Total layoffs now amount to 16%, and may rise to 20% by the end of the year. As reported by Reuters, the company has $9 million on hand and is seeking and additional $20 million. As for delays: Siry says that the Roadster's model year and production year are current out of sync. Pre-orders of the 2008 model are 600 vehicles, of which 50 have been delivered so far. He said Tesla hopes to satisfy the 2008 orders by next June and get the model year back in sync for 2009.

Comments

[Octoberon]

"We'll all be driving electric vehicles some day, because we'll eventually run out of oil."

I remain sceptical about fuel cells suddenly becoming more efficient, or solar panels delivering more electricity. If we run out of oil and out of grid-based power supplies, we won't be driving anything that has an engine. Not only that, but we're already seeing the damage that biofuels can do to the food economy. I'm not saying that there are no solutions, but I can't see the point of transferring the fuel consumption from the internal combustion engine to the electricity company's power station. Assuming no loss in transmission down the line, surely the same amount of energy, from the same non-renewable raw materials, gets used up.

[Matthew DeBord - Huffpost Blogger]

I'm thinking mainly about nuclear here. I think that's where we will probably have to go, even as some set up their own personal solar charging grids and we make some progress on wind, ocean currents, etc. I think with aggressive, policy-driven approaches to getting more and more fuel-efficient cars in the road, we may be able to conserve our way through Peak Oil. We should have been aggressively conserving our way already, but that would have required a different set of governing assumptions over the last 30 years.

The biofuel thing is interesting. I know that Bentley, off all OEMs, is committing to a next-gen biofuels plan because it can't get the horsepower or performance it believes its customers want out of EV tech. They are aware that competing with food crops is a bad idea, however.

[Octoberon]

As I understand it, biofuels conflict with foodstuffs due to the effect that the inflated value of the biofuel crop has on the agricultural economics. And the value gets inflated because the crop is now being put on a level somehow with other fuels, including crude oil. Is that right? Economics is, of course, a famously imprecise science.

I'm reluctant to put my faith in nuclear because of my background in physics. Safe storage of radioactive waste burdens future generations. Why go down that road when there may be smaller, more local, solutions? For example, if the new administration was to make it easy (by means of subsidies, tax breaks or whatever) for modest homeowners to equip their houses with roof-mounted vertical axis wind turbines (VAWTs), not only could many people see their domestic energy costs dramatically reduced, but at times they could also become net contributors to the national grid.

[Overtone]

Revolutionary new technology is moving toward the market that will generate electricity 24/7 without fuel or recharge.

An early application is expected to be elimination of the need to plug-in, a plug-in hybrid, car. Prototypes are possible in about a year, with production the following year. This will be a harbinger of vehicles that utilize fuel-free sources of energy never before commercialized.

See magneticpowerinc.com for additional information.

[BlackbirdHighway]

Some very bad news for you, DeBord! Tesla just got a $40 million dollar financing round, which should easily hold them over until they get their $200 million from the Dept. of Energy next year.

Looks like you won't be celebrating the "downfall of Tesla" as a "Welcome development" after all.

[KillTheMessenger]

So we should be giving a company that produces toys for super rich people $200 million so they can deliver the toys they promised?

Sounds like a great deal... in crazyland!

[research]

Just like the moon shot and car racing advance technology.

Tesla's cars are only expensive because they are hand made.

[research]

tax credits for people buying these cars, and loans of grants to Tesla from the government would be a wonderful public works investment. Instead we give 700B to hedge fund speculators and lazy American car companies.

[KillTheMessenger]

How are loans to a company that makes nothing but electric toy cars for the super rich a wonderful public works investment? Why don't you just give the prospective Tesla buyers $50k each? They seem to need it.

[research]

The technology that Tesla develops will, pardon me, Trickle down to lower cost systems.

[fourbrrl]

Does ANYONE wonder why l-ion is expensive ?? ever seen the exxon mobil commercial stating that they are "investing in the future of energy", stating L-ion ? wonder WHY theres a high price for Lithium ?remember chevron texaco bought the NiMH patents ? hmmmmm

[KillTheMessenger]

Lithium batteries aren't expensive. They are just not as cheap as ICEs. After all, we are building a hundred million ICEs a year and have more than one hundred years of engineering experience with them. And commercial Lithium Ion technology is barely more than a decade old... so it's quite natural that it can't quite compete. No conspiracy needed.

