Posted on 08/18/2013 10:38:44 AM PDT by ckilmer
Last quarter, Tesla (NASDAQ: TSLA ) delivered 5,150 cars, which was well above its expectations of 4,500 deliveries. The company did so by boosting its production rate by 25% to 500 per week. If everything goes according to plan, the company's deliveries for its award-winning Model S could reach an annualized rate of 40,000 by the end next year, which is nearly double this year's expected rate. That's simply stunning growth. However, it's only the tip of the iceberg for where this company plans to be in the future.
The company has a very long road ahead of it to reach its goal to produce 500,000 vehicles annually, which is the rate CEO Elon Musk believes it can eventually reach. To get there, the company needs to capture lightning in a bottle again and produce a car that can be a mass-market success. That will happen only if consumers can drive a car off the lot in the $35,000 range -- something Tesla believes will be possible in as little as four years. While that's a bold dream, if Tesla has taught us anything, it's that it's OK to dream. So let's dream together of a world were Tesla can sell half a million cars each year.
No more pain at the pump? Americans as a whole are driving less, but we still drive a lot. Last year alone, the average American drove 9,363 miles, which is 7.5% down from the peak in 2004. While there's no telling how much we'll be driving by the time Tesla takes 500,000 gas-guzzlers off the road, we could conservatively assume that each one of those cars would have driven 10,000 miles per year. Even with using 2025 CAFE standards of 54.5 MPG as the average gas mileage of the cars being taken off the road, that's 183.5 gallons of gas being saved per car.
Overall, that's a savings of nearly 92 million gallons of gas each year. For perspective, that's just about a quarter of the 367.08 million gallons of gas Americans use per day. Thought of another way, if gas was $4 per gallon, it would save Tesla owners a collective $367 million, or about $733.94 per year. Swapping in a more gas-guzzling car would certainly boost the savings, so just think of these numbers as ballpark figures.
In fact, let's just say that Tesla was able to replace 500,000 true gas-guzzlers and knock off one day's worth of America's annual fuel consumption, or roughly shave the demand for a million gallons of fuel per day. Let's take a look at those numbers. anImage
*Based on an average of 10,000 miles driven and $4 gasoline
How much of a pinch would that be for refiners such as Phillips 66 (NYSE: PSX ) or Valero (NYSE: VLO ) ? In 2012, Phillips 66's refining and marketing segment produced $4.5 billion in earnings on $173.3 billion in revenue. Similarly, Valero's total revenue last year was $139.3 billion and its operating income was $4 billion. Clearly, the $1.47 billion in gasoline that Tesla could save each year won't put either out of business.
Oh, by the way Further, while taking a million gallons of gasoline per day out of the equation would still have some impact, odds are it would find somewhere else to disappear. In fact, just last quarter, Phillips 66 highlighted that it had increased its refined product exports to 181,000 barrels per day, or more than 760,000 gallons. By the end of this year it should have the capacity to export 370,000 barrels of refined product per day, or more than 1.5 million gallons. That additional capacity means Phillips 66 alone could easily export the amount of gasoline per day that 500,000 Teslas would save.
In fact, the U.S. has now become a net exporter of refined petroleum products because of lower U.S. demand and our competitive advantage in the marketplace. This situation is putting U.S. refiners with a strong Gulf Coast presence like Valero in a key competitive position to take advantage of future demand outside the United States. Tesla might actually be doing these companies a favor, as refined petroleum product exports are more valuable than those sold in the domestic marketplace.
Final Foolish thoughts Tesla's bold goal to sell 500,000 cars per year is a great dream, but it won't put gasoline refiners out of business anytime soon. Instead, these companies will simply have more gasoline available for the export market, which is a real positive for our economy. That's not to say half a million Teslas won't affect the energy markets, so tune in next week for a look at how that many Teslas could affect the electricity marketplace.
The only problem as far as investors are concerned is that Tesla is currently priced almost as richly as its Model S. That means investors looking to profit from the revolution in the energy markets need to look elsewhere
Gas tax plus a mileage tax IOW: Everybody will suffer
There are that many people in today's economy whole can shell out $70K to $100K for a car? per year?
Oh no that can't be. Mr Obamavelt gonna build us new huge solar power plants that magically produce massive amounts of power. His magical mandate wand gonna save us all.
Say what? The massive amount of electrical power a solar panel manufacturer uses just to make a panel? Oh Mr Obamavelt got the answer for that. he's gonna wave his magical mandate wand and wind turbines will spring up like daisies throughout the land. But they aren't reliable? Well good grief you expect Mr Obamavelt to be a miracle worker and address all the energy crisis problems his policies and administration has created? Shut up and enjoy the candles. Your government mule will be issued to you within a few years. Building the wagon is your duty as a citizen.
500,000 Tesla’s? There are that many people capable of paying $100,000 for a car?
Don’t insult the 1950 4th grader....they had common sense. These masters program graduates have had major liberal indoctrination lobotomies. Common sense was removed from their thinking.
William F. Buckley had something to say about that...one would have to have been educated at the high end of the Ivy League to have thought up something so stupid.
This is the same guy who runs spacex and paypal. He’s likely to be the next jobs or gates
Charged by what? Closed coal plants? No nuke plants?
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It would be better if they figured out how to do fourth generation lftr portable nuclear power plants
Replacing gas-guzzlers by coal-guzzlers.
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the feds are currently trying to kill the coal industry. hard to say how this will end.
The Tesla Model S produces 443 pounds of torque at zero RPM.
Here is a video of a Tesla Model S beating a BMW M5 in a drag race...
http://www.youtube.com/watch?v=vvHTN0Yi1t4
The DNC will import 30M illegals and put 30M ,20 year old gas guzzlers back on the road.
Right. And since Obamacare will have its tentacles into your bank account, traffic fines can be deducted automatically.
No muss, no fuss, no bother.
Around the world about 50,000 for the $100,000 car. The other 400,000 will be from their GenIII - $35,000 car.
I think that’s pretty awesome, how is it on gas?
That’s a nice beater for $300. Not bad shape either, if the paint’s the worst thing about her. If you lived here you’d also have had to plow in some bux to upend the A/C, but still a good value.
None of that messy due process crap, either.
I expect worldwide demand of about 50,000 per year on Model S, 50,000 per year on model X and 400,000 per year from Gen III ($35,000) car's. They are also planning trucks down the road, which could lead to additional factories and excess of 500,000 annual production.
Nice price and car for a daily driver. I also try not to spend too much on cars with internal combustion engines.
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