Can Tesla Save This American Icon?

Photo Credit: Tesla Motors.

When Tesla Motors (NASDAQ: TSLA  ) launched its Model S, it arguably changed the face of the auto industry forever. The company proved once and for all that it could build an all-electric car that consumers wanted to buy. Detroit was put on notice that it needed to really shift gears to catch up or it could be innovated into extinction. However, while Tesla is looking to speed past American icons such as Ford (NYSE: F  ) , its success could save another American icon: Alcoa (NYSE: AA  ) .

There's no doubt about it: The aluminum giant and Dow Jones Industrials member has seen better days. Its stock is down some 80% since the dawn of the financial crisis. Many airline manufacturers that were among its biggest customers have switched from aluminum to composite materials for the body of their next-generation planes. However, while composites might be next generation for the aviation industry, aluminum represents the next generation for the automobile industry.

In fact, the driving force behind Tesla's Model S might not be the electricity coursing through the car, but instead the lightweight aluminum that makes it all possible. The aluminum-intensive design saves Tesla precious pounds, which enables the car to deliver performance never dreamed possible from an all-electric car. At 4,650 pounds, Tesla needed the weight savings from aluminum, in this case roughly 33% over steel, or more than 200 pounds, to offset its hefty battery pack. Its success with aluminum is now rekindling hopes that Alcoa can once again thrive.

Tesla uses an enormous amount of aluminum to build each Model S. In fact, each car starts as a huge aluminum coil that weighs up to 20,000 pounds. It's used to form virtually everything from the hood to the trunk. In fact, nearly every piece of visible metal is aluminum, which totals more than 660 pounds. That's more than twice the industry average. What all this means is that as Tesla ramps up its production, its aluminum usage should skyrocket.

However, at its current rate, Tesla doesn't really put much of a dent into the aluminum market. The company hopes to be able to double its production to 800 vehicles per week by the end of next year, which would be about 40,000 per year. That's a far cry from its capacity for 500,000 cars that its founder Elon Musk envisions in the future. Even at that rate, Tesla alone wouldn't drive the aluminum market. Instead, what it's doing is leading the charge -- and its competitors are beginning to follow.

Ford, for example, is said to be considering an aluminum body for its next-generation Ford F-150. The move could shave off 700 pounds, or about 15% of its total body weight. That would provide a big boost to Ford as it strives to meet the upcoming increases in CAFE standards. While the F-150 would represent its largest foray into aluminum, Ford currently does have several vehicles with at least 10% of the body weight being finished aluminum, with the Fusion, for example, using 336 pounds, or 10.2% of its curb weight. Overall, the company's percentage of aluminum is only expected to increase in the future as it looks for ways to cut weight to increase gas mileage.

Not only is a lighter vehicle important for fuel consumption -- or, in Tesla's case, range -- but a lighter vehicle also accelerates and brakes more quickly and handles corners better than a vehicle built with heavier materials. This is why I wouldn't write off a company like Alcoa just yet. While demand from Tesla alone won't drive Alcoa's business, it is driving change within the auto industry in more ways than one.

That still doesn't mean Alcoa is a top stock. Instead, you be better for taking a closer look at the stock that The Motley Fool's chief investment officer has selected as his No. 1 stock for this year. Find out which stock it is in the special free report: "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.


Read/Post Comments (11) | Recommend This Article (6)

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 August 10, 2013, at 10:16 AM, kca124cain wrote:

    If you search eBay right now: Listing 290955840979 , you will see a damaged Tesla 2011 roadster 6,500 miles, for sale. Salvage title. This vehicle was in a "minor" accident. Hit in the right door and right rear quarter just in front of the rear wheel. Looks worse than it is, because the quarter panel has been trimmed away in an attempt to access and repair an electrical problem. This would be a $2,000 to $4,000 repair on a regular car and you would be driving it, but was determined totaled because the car will not run. Also, the warranty has been canceled due to the accident.

    Tesla has failed big time. A decade ahead? No, light years behind the competition.

    When the insurance companies start to get data, Tesla's will become uninsurable – or Obama will require the costs to be spread out amongst everyone else.

  • Report this Comment On August 10, 2013, at 10:52 AM, russellgbowman wrote:

    Another new vehicle about to hit the streets in 2014 is the Elio (Elio Motors), using composite panels and radically different design, it gets 50 mpg city, 84 mpg freeway. At $7,000 per copy, expect this nice looking vehicle with air bags, fully appointed interiors and Lear Jet seating to be a hit. Did I mention it uses 95% materials and parts made in the USA? Check them out! Again, the old three traditional makers of our domestic automobiles are thinking decades behind modern design and engineering. They had better get a clue, there are plenty of ways to make cars affordable and green for our environment.

  • Report this Comment On August 10, 2013, at 11:02 AM, kingofrome wrote:

    I have looked at the eBay pictures looks like it will need a new ground effect/ rocker panel, new door, new trunk, frame looks a little bent under the ground effect!!!! plus the wheel frame is cracked if you notice it! AC lines is bent. Door frame might be bent too!!!! Have to paint the new panels and replace any electric problems anyways repair price is maybe more like 30,000-40,000 or more depending on what the electric problem is where you take it. Sad they don't make roadster anymore parts must be very hard to come by.. Anyways any car that gets a salvage title will lose it warranty! plus the ad doesn't state anything you have said like example "Looks worse than it is, because the quarter panel has been trimmed away in an attempt to access and repair an electrical problem." where do you read that in the ebay ad? ass hat much?