[SCG]

I don't think the climate, massive trade deficits, will wait until we exhaust oil. Not to mention the ensuing wars for resources, and the military expense required in both blood and treasure.

Experimentation and development in this area, would not be my first choice for cuts. It's in our long term national interests. But then again I have know idea what in the way of subsidies, Tesla receives? Maybe they could scale back plans or defer to the future, their larger plans. But it would be a loss, to write off the entire endeavor.

Part of the problem, has been consolidation, and large moribund monopolies, more interested in providing double digit returns for investors, than getting serious about spending on development for something more than where to add a cup holders and other marketing gimmicks.

This is one reason why Toyota is eating our lunch again. They invested the time and money into efficiency. Now we're getting caught flat footed again, the second time around. Shouldn't we wise up?

[ZEVangel]

For an alt-fuel and vehicle-efficiency blogger, Mr. DeBord sounds remarkably like the many detractors of electric vehicles (EVs) that I've corrected over the last nine years. One EV company's partial retrenchment (when most businesses are having to cope with uncertainties) does not spell doom for EVs. A century ago, gas stations did not exist, autos were rich men's toys and cars broke down every twenty miles on rutted dirt roads. Many then wrongly predicted their demise.

Mass production is ramping up of large-format lithium batteries suitable for 250-mile-range EVs; decade-old nickel metal hydride batteries now power RAV4 EVs over 120 miles; Firefly and other light-lead battery makers are churning out EV-suitable batteries as I write. Thirty new EV builders are now leading the major automakers into EV mass production.

See EVWorld.com or Electrifying Times Magazine online for accurate information on EVs. I maintain the EVolution guest blog at EVWorld.com, which refutes many objections to EVs propagated by the oil and foot-dragging auto industries. I'll add another page for this 'problem.'

[Matthew DeBord - Huffpost Blogger]

ZEVangel: I don't begrudge anybody the goal of continuing to pursue the electric dream. In fact, I think Tesla did change the terms of the EV debate by proving that a battery could be developed that yielded both range and performance. I just don't think an EV revolution is the way to go right now, while there are some other issues at stake. Such as the survival of the US car business. I'm also increasingly convinced that "alt-fuels and vehicle efficiency" can and should be pursued, but that we should continue to import oil and run our cars on it. I'm advocating an incremental approach that can deliver some solid short-term progress on climate and conservation, and that to be honest can be initiated through some political arm-twisting.

[EinChicago]

So to be fair, will there now be a sequal to Who Killed The Electric Car, which pillories Tesla and ignores reality as much as the first one did?

"And "This is all happening as both GM and Chrysler have rolled out their own less expensive electric cars, and as Toyota is ramping up development of so-called plug-in hybrid vehicles. "

Really? Toyota is rampoing up on its mythical PHEV Prius. Really. Has anyone actually seen so much as a prototype of this mythical PHEV from Toyota yet? They keep talking about it but have yet to show even a concept.

Fact is GM spent billions on the EV1 and when it was pulled, they waited less than 6 years before announcing that they had taken what they learned from the $300,000+ per car EV1 and were introducing a $30,000 all electric car for mass production. For the 3-4 years they were in development they were pilloried and Toyota eleavted to god like status.

[rlugbill]

100 years ago, half the cars were electric. You're saying that we can't do as well now? Yes we can!

Tesla may be struggling, but so are most car manufacturers right now.

Electric cars are here. If the major carmakers had continued with the models they produced for the California market 10 years ago, we would already have a lot of electric cars on the road. The manufacturers decided to lobby instead of produce electric cars, so we are 10 years behind. In 10 years, electric cars will be like the hybrids of today. In 20 years, they will be the norm.

Environmentalists need to adopt the can-do attitude. Yes we can!

