Category Archives: CAFE Standards

Tesla Model 3 Sales Will Be Make Or Break For The Company


Is Tesla a major player in the transportation market?  The answer is no.  But will Tesla be?  We read that automobile engineers at the major vehicle producers begin shaking all over when they think of the threat Tesla poses.  So maybe they have magic.

Have not seen it yet and I could be wrong not being an auto engineer.

How is a stock market analyzing firm ranking Tesla versus competition?

Company TTM Sales $million $/Share Recommended Buy Price $/Share
Tesla    10,069 345 99
VW adr  267,350   31 29
Toyota adr  256,791 113 68
Damlier adr  189,396   74 56
Ford  153,596   11   8
General Motors  170,231   36 31

A casual glance says that Tesla share price is not based on actual sales but on investors belief that the company is something special.  Note that the firm that provided the above data ventured that the actual Tesla share price was about 3.5 times their recommended buy price.  The actual prices were greater than the recommend buy price for each of the companies shown in the table. But the relationship was in most cases about 1.3 or so.  Some analysts believe that Tesla is looked at more of a Tech stock than and stock of a company making vehicles.

In August 2016, Elon Musk,  the force behind the Tesla  said that he plans to sell 500,000 vehicles by 2018 and one million by 2020. From my readings, I would guess the majority of analysts don’t think he will accomplish that goal.

Several years ago, Consumer Reports (CR)  said theTesla was the best car ever.  They still believe it to have superior performance but no longer rate it an unqualified success because of reports of lack of reliability. (The Toyota in my garage was purchased based upon CR’s reliability rating of the car—and CR got it right.

The lowest priced  Tesla vehicle is the Model S.  The S’s price starts at $69,500 and grows based upon the options the buyer elects to add. The new Model 3 is said to have a base price of $35,000.

CR posted some info on the likely cost of the new Model 3 which may disappoint some potential purchasers of Model 3. In an updated (8 August 17)  posting CR said this

The base model will be black, with a Tesla-estimated range of 220 miles and 0-60 mph acceleration of 5.6 seconds. (If you want a color other than black, it’ll add $1,000.) Notable standard equipment counts WiFi and LTE internet connectivity, navigation, and the hardware to enable active safety systems, including eight cameras, forward radar, and a dozen ultrasonic sensors.

Initial Model 3 cars will feature the long-range battery (a $9,000 option) and the Premium Upgrades package (a $5,000 option), which adds heated, 12-way adjustable front seats; premium audio system; glass roof; folding/heated side mirrors; fog lamps; and a center console with covered storage and docking for two smartphones.

Enhanced Autopilot (a $5,000 option) bundles futuristic capabilities such as active cruise control, lane-keep assist, automatic lane changing and freeway exiting, and self parking. Tesla advises more such features will be added via software updates.

In the future, Tesla will offer an addition to Enhanced Autopilot that claims “full self-driving capability” for $3,000. The company says, “Model 3 will be capable of conducting trips with no action required by the person in the driver’s seat.” We are concerned that such a claim encourages distracted driving.

We expect typically equipped (early-delivery) cars will cost $57,700, which includes long-range battery, choice of color, Premium Upgrades package, Enhanced Autopilot, and 19-inch wheels.

A typically equipped model with the standard battery is expected to cost about $42,200, and comes with your choice of color and Enhanced Autopilot.

The free charging of the battery at Tesla stations will not extend to the Model 3

Car and Driver rated the new Model 3 the best of all the EV on the market.  However that rating was based on a prototype.  How valid is a prototype rating?

The US government tax credit of $7,500 has been helping Tesla sell its cars.  This tax credit ends when a manufacturer reaches sales of 200.000 vehicles.  It has been estimated that there have been over 100,000 Tesla sold using the tax credit.  The impact of the subsides provided by governmental bodies on the sale of EVs is examined in the next posting.

