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
That's pretty difficult to do. They treat such questioning as a fight, an argument, and will be attacking your character and intelligence within a minute. If you don't have a Master's degree, they'll just call you an uneducated buffoon.
Where is the power going to come from??
Wind Farms, dude. And solar. That reminds me, how do I get these peckerheads to quit calling me offering to put panels on my roof?
Solyndra was a failure. You call the best car ever tested by consumer reports magazine as failure? Here is something to help you understand the magnitude of their achievement. This is a small company with little history in the car business. The first car they produced from ground up is being considered by various industry experts as the best car ever build. If they continue to operate anywhere close to this going forward, they will beat their competition hands down
They can produce a car at around $30,000 and compete against the $20,000 Honda civic, given there is minimal maintenance expense and minimal gas expenses. A Tesla car to compete in that space will be available in 3 - 4 years.
It could be the best car ever made in the whole wide world, but if it’s priced out of the market it will still fail, with all flags flying, even if tons of taxpayer dollars are poured into the enterprise. Adam Smith’s dead hand is still stronger than the US government.
It would be fun to put a bank of batteries in a pickup and park at EV free charging stations and charge those batteries. Then, go home at night and power your TV off the batteries.
I hope my unicorn is blue.
I really like blue.
It is currently priced under the market. They are unable to produce enough to satisfy North American Demand. Two weeks ago, they increased their prices with no slack in demand. They are recently opening their doors in Europe and Asia and would expect their demand to triple. They can increase their prices some more and still sell all the cars they produce. I expect them to produce their $35,000 car before the demand for their Model S and Model X slows down.
Just like the 4th grader I mentioned, no? ;)
I like the word “free.” That seems to be word that is used a lot with snake oil salesman.
Can you imagine what the line would look like at these stations if even 5 cars used them? How long does it take to charge a car? 1-2 hours at best? That is 10 hours waiting in line.
Minimal maintenance expense? The battery alone is a ticking time bomb of maintenance expense, so I wouldn't be touting that as an advantage just yet. I'm not even talking about the peripheral hardware that will be subject to failure, for example the power generation features like brakes.
I bought a hybrid in 2009, and I'll be looking to replace it in a couple of years because that battery warrantee will be going away soon. And I don't even have 20K miles on her yet.
A local restaurant installed one of those charging stations. The local media made a huge deal about it. I have never seen a car parked in that space.
I went to eat their once and asked the manager about it. He said it had only been used a “couple” times since they installed it, 8 moths prior.
Your comparison was accurate, ‘tis true. Hey look, we have a fanbois.
Which market is that? The luxury market, or the commuter market? Did you buy one? You sound like you either sell them or recently bought one.
I lost all trust for Tesla when they took taxpayer funds under Stimulus
Electric cars don’t solve the automobile’s environmental problems
Electric cars may not be so green after all, says British study
Yes, I have a whole list of people I don’t trust because of that.
Yeah, I’ve seen a couple of those charging stations around. They’re covered with spider webs.
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