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A Challenge for Tesla Motors Is an Opportunity for AeroVironment

There are a lot of hurdles for Tesla Motors (NASDAQ: TSLA  ) , Ford (NYSE: F  ) , Nissan, and other automakers trying to sell electric vehicles, or EVs. One of those challenges may be a lot closer to home than we realize. It may be nothing more than your garage's electric car plug-in, which probably doesn't exist. 

As it stands today, not only do electric-vehicle buyers have to fork over thousands of dollars more than for buying a conventional vehicle, they must also spend at least $1,000 for an electric charger at home. Condo owners and apartment renters face a greater challenge even getting a charger installed.

At least one town is trying to eliminate the home plug-in challenge. The city of Palo Alto, Calif., is requiring new homes to come with electric vehicle chargers. The city is already a hotbed for electric vehicles, and as Tesla Motors' hometown it also has incentive to go electric.

Electric vehicles face many adoption hurdles
The home plug-in isn't the only challenge the EV industry faces, but it's one that's largely out of the industry's hands. Tesla Motors has already done a lot to dent the range anxiety electric vehicles present to new buyers. The Model S has a range up to 265 miles, enough to take a three-hour drive on the highway. Of course, Tesla is way ahead in the range game. The Nissan Leaf has an average range of 75 miles and the Ford Focus Electric has an estimated range of 76 miles, or 100 miles in the city. Expect these ranges to pick up as the industry matures.

The next big challenge is the charging infrastructure, on the road and at home. So far, the industry has focused much of its attention on the nationwide charging network. Tesla is building its own supercharger network, which will give a Model S an 80% charge in 40 minutes and a full charge in 75 minutes.  

AeroVironment (NASDAQ: AVAV  ) is building some of the "West Coast Electric Highway," a network of stations that will run from the Mexican to Canadian borders along Interstate 5. Washington and Oregon selected the company to build their portions of the highway. But home charging is up to homeowners or EV buyers, adding another headache in the buying process.  

Ford and Nissan are partnering with AeroVironment to offer one-day turnkey charger installation, while Tesla Motors has partnered with SolarCity, CEO Elon Musk's residential solar installer. Both are decent solutions but they reaffirm that there's work to be done even after you make the decision to buy an electric vehicle. Unless you buy a new home in Palo Alto.

Vehicle charging will be big business
The potential for a company like AeroVironment -- which has become an industry standard charger manufacturer -- is tremendous. A standard home charger costs about $1,000 and, while EVs are counted in the thousands right now, the vision is to sell them by the millions. There are about 114 million homes in the U.S., all of which could take an EV charger -- or two -- meaning a potential market north of $150 billion. That's before we get to commercial or work chargers.

Adoption is going slowly and AeroVironment generated just $8.9 million from charger sales last quarter, but you can see the potential. Even a 10%-20% share of this future market could make this stock a hit.

A big winner in the making
Electric vehicles have challenges, one of them being the lack of charging stations at homes around the country. The city of Palo Alto is trying to address that, and if its effort starts a trend I can see AeroVironment as a huge winner.

The next growth frontier
Tesla doesn't just have its sights set on the U.S. market, China is a huge opportunity for the company. As Chinese consumers grow richer and buy more cars, savvy investors can take advantage of this trend by buying car companies set to exploit the Chinese opportunity. A brand-new Motley Fool report identifies two automakers to buy for a surging Chinese market. It's completely free -- just click here to gain access.

Read/Post Comments (8) | Recommend This Article (2)

Comments from our Foolish Readers

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  • Report this Comment On October 22, 2013, at 10:45 AM, orwa8 wrote:

    You don't need a charger installed for the Tesla Model S. The charger is built into the car. Most people just have a NEMA 14-50 plug (dryer plug) installed in the garage and plug the Tesla into that at night. Cost to install is as low as $150, depending on how much cabling needs to be installed.