  • Report this Comment On August 10, 2013, at 11:10 AM, Marshgre wrote:

    Tesla has been around for ten years... Insurance companies already have data.

    Tesla probably refused to honour the warranty because a third party was allowed to mess around with the electricals. The Model S has a "no fault" warranty on the battery but will cancel that warranty if any non Tesla person opens or modifies the battery. While the roadster didn't have the "no fault" warranty the warranty would still be voided by anyone (non Tesla) opening or modifying the battery or electronics.

    I've had the unfortunate experience of a relatively new car being damaged in an accident - the insurance company put the pressure on for me to have the car fixed at their (cut rate) repair shop, I stood my ground and had the car repaired by the dealership. Had I allowed the insurance company to strong arm me into the cheaper repair my warranty would have become voided for many items (corrosion, suspension)

    The e-bay car from above is a roadster and is largely composite materials - it was most likely butchered at a cut rate "repair" shop. Not a particularly good example of what will happen with most of Teslas current cars.

  • Report this Comment On August 10, 2013, at 11:16 AM, hunter3203 wrote:

    Tesla isn't leading the conversion to aluminum, it's been underway for a long time. Audi was the first major manufacturer to use an all aluminum chasis in their A8 that debuted in 1994, some 20 years ago. This kind of reporting is part of a sickening pattern where reporters who aren't familiar with the auto industry report on Tesla as though they've invented everything. I've seen the same reporting on their assembly process which uses robots to weld panels into place. Of course they left off the fact that the world's automakers have been building cars that same way for decades.

    Tesla has done a great job in developing and building the Model S. By all accounts it's a great car. But most of the technology that Tesla uses has been done before. Their genius is that they've aimed at a part of the market that is willing to pay the true cost of today's EV technology and therefore have the most capable EV on the market.

  • Report this Comment On August 10, 2013, at 11:18 AM, Marshgre wrote:

    Oh. And the Roadster in question most likely will not power on because the main battery disconnect was triggered by the collision. The main battery disconnect is a safety feature that is build into the car so first responders have a measure of safety as they go about their jobs.

  • Report this Comment On August 10, 2013, at 1:23 PM, trats20050 wrote:

    That was the first model for Tesla.. In the current model warranty is getting better.. Future cars will only get better with warranty issues. I cant believe that after reading the whole article somehow this came back to Obama...

    Tesla has paid back the loan.. With interest..

    Romney now wishes he hadnt opened hes mouth about tesla.. Now with all hes millions he cant buy one..

  • Report this Comment On August 10, 2013, at 1:31 PM, trats20050 wrote:

    That was the first model for Tesla.. In the current model warranty is getting better.. Future cars will only get better with warranty issues. I cant believe that after reading the whole article somehow this came back to Obama...

    Tesla has paid back the loan.. With interest..

    Romney now wishes he hadnt opened hes mouth about tesla.. Now with all hes millions he cant buy one..

  • Report this Comment On August 10, 2013, at 1:39 PM, jamesdan567 wrote:

    Why would anyone be stupid enough to evaluate Tesla, which received the highest ratings (5 stars) in government crash tests,

    based on one car involved in one accident, on ebay?

    Answer: Because the electric car threatens their way of life.

    No engine -> no car mechanics, no oil change shops, no smog certificate. No tuneups at the dealer. No filters, No radiator shops, no gas stations needed. The list goes on an on.

    Evolution cannot be stopped. All new cars sold by 2023 will be pure EV's. Many of them will be made by the world's leading EV maker, Tesla.

  • Report this Comment On August 10, 2013, at 3:22 PM, Badskpr wrote:

    The problem with the electric car is the infrastructure or charging stations. As an Affiliate with Urban Green Energy that has a "Sanya Light Pump" which a 5 kw vertical axis wind turbine combined with a 240 VDC GE fast charger for 30 K. This is being used in China and in Durban South Africa but not here. Why,well, ask the House of Representatives when they come back and why they are buying another five million gasoline powered vehicles for GSA to travel less than thirty miles a day.

    Consequently, I think Renault ZE is the top manufacturer of electric vehicles with 3 vans,2 cars,and a Twizzy that can cruise at 90 KPH for thirty miles. Finland,France, Turkey, and soon Brazil will be making these as we watch the fight in Washington DC bringing down the country. The question is who is coming after Obama or will it be another country if we just sit back and like it.

  • Report this Comment On August 12, 2013, at 12:05 PM, BigDennisC wrote:

    Jamesdan youre an idiot. Tesla will be bankrupt if they come out with a cheaper vehicle that the common folk can buy.

    Reason being? Rich people want to flaunt their money by a brand. Thats whats hurting the Volt. People that would love to buy it wont because its a Chevrolet and the common man buys Chevrolets. Lamborghini was talking about bringing out a $100,000 production vehicle and it was scrapped because they found out if they made it they would lose the customers willing to pay $300,000 for their hand built cars.

    Truth to be told though there hasnt been any technological breakthrough when it comes to electricity in over 100 years to make EVs a serious competitor for the future. No matter how far we can make a battery powered car go on a charge electricty can only transfer soo fast. And thats amps and volts. When you start talking transfer of amps and volts high enough to charge a battery in 30 minutes you are talking electrical concerns that require massive safety protocal.

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