Tesla Motors' vision to sell 500,000 units in 2020

EV/PHV plans among emerging U.S. makers

2014/02/13

Summary

 Reported below are business plans of emerging American manufacturers for Electric Vehicles (EV) and Plug-in Hybrid Vehicles (PHV). Tesla Motors, Inc. is enjoying steady business progress to date. The company sold 22,000 units of the Model S in 2013. It will launch the Model X crossover in early 2015 and the Gen III sedan with a USD 35,000 price tag in 2016. Tesla Motors has announced visions to expand its annual production and sales to 250,000 units in 2016 or 2017, and to 500,000 units in 2020. The company tapped into Chinese market in the fall of 2013.

 VIA Motors, Inc. has started converting large pickups, SUVs and vans of General Motors Company, LLC into PHVs. The company will start selling them to private users in 2014. Among other manufacturers, Aptera Motors, Inc. and Bright Automotive, Inc. have already withdrawn from the EV and PHV market due to its sluggish growth. Coda Automotive, Inc.and Fisker Automotive, Inc. each filed for bankruptcy protection in May and November 2013, respectively.


Related Reports: Detroit Three's electrified vehicle plans (posted in February 2014)

Tesla Motors Model S
Tesla Motors' Model S in front view
(from Tokyo Motor Show 2013)
Tesla Motors Model S
Model S in rear view
(from Tokyo Motor Show 2013)


 



Tesla Motors: Model S sold 22,000 units in 2013

 Tesla Motors posted its first net profit in the first quarter of 2013 (USD 11.2 million including USD 85 million in Zero Emission Vehicle (ZEV) credits; net deficits of USD 73.8 million without the credits). The company sold approximately 22,000 units of the Model S in 2013. It posted approximately USD 1.4 billion in revenues from January to September with the net loss of about USD 58 million. Sales soared by 13-fold while deficits slimmed to less than 20 percent of the previous year.

Tesla Motors' financial performance in January through September 2013

In thousands
Jan.-Sep. 2013 Jan.-Sep. 2012 Y-o-Y
Revenues 1,398,277 106,924 13.1 folds
Operating expenses 347,603 309,610 112.3%
       thereof: research & development 163,523 205,146 79.7%
       thereof: selling, general & administrative 184,080 104,464 176.2%
Loss before income taxes (56,520) (305,998) 18.5%
Net loss (57,750) (306,282) 18.9%
Source: Tesla Motors SEC Filings (FORM 10-Q)
(Notes) 1. Tesla Motors posted its first net profit of USD 11.2 million, including USD 85 million in sales from ZEV credits, in the first quarter of 2013 (net deficits of USD 73.8 million from actual sales activities without the credits).
2. Zero Emission Vehicle (ZEV) credits: Automakers selling vehicles in California are required that they sell a certain ratio of zero-emission or ultra low-emission vehicles out of the automakers' total amount  to be sold in California. Automakers that fail to meet the requirement may purchase credits from other automakers with excessive compliance.
3. In 2010, Tesla Motors received a loan from the U.S. Department of Energy based on the Advanced Technology Vehicle Manufacturing Loan Program. The company paid back the USD 451.8 million loans in May 2013, nine years earlier than original schedule, by using funds procured in the stock market.

 

 



Tesla Motors' vision to achieve annual sales of 500,000 units in 2020

 Tesla Motors plans to continue launching new models and expand sales. The company will launch the Model X at the end of 2014, start producing the Gen III sedan in 2016 with a starting price of USD 35,000, and launch the Gen III-based crossover in 2018. The company announced visions to increase its global production and sales of electric vehicles to 250,000 units in 2016 or 2017, and to 500,000 units in 2020 (visions were announced in the fall of 2013).

 Tesla Motors also announced plans to build a battery plant to provide enough battery packs for 500,000 electric vehicles a year. When the plant starts production, its capacity will outstrip today's global lithium-ion battery supply.

 When the annual sales exceed 200,000 units, Tesla Motors will need to outgrow of its presence as a manufacturer in a niche market. Aside from lithium-ion battery procurement, the company will face new challenges including production, sales, service and maintenance, charging infrastructure and used car sales. Tesla Motors will find itself in direct confrontation with established luxury car brands. Major automakers may launch EVs with high market appeal. Tesla Motors has been a rare success among EV venture companies, but it will face many challenges associated with the sudden scale expansion.

