The Tesla Alone Can't Save the Electric Car

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According to the Tesla (Nasdaq: TSLA  ) website, the maximum range for the 85kWh battery version of its Model S sedan is 300 miles -- if driven at a steady 55 mph. That's pretty good for a plug-in only electric vehicle, but for those eager to make full use of the vehicle's massive power -- enough to move the 4650 pound Model S from 0 to 60 in 5.6 seconds, and then on to a top speed of 125 mph -- that range would, of course, be diminished. How much less, the website does not happen to mention. The cost for that amount of frustration comes to a C-note shy of $70,000 after a $7,500 federal tax credit.

For those who don't mind calling a tow truck to get their Teslas to an AC outlet after a night of red light drag racing, that money admittedly gets them a car of sleek beauty:

Source: Tesla Motors.

To the moon, Elon
But, while watching 60 Minutes rerun its profile of Tesla's founder Elon Musk, I couldn't help but think that his extremely ambitious SpaceX project has magnitudes more chance of success than does his car company. In other words, I have more confidence in a Musk-built rocket ship reaching the moon than in Tesla putting its luxury electric vehicles in enough driveways to ensure the company's viability.

Why? Because if Musk really wanted to make the electric car a common form of transportation, he should have followed Henry Ford's example of building affordable cars, not hood ornaments for the eco-conscious wealthy.

Ford (NYSE: F  ) pushed 15 million Model T's out of its factories between 1908 and 1927. The Ford's then starting price of $440 made it possible for Americans to get out on the highway in such numbers that it forced government to build highways to accommodate those vehicles. It also made it financially attractive for private industry to put gas stations along those highways. The smaller market for a luxury Packard, say, at $2,600 a pop, would not have had that kind of motivating power.

The same holds true for the current crop of electric vehicles. If there isn't enough pressure on governments and private industry to build the necessary recharging stations throughout the land, can the electric car survive?

A new Model T?
Yes, the Tesla Model S is a pretty face, but beauty is in the eye of the beholder, and lest one think I am a knee jerk anti-plug-in Luddite, let me introduce you to an electric car that really lights up the pleasure centers of my brain. Please meet the object of my electric lust, the T.27:

Source: Gordon Murray Design.

Wait, stop laughing. That is not a car from Roger Rabbit. I'm as serious as the man in the photo, Gordon Murray, who is the car's designer. Under the cartoonish skin of his creation lurks the DNA of a Formula One race car. Lightness, crashworthiness, and hyper-efficiency underscore the car's achievements, not surprisingly, as Mr. Murray has been one of the world's preeminent racing car designers over the last 40 years.

That's not to say the T.27 has much in the way of speed going for it. It tops out at 65 mph, and its zero to 60 time is a stifled yawn below 15 seconds. But just as an open-wheel race car is bred for nothing but going fast, the T.27 was designed to be nothing but an affordable, energy-sipping, about-town vehicle.

The T.27's qualities:

  • Small on the outside -- less of a footprint than a Smart ForTwo
  • Space on the inside -- seating for three
  • Excellent mileage -- the equivalent of 350mpg in a 2011 Royal Auto Club efficiency competition
  • Practical range -- 100 miles to 130 miles, depending on usage
  • Low price -- an estimated $11,000 (when it starts being produced)

That's why I think the Gordon Murray T.27 could be the modern day Model T. It's affordability and practicality could attract enough buyers to make electric vehicles so commonplace that energy companies would see recharging stations as a good investment. And that in turn could help Tesla's luxury electric vehicles start to make sense to enough buyers that Tesla could stay in business.

The rub
Of course, there's a caveat here. Gordon Murray does not plan to produce the T.27 himself. He wants to license the rights to produce the T.27 to another. The good news is, according to Murray, he is "currently engaged in talks with a prospective customer that could see ... [the] T.27 being manufactured."

Musk should hope that deal goes through. Far from being a threat to Tesla, it could make the world see electric vehicles in a whole new light.