[EinChicago]

"Electric cars are here. If the major carmakers had continued with the models they produced for the California market 10 years ago, we would already have a lot of electric cars on the road. The manufacturers decided to lobby instead of produce electric cars, so we are 10 years behind."

The problem with your rant is reality. The electric cars produced by GM 10 years ago cost around $300,000 each. With gas at $1.25 per gallon, how many people do you know would have been running out to buy a 300,000 two-seater car with less performance than a Geo metro?

The last EV1 came off the road in 2002. GM announced the Volt in 2006 and introduced a concpet version in 2007. That's a total of 4 years to take a two seater 100 mile range $300,000+ car and turn it into a 4 seater, 400 mile range $30,000 car.

Conspiracy theories aside, that's pretty darn fast work.

[KenGirard]

If you look around the net you will find dozens of people who have converted old cars to running on electric battery power. Sure they only get 20-70 miles of range, put they are doing it for $2,500-$3,000 per car.

If car companies will quit trying to give me a unlimited range gas electric hybrid, and instead of just aiming for with something that get 60-100 miles, we would already have the cars on the road. Dump a solar panel on the roof and let me get a couple of extra miles out of having the car sit in the parking lot all day.

[broschultz]

GM and Chrysler are not interested in solving the energy crisis. They are only interested in making as much money as they can. Especially GM. There is no reason to think that investing in them is a good investment. Most of the money they get will be thrown away on existing labor benefits. New companies like Tesla can put more money into research and development. Making GM larger just makes it harder when they eventually fail. If the government has to give money away they may as well give it directly to Chrysler and maybe one of the two companies will survive because of producing something the public needs.

[Semaj51]

I always question the projected mileage proclaimed for curent electric cars. What will the reall mileage be is the typical driver drives with lights, A/C, and the radio?

Until there is a practical electric car (4+ seating) costing less than $25K, the electric car will only be an exotic toy for those who can afford them.

[Matthew DeBord - Huffpost Blogger]

Price is a major issue. It's a problem with the Volt, for example. Depending on how you look at it, it can also be a problem for hybridization. I can't remember exactly where I saw it, but McKinsey & Co. put out an analysis that suggested improving the fuel economy and emissions of current vehicles is the most cost effective way to achieve many of our sustainabiltiy objectives. So buying a used but well-maintained Honda Civic and driving it only as needed makes more sense that hoping for EV deliverance.

[joebaggadonuts]

McKinsey & Company get paid to say what their clients want to hear. Individual mileage varies.

[Stephen308]

I'm thrilled that some are now recognizing that nuclear power is a big part of the answer. I agree, electric cars are the future.

My wife and I bought a new car that gets 50% more mileage than our old car....and that's the state of the art today.

I think the hydrogen highway is a bust too....but you can't get people to admit it. Its death to knock any environmental idea no matter how stupid. Like turning corn to fuel. Our brain dead congress mandated it, driving the cost of food higher globally and helping to starve people and damage the environment as carbon sinks are removed to grow more fuel for American cars. Now, the power of political correctness keeps same brain dead cowardly congressmen from UNDOING this disaster of a corn to ethanol bill.

It's time we realize that putting the food of poor people into our car is not an acceptable path to take.

[djsiry]

Matthew - your facts are very wrong. Our total layoffs accounted for 16% two weeks ago and may reach 20% by years end. The delay we announced was related to our second product, the Model S sedan, not the Roadster.

Since this is a major error, I'd ask that you correct it in your piece and/or provide an update.

Please contact me (you have my email address) so we can get things corrected and so I can answer any other questions.

Darryl Siry - Tesla Motors

[Matthew DeBord - Huffpost Blogger]

Darryl: I'm happy to update. Is this the hard-and-fast number? I backchecked and found different numbers in Ken Bensinger's LATimes story--24% total, and no mention of phased layoffs. Also, earlier reports indicated that deliveries, not production, on the Roadster orders have been delayed. My understanding was that 2008 was all sold out.

Also, I don't have your email. Send me friend request on Facebook and we can remedy that.