Tesla Motors' model plans

Model Start of sales Description
Roadster 2008-2012
(results)
 Produced and sold about 2,400 units in total.
Model S June 2012  Tesla Motors' first production model developed from scratch to take full advantage of electric vehicle architecture.
 The basic trim level(with 60kWh battery capacity and an EPA rated range of 208 miles) is sold for USD 69,900 (USD 62,400 after applying a USD 7,500 federal tax credit). The 85kWh model has EPA range of 265 miles and is sold for USD 72,400 to 85,900.
 Over 20,000 units were produced in 2013 at Tesla Motors' own plant built in the site of the former NUMMI plant where joint production by Toyota and GM had taken place.
Model X Early 2015  The seven-seater Crossover based on the Model S is an all-wheel drive model powered by two motors. The concept car exhibited at the Detroit Auto Show 2013 featured the falcon-wing doors.
Gen III sedan 2016  A compact sedan which is the same size as the BMW 3 Series. It will have a cruising range of 200 miles and a starting price of USD 35,000 (half the price of the Model S). This will mark Tesla Motors' entry in a mass-market model segment.
 Incidentally, the Nissan Leaf SL, the highest grade of the make, has an EPA rated range of 75 miles and is sold for USD 34,840. The Gen III sedan will have a threefold cruising range over the Nissan model that is sold for about the same price.
Gen III crossover 2018  Tesla Motors plans to develop a crossover that will compete with the BMW X3 and Audi Q5.
Gen III sports car 2020  The company plans to develop a Gen III-based sports car and a second-generation Roadster. These models will be launched in six years at the earliest as the higher priority is put on the Gen III sedan and Gen III crossover.
Next-generation Roadster

 

Tesla Motors' expansion plans

Global sales Launch and sales models
2013 22,000  Selling Model S
2014 40,000  Launching Model S, Starting sales in China
2015 80,000  To launch Model X
2016~2017 250,000  To launch Gen III sedan
2020 500,000  To launch Gen III crossover in 2018


 

Panasonic to supply 2 billion lithium-ion battery cells in the next four years

Lithium-ion battery supply contract with Panasonic renewed for a larger quantity

 In October 2013, Tesla Motors and Panasonic agreed to renew their lithium-ion battery supply contract which was originally signed in 2011 and to increase the supply quantity. Panasonic will supply 2 billion cells in total for Tesla Motors' Model S and Model X from 2014 through 2017.
 Tesla Motors and Panasonic developed the new-generation batteries with the highest energy density and overall performance. The batteries are used to power the Model S and contribute to achieving the cruising range of 265 miles for the Model S with 85kWh batteries.
 Tesla Motors and Panasonic are working on development of "battery-cell electrochemistry," a new battery for automotive use. This new battery is expected to achieve a 200 mile range target and the price tag for USD 35,000 for the Gen III Sedan. Tesla Motors plans to slash costs significantly before starting production of the Gen III sedan.

 

Establishing the "Supercharger network"

 Tesla Motors has been establishing a network of "Supercharger" stations in the U.S. and Europe.

Establishing a network of "Supercharger" stations

 Tesla Motors is establishing a network of "Supercharger" ultra-fast charging stations to enable long-distance driving of the Model S. The company started to install the charging stations in September 2012 and aims to set up each station within  250 miles apart from another station. Each "Supercharger" station provides 100kW of DC power and enables charging in 30 minutes to cover three hours of driving at 60 mph. An associated solar power system generates electricity to charge the Model S battery. The excess electricity from the solar power system is sent to the electricity grid for income generation. In this way, the Model S driver can use the charger for free.
 This is the most advanced system among the existing charging systems. It can charge at a speed 16 times faster than an ordinary public charging system. The system uses special cable to charge the onboard battery directly without using the onboard charging device.
 A more powerful 120kW charger is to be launched. The charger will reduce the charging time by 33 percent and can charge up to half of the full battery in 20 minutes.
 In February 2014, the Supercharger was installed at 73 locations in the U.S. which enables Model S drivers to travel across the U.S. continent. The company plans to install more Superchargers to give less than 250 mile accessibility to 80 percent of the U.S. population. Tesla Motors plans to install the Supercharger in several locations in Canada as well. The company further plans to cover 98 percent of the American population in 2015.
 The Supercharger is installed at 14 locations in Europe as of the beginning of February 2014. In Germany, Superchargers are accessible within a 320km range for 50 percent of the population as of March 2013, and will be accessible for 100 percent of the population by the end of 2014.

 

Opens Dealership in Beijing; plans to sell 5,000 units in China in 2014

 In August 2013, Tesla Motors started receiving orders for the Model S in China. In November, the company inaugurated its first showroom in Beijing. In January 2014, it announced the starting price of the Model S fitted with the 85kWh battery pack to be CNY 734,000 (USD 121,000). The company could have doubled the price for the Model S in China from the price in the U.S. However, Tesla Motors decided to treat the Chinese customers in the same way it does people in other markets. As a result, the company added only the unavoidable transportation costs and taxes to the U.S. price.