In the meantime, while we wait for the hordes of electric vehicles to clog up our highways, it's still a good idea to keep an eye on the oil industry. If you want to find out which oil companies are the ones to buy for the rising price of oil, get this special report from the Fool: "3 Stocks for $100 Oil." The report is free and essential reading!

Fool contributor Dan Radovsky has no financial interest in the above-mentioned companies. The Motley Fool owns shares of Ford Motor and Tesla Motors. Motley Fool newsletter services have recommended buying shares of Ford Motor and Tesla Motors. Motley Fool newsletter services have recommended creating a synthetic long position in Ford Motor. The Motley Fool has a disclosure policy.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Read/Post Comments (11) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 16, 2012, at 4:42 PM, SpaceVegetable wrote:

    It's cute. But I still totally covet the Tesla Roadster :-) I'll probably end up buying one of the cheaper plug-in options - maybe the Volt or whatever Ford comes out with.

  • Report this Comment On July 16, 2012, at 4:45 PM, MARKETSURFER wrote:

    Hybrid autos are superior to just electric. A hybrid vehicle can continue running if one of the propulsion methods goes bad; it just changes over to the other propulsion method as the hybrid produces it's own electricity. Additionally, all electric vehicles will put a tremendous strain on the electric grid as they do not create their own electricity and have to be plugged in to recharge drawing down on the electricity in the grid. In case of a breakdown of the electric grid due to terrorism or acts of God, the hybrids could continue operating where the fully electric vehicles would be would be out of action as soon as their current battery charge ran out. Hybrids would make us much more resilient as a nation in the face of these types of catastrophes. Lastly,

    the propulsion system currently operating on gasoline in the hybrids should be changed over as soon as possible to natural gas in as many hybrids as possible. We are loaded with natural gas reserves here in the USA and this changeover would hasten the day we no longer have to rely on OPEC oil.

  • Report this Comment On July 16, 2012, at 5:18 PM, vegaland wrote:

    The Model T was a great success because it was the only viable alternative to the "Rich Man's Toys" everyone else was producing. Now, there are lots of alternatives to $70,000 toys from cheaper new cars to used car auctions where very high milage cars go for a grand or so. I don't think the T-27 is viable.

    And you still have to tow it home if you run out of juice.

  • Report this Comment On July 16, 2012, at 8:07 PM, 2ndString wrote:

    Any EV competition out there can only help Tesla since they make the type more visible. Musk's strategy is to build an expensive trophy (Roadster). Then mass produce a high end family car (model S, and X). In the works is a $30k family car. Tesla's design and execution is very good as reviews have shown. There is a waiting list for his products. This sounds like Apple inc. If he can maintain this standard he will win,and that means we will win if we are holding Tesla shares.

  • Report this Comment On July 17, 2012, at 7:27 AM, c5then wrote:

    The people who design an "Electric car" will be doomed to failure because they design it with the primary goal being long range and light weight. This means that there are many design issues which people dislike. Size is a big issue. Regardless of the crash technology used in "cartoon cars" like this, the fact is that they are sharing the road with vehicles that are 3x, 4x, 5x and more their mass. In a highway collision, mass matters. only a very small segment of the population will be willing to be seen driving in a cartoon looking vehicle. All the marketing and psychology studies around automobiles show that most people think of the vehicle as an outward manifestation of how they would like to portray themselves to society.

    The reason why Tesla is already doing better than almost all the "experts" and industry analysts expected is because Tesla designed an extremely nice high-end car that happens to have an all electric power train. The design of the car was first and then they designed the power train to get near the performance that they wanted. Tesla is NOT competing with the Ford Fiesta and the Nissan Leaf. They are competing with the BMW 6 series and the Jaguar.

    Another reason is because Musk understands that you can not introduce new disruptive technology initially in the mass market segment. It first makes its debut in the high-end luxury segment where it is vetted, refined and made ready for mass production. Then it works it's way down the market ladder if it is something that the general buying public decides they want.