How successful the Model 3 is,  will define the future of the Tesla company.

cbdakota

Some EV Sales Improvement, But Still Way Below Obama Forecast


ev-for-postingHave you been keeping up with the car buying public’s interest in electric vehicles (EV)? The many models of EVs that are on the market are quite astonishing.  Nearly all the manufacturers have a model or two.  The sales are still well below the Obama Administrations projections.  But 2016 brought some joy to the makers of plug-in EVs.

Probably most of you that are reading this know about the different versions on the market, but for those that have not been following EVs closely, let me give you some guidance.

The Toyota Prius has been the sales leader. Later on, the Chevy Volt and the Nissan Leaf came on the scene but they have not equaled the Prius sales volume.  Those three vehicles represent the three major categories of EVs.

The Hybrid (HEV) is a vehicle that has both batteries and an internal combustion (IC) or diesel, fossil fuel powered motor to propel the vehicle. The batteries are not charged by an external plug-in arrangement but are charged by the onboard motor. The Prius is a HEV

The PHEV has both a IC or diesel motor and batteries, but in this category the batteries are charged by plugging into an external power supply.     The Chevy Volt is a PHEV.

The BEV vehicle has only batteries for motive power and those batteries are charged from an external power supply.  The Nissan Leaf is a representative of this category as are the Tesla and the GM Bolt.

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Electric Vehicles And Hybrid Sales At Lowest Level Since 2011


These are troubling times for the electric vehicle (EV) and the hybrid (EHV) sales. The first 3 months of 2015 experienced lower sales than in the year 2011 which was the first full year of sales for the Chevy Volt (EVH) and the Nissan Leaf (EV).   Even though the buyer of a new EV or new EVH is still geting a $7500 tax credit, manufacturers are having to cut China Electric Car Bluesprices because the dealer’s inventories are building up. The low price of gasoline and the questions about electric vehicles durability are major reasons for this situation.  But there is another reason that is playing a big part in this problem.   A posting on Detroitnews.com titled “Electric vehicles lose buzz” talks about the issue of leasing:

“Edmunds.com reports that leases comprised nearly seven of every 10 plug-in cars that drove off dealer lots from January through March.

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Jay Leno Wants To Ban Ethanol In Gasoline


Jay Leno says that putting ethanol in gasoline results in fires in older model automobiles.   As many of you know, Leno is a collector of classic jaylenoaw_20150302p10 Leno-Ethanol-1cars, most of which are old cars. In a posting in Autoweek, March 4,2015 titled “Jay Leno hates ethanol” he says:

“There have been a lot of old-car fires lately. I went through the ’70s, the ’80s and most of the ’90s without ever having read much about car fires. Suddenly, they are happening all over the place. Here’s one reason: The ethanol in modern gasoline—about 10 percent in many states—is so corrosive, it eats through either the fuel-pump diaphragm, old rubber fuel lines or a pot metal part, then leaks out on a hot engine … and ka-bloooooie!!!”

 Once in my business career, I was the manager of our methanol-in-gasoline program. The company spent in the high six figures on laboratory work to determine the safety of methanol (not to be confused with ethanol) as a gasoline additive.  The program tested fuel lines, gaskets, fuel tanks, etc. Basically everything that this blend would encounter. The concentration of the methanol in the mix was an important factor. The work was completed and we got EPA approval to use. We knew that some of the older vehicles  owners might need to be alerted about the properties of the mix. At that time there was no Renewable Fuels Standard so people were not going to be forced to use the blend. Not too long after getting the EPA approval, the company decided to go out of the methanol business. End of story.

Jay has several more complaints about ethanol blended in gasoline at 10%:

“There’s more. I find that gasoline, which used to last about a year and a half or two years, is pretty much done after a month or so these days. If I run a car from the teens or ’20s and fill it up with modern fuel, then it sits for more than two months, I often can’t get it to start.     Ethanol will absorb water from ambient air. In a modern vehicle, with a sealed fuel system, ethanol fuel has a harder time picking up water from the air. But in a vintage car, the water content of fuel can rise, causing corrosion and inhibiting combustion.