 Delivery in China will start in March and the company plans to deliver about 5,000 units in 2014. It will open dealerships in six key cities in China by the end of 2014, and will also establish a Supercharger network across China.

 Tesla Motors reportedly will form a partnership with a Chinese automaker and start local production in the future to benefit from the eco-car credits of the Chinese government. According to the company, the price of the Model S could be reduced by 15 percent after local production begins.

 

 



VIA Motors: converting GM's large-size vehicles into PHVs

 VIA Motors was established in 2010 by engineers who span off from an engineering firm called Raser Technologies. VIA purchases large trucks, SUVs and vans from GM's Silao plant in Mexico. By using Raser Technologies' expertise, VIA modifies the vehicles and sells them as the Extended Range Electric Vehicles (EREV, same as PHV).

 VIA Motors has been testing the EREVs with fleet customers. In November 2013, VIA's Mexican plant began production and the company will start selling the EREVs to individual customers as well in 2014.

VIA Motors: Converting GM's large-size vehicles into PHVs

Established  Founded in 2010 by engineers who span off from Raser Technologies and by a group of investors. Bob Lutz, the former GM vice chairman and "father of the Chevrolet Volt" , joined VIA Motors in 2011.
PHV production and sales  VIA Motors purchases large pickups, SUVs and vans (cargo vans and passenger vans) from GM's Silao plant in Mexico. The company converts them and sells them as the Extended Range Electric Vehicles (EREVs) under the VTRUX brand. VIA Motors has been beta testing the EREVs with fleet customers.
 The company built an assembly plant in San Luis Potosi in Mexico, and started production of the EREVs in November 2013. The company plans to sell them to individual customers as well in 2014 and has started receiving orders from them. The Mexican plant can produce 2 EREVs an hour, 10,000 units a year.
30 to 40 miles EV range  The VTRUX vehicles use GM's V6 4300cc gasoline-fueled engine and 24.4kWh lithium-ion battery supplied by A123 Systems. The EREV runs 30 to 40 miles in EV mode, and after that  the system uses the engine to generate electricity and to charge the battery. Since most of the daily driving is on EV mode, the company claims that the EREV can increase the fuel economy to 100 mpg or higher.

 

 



Fisker Automotive: files for Chapter 11 bankruptcy-court protection

 In April 2010, credit loan for up to USD 529 million was granted to Fisker Automotive from the U.S. Department of Energy (DOE). The company actually received USD 193 million. With additional funding of USD 1.2 billion, the company developed the Fisker Karma, a high-end PHV. Its delivery started in October 2011 and about 1,800 units were produced. But the company experienced two incidents involving vehicle fire. To make matters worse, A123 Systems that had supplied lithium-ion batteries to Fisker went bankrupt. As a result, production of the Fisker Karma has been suspended since the summer of 2012. Dongfeng Motor Group and Geely Automobile Group expressed interests in acquiring Fisker Automotive in early 2013. But negotiations did not bear fruits and the company filed an application for Chapter 11 bankruptcy-court protection.

 In October 2013, DOE auctioned off its USD 168.5 million credits on Fisker (the uncollectable amount out of the USD 193 million loan). The credits were sold to Hybrid Tech Holdings of China. Therefore, Hybrid Tech stands as the best candidate to purchase Fisker assets. However, Wanxiang Group, the largest parts supplier in China that acquired A123 Systems, had expressed interest in acquiring Fisker (as the owner of A123 Systems, Wanxiang Group is also a creditor to Fisker assets). At present, the two Chinese companies are competing to win Fisker assets. A court decision is expected to be made in mid-February.

 

Coda Automotive also files for bankruptcy protection to liquidate the automotive business

 Coda Automotive raised USD 344 million funding to start electric vehicle assembly business at its plant located in California, the U.S. The company imported bodies that were produced by Hafei Group, its Chinese partner, and lithium-ion batteries that were produced by a joint-venture company also located in China. However, start of production was delayed due to technical difficulty in matching the body and the electric powertrain, and in meeting the safety standards imposed in the United States. Its first product, the Coda Sedan EV, was released for sale in March 2012 but it sold only about 100 units. Coda Automotive filed for bankruptcy protection in May 2013.

 The bankruptcy court approved acquisition of Coda Automotive for USD 25 million by Fortress Investment Group. Coda Automotive decided to abandon car manufacturing and concentrate instead on energy storage business.

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