    In conclusion, the T.27 is designed for a market that is almost non-existent; the single city dweller who wants a small car to get around the city and who doesn't mind looking silly. Since it isn't designed for trips longer than an hour or so in duration, it will do nothing to generate need for an "electric vehicle infrastructure". Also looking back at history is dangerous if you fail to take in the bigger picture. Henry Ford was able to start mass producing his Model T not before the other "wealthy toys" were produced, but after they were and because of them. The internal combustion engine was refined and made better for decades before Henry Ford massed produced one. If not for the high profile rich people driving around in their rich toys, no one would have wanted a Model T. It was a version of something that upper middle class people could possess that was previously only available to the wealthy. Keep in mind that the Model T was still about a year's salary for the average city worker at the time.

    None of the technology items that we use today and take for granted entered the market as cheap affordable items for the masses. They all entered as high-end luxury items that worked their way down to the masses. Because doing something new is expensive and risky to you better make a profit off each one sold and not have to depend on "volume" to be solvent.

  • Report this Comment On July 17, 2012, at 10:39 AM, tander987 wrote:

    Dear author, please do you homework on a company to a greater extent than watching sixty minutes before forming an opinion and writing about it. TSLA's business plan is actually largely based on Ford's original business plan.

  • Report this Comment On July 17, 2012, at 11:15 AM, devriet wrote:

    The author is making a very good point about cost. Can you imagine a 11k car with a 7.5k tax rebate? A $3500 car makes sense, for a car to drive to and from work.

  • Report this Comment On July 17, 2012, at 12:59 PM, gametv wrote:

    this author knows nothing about business, which is why he writes for a living and doesn't manage a business. the tesla is perfectly positioned as a high-end vehicle. they are targeting exactly the right people with this car, the people with high disposable incomes that have multiple cars in their household. the reason that is important is that if a husband and wife own a tesla, they can switch cars if they need to drive more than 300 miles and they can use their other car for long trips. once tesla has been established as an "object of desire" with the wealthy, then they will move down-market. also, tesla's SUV vehicle is a smart follow-up vehicle. there are lots of "soccer moms" who just drive their kids around all day, who dont need alot of range, but have lots of money. over the next 2 years tesla will show the rest of the schumcks in the auto industry how to disrupt an industry

  • Report this Comment On July 17, 2012, at 3:58 PM, fernandave wrote:

    The silliness of the "infrastructure" and "strain on the power grid" arguments make me crazy. Those issues are non-issues once the range of the vehicle exceeds 300 miles. All you have to do is think about the way you and everyone you know actually uses their cars. The vast majority of days, you drive to work, park the car all day, and drive home. Maybe a couple small errands on the way.

    Seriously, when was that last time that you or anybody you know, aside from a trucker or a traveling salesman, drove more than 300 miles in the same day. If you have a plug in your garage, you have the infrastructure. As electric cars become more common, hotels & motels, and apartment owners will install chargers, just to be able to compete for tenants. The infrastructure will grow by itself.

    90+% of the cars will be charged in the owner's garage at night, when the grid has TONS of capacity. For the next few years, the folks who will be buying electric cars will highly likely be those with 1 or 2 or 3 other cars, so in the unlikely event of a long travel day, they'll just take another car.

    Anyone who sinks money into building roadside charging stations and battery swap stations will never make a penny. Within a few years, more cars than the Model S will have the longer range, and the owners will almost never need to charge them up anywhere but at home.

    Little weenie micro-city cars will never be very popular, gas or electric. Niche market at best, forever.

  • Report this Comment On July 17, 2012, at 5:17 PM, 48ozhalfgallons wrote:

    ...and I thought the Prius was ugly! Making a car look good it the least expensive aspect of vehicle design. Only a prick could produce such an ugly device.

  • Report this Comment On July 17, 2012, at 5:22 PM, 48ozhalfgallons wrote:

    Making a car look good is the least expensive aspect of vehicle design. The typo was a mistake. The look of the T.27 is a tragedy.

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