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Tesla's Supercharged Week

It’s been a good week for Tesla, the electric car company. Yesterday it reported its first quarterly profit in its ten-year history. Today, Consumer Reports announced that the Tesla Model S was the highest-scoring car… ever. Business Insider reports on Tesla’s recent success:

Tesla reaching profitability so quickly provides proof that if you build vehicles that not only look great but are enjoyable to drive, consumers will purchase them,” said Alec Gutierrez, senior analyst at Kelley Blue Book in an email.

But he goes on to write that, “While Tesla has found success in the premium luxury segment, even surpassing sales volume of the more affordable Chevrolet Volt, they will run into the same difficulties faced by Chevrolet, Nissan, and others in trying to sell an electric vehicle to mainstream consumers that will find it more difficult to pay the premium prices associated with electric vehicles.”

We’re generally not in favor of the federal government picking winners and losers in nascent industries. The recent demise of Fisker Automotive, one of Tesla’s electric vehicle competitors, was a good example of the risks of making the wrong bet. And even when bets pay off, the government still leaves itself open to accusations of crony capitalism.

Tesla seems to be the exception to the rule. As far as we know, Elon Musk (Tesla’s founder and CEO) and President Obama aren’t best friends, which is good. But the boutique car company still faces three fundamental problems: its cars are very expensive, they take a good deal of time to recharge, and they have limited range. Sure, Musk has a plan to roll out cheaper, more family-friendly cars in the future. But even if EVs could compete with gas-powered cars on price, they would struggle to win over consumers accustomed to extended range and quick refueling stops. (Drivers in cold areas will see even shorter ranges, something this NYT reviewer found out the hard way.)

Despite all of that, Tesla has comfortably settled into a rich, environmentally conscious and geeky niche. It’s on track to pay back its government loan ahead of schedule and seems to be avoiding the pitfalls that have doomed the Fiskers and Solyndras of the clean tech world. Much of that can be attributed to Musk’s leadership. Also the founder of Paypal and SpaceX, Musk has charisma, vision, deep pockets, and an entrepreneurial savvy that’s been vital to Tesla’s success so far. He’s a model of American gumption, but his biggest test will be what happens next.

[Tesla Roadster image courtesy of Wikimedia]

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  • Andrew Allison

    “Today, Consumer Reports announced that the Tesla Model S was the highest-scoring car…ever.” Not so, it is only the second vehicle to have achieved a score of 99, and there was a major caveat, namely long-term reliability.

    Not to denigrate Telsa’s undoubted success, but let’s not go overboard.

  • Alexander Scipio

    Let’s suppose I drive 40 mi to work in LA, using an electric car. I plug it in at 9:00am for its 6-hr recharge. At 10:30am, my son’s HS calls to say he’s been injured, or CHP calls to say my wife’s been hurt, etc., and I need to come immediately. Do I just tell them to stop bleeding and wait for 4-1/2 hours before I can leave work to go see them? Until & unless an e-vehicle provides a decent range (at least 100mi in a major metro) and can be recharged in single-digit minutes, it’s a fantasy for the non-working elite.

    • Philopoemen

      You would do well to at least quickly look up the car’s range before criticising it. The Model S, in real-world use, can easily manage 120 miles on a single charge, and a quick charge takes far less than four hours.

  • foobarista

    Not that they didn’t try to muck up – they went through several “reorgs” until they finally got their stuff together and started building cars in anything resembling assembly-line fashion. But it seems that they’ve finally got actual assembly lines going at their plant in Fremont (frighteningly only about a mile from the Solyndra site).

    About four years ago, I went there for a job interview, and it was the most disorganized interview I’ve ever had: nobody knew I was there, people didn’t know what job I was interviewing for, etc. Fortunately, I didn’t get the job as they laid off half the company about a month later.

  • Charles R Harris

    Reminds me of why I stopped paying attention to CR, PC was given more weight than actual performance. That made their recommendations essentially useless if you wanted to buy something that actually worked and did what it was supposed to do.

  • Jim Luebke

    I’m very happy he’s paying off those loans.

    Is anyone else disturbed that our government (an administration of Democrats, no less) is subsidizing companies to make Rich Yuppie Toys?

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