[BlackbirdHighway]

It's right there on the company's website. according to Chairman Elon Musk:

"At Tesla, we have decided that the wise course of action is to focus on our two revenue producing business lines - the Roadster and powertrain sales to other car companies. In the Roadster, Tesla has a unique product with a large order book that continues to grow, despite softness in the automobile sector. Our powertrain business is profitable today and is also growing rapidly.

Our goal as a company is to be cash-flow positive within six to nine months. To do so, we must continue to ramp up our production rate, improve Roadster contribution margin and reduce operating expenses. At the same time, we must maintain high production quality and excellent customer service. "

http://www.teslamotors.com/blog2/

So they are focusing on production of the Roadster and ramping up the production rate. I don't see how you get delayed deliveries out of increased production rates. I would think that would make for earlier deliveries.

[8IZENUF]

I was very excited about hybrid or full electric cars until I saw a documentary on where more than 50% of our electricity comes from. Burning the Future: Coal in America (Sundance Eco Documentary.) I live in a state that produces coal in the West and recognize it is vital to livelyhood of the smaller towns in the southern part of our state. But I would think twice before buying a full electric car until more of our electricity comes from cleaner sources. The current mining of coal produces too much contamination to all life on this planet. There are too many lives lost in mines that are not managed well--and choose to pay fines over fixes and the environmental impact to the landscape. If we could invest in wind technology and solar to provide more of our electricity, then major investing in companies like Tesla, may look brighter in our future. I would like to see a plan that converts existing vehicles to hybrids of electrical or natural gas, with affordability to average American. (Why are we building new?) I hope we keep looking for solutions and come up with a good ratio for energy independence. But before we leap we need to look at the foot print we will leave behind.

[BlackbirdHighway]

Yes, we need to move from coal to other energy sources for our electricity. But that is no reason to delay development of electric cars. Even with huge investments it will be many years before even 5% of new cars are electric, and many, many more years before even 5% of the cars on the road are electric.

At least with electricity we have choices. We can make it from wind, solar, hydro, natural gas, geo-thermal, tides, nuclear, coal and oil. Even with coal, at least we have it right here in this country.

With gasoline made from oil, the only choice is which foreign country to buy it from; Russia? Iran? Saudi-Arabia? Venezuela?

I get a large part of my electricity from the solar panels on my roof. There aren't any panels you can put on your roof that make gasoline.

[leftcoastindy]

Sorry Matthew, but it appears you didn't actually read the statements of Musk...

"On Friday, Musk said that he will lay off at least 20% of Tesla's 363 employees and pump $10 to $20 million more of his own money into the high-profile San Carlos, Calif.-based company to help it weather the ongoing financial crisis."

20% reduction in workforce and no mention of delaying the delivery of the roadsters. Where are you getting your information?

As to your overall hypothesis of the electric vehicle "running out of juice", good luck backing that up. Unless the plug-ins that come out over the next 2 or 3 years totally suck, you will end up looking rather 'uninformed'.

[dublinmotor]

Leftcoastindy,

Perhaps Matthew was more right than you may know. As someone intimate with the Tesla situation, I can say he is generally right on all counts. Battery cost is simply very high for the foreseeable future. So a pure EV, with a very large battery will make any OEM a victim of that commodity cost.

Series PHEVs with range extenders have smaller batteries (1/3 the cost of Tesla"s) charged in part by a very small generator set is a better interim solution.

Elon compounds Tesla"s death spiral by his inability to let professionals manage simple things like purchasing, quality, product development, etc. His micromanagement egotism got him fired from PayPal and will again cause his demise at Tesla. Eventually, the board will wake up and act responsibly.

The reason for the slower deliveries of Roadsters is that they lose significant money on every car produced, and accelerating production would accelerate the corporate losses. No way to be cash flow positive in 2 months or 12 months.

Someday soon, there will be a collection of car companies large and small that will work with suppliers to drive costs down together resulting in production volumes increasing. Then, a positive spiral business model will form making an EV affordable for the masses that have had to adjust to a more modest middle class life after this horrendous correction in the markets.

Thanks to Martin Eberhard & Marc Tarpening for inspiring us, and shame on Elon for destroying the dream.