Category Archives: US Auto Manufacturers

Can Tesla Survive The Loss Of Subsidies?


Three years ago, The Los Angeles Times posted “Elon Musk’s growing empire is fueled by $4.9 billion in government subsidies”. I have not seen a summary of the current total of Musk’s subsidies but it is certainly more than $4.9 billion now. When The LA Times speaks about an “empire” it included Tesla, Space X and Solar City—all Musk controlled businesses.

This discussion will focus on the Tesla electric vehicle (EV) business.

Subsidies start with the Federal Tax Credit of $7,500 given to each buyer of a Tesla EV.  (Every EV maker gets the same treatment.).  California also provides a $2500 subsidy per car.

The following is from the LA Times posting:

“Tesla has also collected more than $517 million from competing automakers by selling environmental credits.  The regulation was developed in California and has been adopted by nine other states.”

These regulations require that companies selling automobiles must also sell a certain percentage of EVs.  Sales of an EV gives the seller environmental credits.   Manufacturers are penalized for not selling enough EVs and must buy credits to offset their failure. Because Tesla sells only EVs it gets a lot of credits which they sell to the other car makers.

The following 2016 video discusses what the Wall Street Journal thinks subsidies mean to the Tesla’s bottom line: (Please excuse the 15 second commercial.  When video ends click back to this page.)

https://video-api.wsj.com/api-video/player/v3/iframe.html?guid=00E58A9F-9315-47FE-BFED-7C79B2C3A98B&shareDomain=null

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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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Dependance On Petroleum?—More Than Just Use As A Fuel


How much do you depend on petroleum-based products?   A few of the non-fuel uses are previewed in the following video:

 


<p><a href=”https://vimeo.com/31586887″>Hydrocarbon Man</a> from <a href=”https://vimeo.com/user8463025″>Robert E. Bailey</a> on <a href=”https://vimeo.com”>Vimeo</a&gt;.</p>

 

cbdakota

Sales Of EV’s Are Not Impressive.


cartoonevforseptblogSales of electric vehicles (EV) jumped in the second quarter of this year. This was enough to convince Real Clear Energy to post “Surge in EV Sales Bucks Cheap Gasoline, Broader Auto Industry Trends”. The posting says that while President Obama’s goal of 1 million EV’s on US roads by 2015 was not met, it was only about half that number in 2015, the surge “gives reason for fresh optimism about the future…..” EV Sales in the first half of 2015 were 70,296 versus 2016 first half sales of 99,634—a 42% change. That looks pretty impressive in the abstract.

However,  EV sales need to be evaluated versus all US automobile sales

Detailed Data for sales in August are readily available but June 2016 detailed data are behind a pay wall.  In reality the exact numbers are not significantly going to change the fact that EV sales were about 1..2% of total sales.  YCharts forecast annual sales based upon  auto sales by using the current month’s actual sales.  In June , half of the year, the Y chart number for total sales was 17.09 million automobiles.  This number counts cars and light truck and it includes EV sales in this number.  The 2016 auto sales  for the year based upon August July sales was18.15 million. Because the biggest sales months are in the fall of the year,  the official forecast for 2016 sales is 18.75 million.

Anyway,  if the annual forecast at the end of June was 17.09  roughly the year to date sales for the first six months sales would have been about 8.5 million.

The math:        0.1 million EVsales /8.5 million total sales = 1.2% of the total sales were EVs.

Real Clear Energy really has to be reaching to say that this gives them “fresh optimism.”

A hat tip to David Middleton for this story line based upon his posting in WUWT titled “Green math must be a Common Core product“.  I have modified it because I believe his calculation was erroneous. He arrived at number of 0.6% rather than what I believe is the correct number. Middleton’s conclusion however  is unchanged by my calculation of 1.2%.

cbdakota

 

 

 

 

“California Dreamin’” Or Perhaps Hallucinatin’.


California, always trying to be an environmental leader, has recently enacted SB 350 which will require that, by 2030, electrical utilities must get 50% of their power from renewable resources. The bill also requires greenhouse gases emissions (GHGE) be reduced by 40% by 2030 and 80% by 2050 versus the carsonhighwayimages1990 GHGE baseline. Dropped from the bill were measures to compel a 50% reduction in petroleum use by 2030.

These reductions are more stringent than those that failed to get accepted by the nations of the World at the COP21 meeting in Paris. California against the world. Further, even if these SB350 mandated changes are met, they will be too small to even be measureable. That is the definition of futility.

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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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