  • Report this Comment On October 22, 2013, at 11:14 AM, dimestop wrote:

    yes, all this "charger emphasis" is interesting...


    a. Tesla comes "CAPABLE OF BEING CHARGED OFF YOUR 110v "garage outlet"...


    c. you just "plug your Tesla" into a regular 110v socket...

    d. this takes overnight...when you're probably sleeping anyway... like you get home from work at 7pm... pull your Tesla in the garage... plug it in...and you're ready to commute next morning...

    e. you can use the "240 volt" adapter (comes with your Tesla) if you have 240v service in your garage... BUT YOU CAN PLUG AND CHARGE A TESLA in "ANYWHERE" you have access to a "standard 110volt socket... like what you plug a lamp into, etc.

    F. all this SUPERCHARGER stuff... is just mostly if your "on the road" and NEED A FAST 30 MINUTE CHARGE to get about 1/2 full... meaning easily go another 100plus ...miles


    YOU DON'T... and this article should have MADE THAT CLEAR...

    I wonder "why not???"

  • Report this Comment On October 22, 2013, at 12:03 PM, IhateNASA1 wrote:

    Tesla now come equipped with a fire pit standard in the Frunk, at no extra cost, just strike a piece of metal and poof a flame is ignited.

  • Report this Comment On October 22, 2013, at 12:17 PM, RustySlade wrote:

    The writer needs to identify the battery sizes of the different cars in order to have credibility in the article. . . . .

    The writer also needs to say how expensive the 85kwh battery is for a Tesla to get the 265 mile range. . . . . last I heard it was $30k for the battery alone.

    This article would be better if the writer compared battery sizes to charge times and electricity required to get that charge time.. . . And then compared the cost of the battery between them as well as the cost of the electricity for X miles.

  • Report this Comment On October 22, 2013, at 12:35 PM, speculawyer wrote:

    Chargers are NOT REQUIRED. Just wiring & conduit.

  • Report this Comment On October 22, 2013, at 12:42 PM, jeffhre wrote:

    Be fair. EVSE's today are few and far between, so there is a large potential market. Sure I plug my Volt into a 110 V (120 Volts) socket every other night. But that is not the whole story.

    People that drive a vehicle with 260 miles of range, which costs between $70,000 and $135,000, may drive it home with nearly no miles left and decide they want it charged to full again in quickly, at their apartment. That could be a really big business some day for a company like AeroVironment.

    Ohhh, you thought that was sarcastic! Hey, it could, and probably will happen. Enough to build a business, we'll see. With Blink out of the way, the field is open for the taking!

  • Report this Comment On October 23, 2013, at 3:40 PM, CAGriffinX2 wrote:

    @RustySlade: "The writer also needs to say how expensive the 85kwh battery is for a Tesla to get the 265 mile range. . . . . last I heard it was $30k for the battery alone."

    If your $30k cost estimate is true, this is only the CURRENT cost of the 85kwh battery pack, which has an 8-year unlimited mileage warranty. With constant advancements in battery range and lower costs every year, by the time your battery pack wears out in >8 years, your replacement costs will be much lower and your Model S will go farther on a single charge than it can now.

  • Report this Comment On October 23, 2013, at 3:45 PM, CAGriffinX2 wrote:

    @IhateNASA1: Although I admit your "fire pit standard in the Frunk" comment is very funny, Elon Musk just pointed out in Munich, that had it been a gasoline powered car, the piece of metal would have entered the passenger area with tremendous force and could have killed the driver. This piece of metal managed to pierce a 3-inch-diameter hole in the Model S' 1/4-inch-thick armor plate that protects the battery pack. Gasoline powered cars only have a thin sheet of metal underneath to protect the car's occupants.

    Plus, the Model S is so advanced that the car TOLD the driver that there was a problem, and that he should safely pull over and exit the vehicle!! The fire was contained to within only the front module (out of 16 modules - each of which is separated by a firewall) of the pack until the fire department arrived and cut a hole into the pack to extinguish the fire within. Only then did the fire spread to the frunk area of the car. The car actually performed flawlessly in protecting the driver from injury in such a catastrophic event.

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