Leno believes the Renewable Fuel Standard has done more harm than just that of damaging his and other people’s cars.   He says:

“Blame the Renewable Fuel Standard. This government-mandated rule requires certain amounts of ethanol and other biofuels be blended with gasoline and diesel fuel. “I just don’t see the need for ethanol. I understand the theory—these giant agri-business companies can process corn, add the resulting blend to gasoline and we’ll be using and importing less gasoline***. But they say this diversion of the corn supply is negatively affecting food prices, and the ethanol-spiked gas we’re forced to buy is really awful.

The big growers of corn have sold us a bill of goods. Some people are making a lot of money because of ethanol. But as they divert production from food to fuel, food prices inevitably will rise. Now, if you don’t mind paying $10 for a tortilla…”

He would like some action here:

“It’s time for us as automobile enthusiasts to dig in our heels and start writing to our congressmen and senators about the Renewable Fuel Standard, or we’ll be forced to use even more ethanol. Most people assume, “Oh, that’ll never happen. They’ll never do that.” Remember prohibition? In 1920, all the saloons were closed. It took until 1933 before legal liquor came back.”

At most marinas, gasoline containing no ethanol is supplied as small craft engines can be destroyed by the ethanol-gasoline mix. So boaters might want to join Leno and the automobile enthusiasts.

Leno has more to say about this issue and you can read it by clicking here on this website:

http://autoweek.com/article/car-life/jay-leno-hates-ethanol

***Actually I believe he means “importing less crude oil” rather than “gasoline” but it doesn’t alter his point of view. These days we have plenty of domestic crude oil so we don’t really need the ethanol to stretch our gasoline supplies.

cbdakota

 

 

 

 

 

 

 

President Obama Is Prevaricating Again


The President in his weekly address did it again. He  said things that are demonstrably untrue and in other cases terribly misleading.  This comes after the debacle resulting from his lying when he made assurances about keeping your medical policy under Obamacare, period!!!!  Why is he doing it again?  Because he knows, with the compliance of the Main Stream Media (MSM),  he can mislead the low information voters.  And he is happy to be doing that. See the video of the address by clicking here.

He takes credit for the increase in oil production in the US.  He has had nothing to do with it.  And he knows that.   The oil boom comes from private landowners operating on non-federal land.(See chart below.)  He cannot prevent exploitation of those reserves.

shaleoilproduction

Source: U.S. Energy Information Administration based on DrillingInfo and LCI Energy Insight

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July EV Sales Down But Still Some Hope For 100,000 Sales By Year End


July sales for the leaders, Chevy Volt and Nissan Leaf were off compared to their June sales.  The Volt sold 1,788 in July versus 2,698 in June.  The Leaf sales were 1,864 in July versus 2,225 in June.

The table below shows the models having sold more that 1000 vehicles year-t0-date.  (Tesla would be in this table but they only report sales quarterly.)

MODEL JULY SALES YEAR-TO-DATE SALES
Nissan Leaf 1,864 11,703
Chevy Volt 1,788 11,643
Toyota Prius Plug-In     817   5,035
Ford  C-Max Energi    433   2,915
Ford Fusion Energi    407  1,991
Ford Focus Electric    150  1,050

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Steep Depreciation Rates For EVs A Serious Problem


According to the National Automobile Dealers Association the used plug-in electric vehicles depreciate at a 30% rate that is the highest depreciation of any vehicle segment in the American automotive market. For other vehicles, according to Carsdirect.com: “New cars depreciate about 20% the moment you drive them off the lot.”   Then the depreciation is about 15% per year for the second and third year and less in subsequent years.

TheDetroitBureau.com says:

“The steep rate of depreciation for used plug-in electric vehicles can be attributed to limited range, manufacturer incentives and federal tax credits intended to offset the higher prices of new plug-in electric vehicles,” said Jonathan Banks, executive automotive analyst for the NADA Used Car Guide.

If the forecasted decline continues, it could be a serious problem for both manufacturers struggling to boost demand for their latest plug-in hybrids and pure battery-electric vehicles, as well as federal and state government officials who have been using financial incentives to help promote the technologies.

 Another ominous sign for the EV business.

cbdakota