Will Tesla Solve Its Biggest Problem Tonight?


Tesla's 2013 Model S. Photo Credit: Tesla Gallery.

Some of the greatest innovators and leaders aren't recognized as such because of their penchant to solve incredibly difficult problems – although many do just that. Rather, it's by solving problems with answers so simple that they're typically overlooked. Tesla (NASDAQ: TSLA  ) has announced a press conference to be held today to demonstrate how its Model S will jump a hurdle some consumers and investors have complained about – the length of time it takes to recharge its battery. Even Consumer Reports, which recently gave Tesla's Model S a rating of 99 out of 100, had only one complaint: that it could take six hours to recharge a battery if traveling long distances. Here's how the problem has perhaps been solved.

Think outside the box
As I mentioned, sometimes the best answer is the simplest and is often overlooked. This time, though, the solution may have been overlooked because it had been tried before and failed. The company Better Place, which filed for bankruptcy this year, had a similar strategy. But its strategy had one flaw: It serviced consumers with lower incomes than your typical Tesla buyer, and it couldn't keep the battery swap cost low enough to remain successful.

Tesla hasn't yet provided any details on how this battery pack swap will take place, opting to demonstrate it instead. The idea of a battery swap instantly raises a few questions. For instance, as batteries age they consistently hold less and less charge, and swapping a battery for another of dubious quality could pose problems. If I just forked over at least $69,000 for a new Model S and then have to hand you my brand-new battery to exchange it for what could be a much older one holding less charge, I'd be very reluctant to do so. I'm quite sure Elon Musk has thought of this, and that it is a problem that already has a solution and will be explained tonight – but we'll see.

If Tesla has indeed drawn up a way for a quick, painless, and cheaper way to swap batteries for those drivers worried about traveling long distances, then it will be a very positive development for investors. The battery swap solution could boost revenues by bringing additional consumers to Tesla showrooms who were originally hesitant to purchase a Model S because of driving distance limitations. It would also give investors more confidence that Tesla will continue to innovate its way past other problems that will undoubtedly arise – giving more justification for its very lofty valuation. In addition to all those potential benefits, this development continues the seemingly endless positive publicity that Tesla has received lately, even through a recall – which was handled extraordinarily well.

Bottom line
Tesla has been one of the wildest rides in the stock market to witness this year, and the company has a very divided following. Many Fools are at opposite ends of the argument; some believe Tesla could live up to its lofty valuation, others believe that its share price has risen far ahead of its actual value. One thing is for sure: Tesla is jumping one hurdle at a time, and while I believe that the company will fight an uphill battle over the short term, it could be one incredible long-term story for patient investors willing to endure speed bumps throughout the decade.

Is Tesla doomed to crash just as fast as it has surged these last two months? Giant competitors are already moving to disrupt Tesla. Will the company be able to fend them off? The Motley Fool answers this question and more in our most in-depth Tesla research available. Get instant access by clicking here now.


Read/Post Comments (6) | Recommend This Article (5)

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 June 20, 2013, at 5:51 PM, Grumpycat wrote:

    No.

  • Report this Comment On June 20, 2013, at 7:49 PM, jamesdan567 wrote:

    The Tesla S model is 300% to 400% more efficient than any ICE car, so Tesla has no big problems left.

    They just need time to execute the business model and push aside the naysayers as they have been doing perfectly for the last ten years,,,

  • Report this Comment On June 20, 2013, at 10:47 PM, haid1 wrote:

    The Model S could become the next Taxi cab.

    It is the smoothest ride in town. It has plenty of room for passengers and luggage. It has 1/4 the fuel cost. The engine has only 3 moving parts. The transmission is simple as it is a fixed gear ratio. With regen, brakes never wear out.

    And if a taxi cab company has a fleet and a battery swapper, it could "refuel" in a few minutes. And never have to worry about battery ownership, as they all would be owned by the cab company.

  • Report this Comment On June 21, 2013, at 5:19 AM, gowanz wrote:

    The Tesla is an example of a great new technology. It might take a few years before it gets sufficient volume to be a real threat to existing car manufacturers. Once a solution is offered for the distance problem, other manufacturers may start to introduce their own all electric cars. The industry needs to do what the computer industry did and get the IEEE to define compatible plugs and connections, so a 2015 Ford owner can use the same charging system as Tesla. This will then bring down fixed costs.

  • Report this Comment On June 21, 2013, at 9:15 AM, Aelaza wrote:

    Everyone in the USA should be very interested in Tesla as this vehicle and technology will free us from our dependence on foreign oil. That is a VERY BIG deal folks. We support many nations just to make sure we have uninterupted fuel supply. We could be the first Nation on earth to go mostly electric and that would be awesome. Keep in mind as well that the Tesla was awarded the highest rating ever so we dont have to drive so-so vehicles just to go electric. This is a very big deal folks.

  • Report this Comment On June 21, 2013, at 4:28 PM, 48ozhalfgallons wrote:

    It would be a no-brainer and not much to ask to use an on-board processor to sample and display remaining energy and potential pack recharge with each swap; simply a smart fuel gauge. 100% is the standard. Less than that would be pro-rated. For example, an 11.1% energy credit against the value of a full charge would be applied to one who swaps a discharged 100% pot(potential)-pack for a fully charged 90% pot-pack and vice-versa. On board gauging processors would be synched with service processors for monitoring charge valuations. New packs or old packs become moot. The pack's value is determined by charge or remaining energy of the installed pack. Once discharged the pack is considered to have no value (unless stolen) until recharged.

    Individual cells have individual characteristics. The collective character of a pack must strive to achieve and hold a 100% potential charge for a given time before discharge, and energy available for discharge among similarly charged packs must be of standardized value. For equitable maintenance the packs must have the capability of providing charge condition and potential of sub-pack groups. In turn, those sub-pack groups must provide data for individual cell performance and potential. Individual cells must be easily located and swapped. The sum of the percentages of sub-pack charge and energy must ≥ 90% of pack potential. As battery efficiency improves, an equitable standardized swap/recycle scheme must be utilized. Limits are not with the technology. Limits are in the efficiency of logistics and willingness to convenience the user, or just plain old fashion service.

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