The One Reason Tesla Motors, Inc. and Electric Vehicles Will Dethrone Gas-Powered Vehicles

U.S. consumers place a premium on this one factor -- and it's why Tesla Motors and electric vehicles will likely win the alternative-fuel vehicle race.

Feb 15, 2014 at 6:30PM

If you're following the race among alternative-fuel vehicles to dethrone today's king of the road, the internal combustion engine vehicle, you know there are pluses and minuses associated with each type of vehicle. This includes the hybrid electric vehicle; the purely electric vehicle, much in the news these days thanks to Tesla Motors (NASDAQ:TSLA); and the hydrogen fuel cell vehicle. They all have their strengths and weaknesses when it comes to various factors, such as cost, convenience, environmental- and human-health impact, and so on. Of course, those strengths and weaknesses are largely quite subjective -- they vary based upon whom you ask, as well as who paid for whatever study is being quoted.

My take is that many of the specifics don't matter that much, and that which type of vehicle should win and which one will win could, perhaps, be two different things.

I believe there is one reason it is highly likely that EVs -- with Tesla leading the way -- will take the passenger-vehicle mantle from ICE vehicles: convenience. (Down the road, perhaps, EVs might be dethroned, and it would be terrific for us all if it were by solar-powered vehicles, but that's a long way a-comin.')

The U.S. is a "convenience society"
I realize boiling this big issue down to one key factor seems overly simplistic. However, what the consumer wants, the consumer usually gets -- and what the U.S. consumer, in general, most craves is convenience, in my opinion.

The U.S. is a convenience society. We have drive-through everythings; Netflix kicked Blockbuster to the curb largely because of the convenience factor; Green Mountain Coffee Roasters' Keurig has been phenomenally successful mainly because it's ultra-convenient; and McDonald's and the entire fast-food concept enjoy amazing success largely because of the ease factor.

Let's not forget the poster child of convenience: online shopping. Amazon.com's massive empire was built on convenience. And what's the latest competitive space in that realm? Same-day delivery. Amazon, Wal-Mart, and Google, among others, see huge dollar signs in their corporate eyes in delivering even more convenience into consumers' lives. Otherwise, would Amazon CEO Jeff Bezos be looking into using drones for short-distance same-day delivery? There are surely huge costs involved in getting that enterprise up and running. Google, likewise, apparently plans to spare no expense in capturing the convenience dollars up for grabs. It's been widely speculated, including by The New York Times, that one reason Google's been building up its massive robotics army -- it bought eight robotics companies last year -- is to use them in its retail delivery service.

Electric vehicles are largely "convenience vehicles" for many
EVs allow for the bulk of "fueling" to be done at the driver's home, while he or she is sleeping away. And, when away from home, the driver will largely be able to plug in and charge up while parked at work, a restaurant, a shopping center, and so on. No need to go out of one's way -- even if it's only a few blocks -- to a gas station. Many people like this idea, and I'd venture to say that most of those same people likely don't want to have to make pit stops at hydrogen fueling stations, either.

Additionally, EVs require less regular maintenance and likely fewer repairs than ICE vehicles -- and who wouldn't like that idea? This is a biggie with respect to both cost and convenience. 

Now, EVs might not be considered convenient for some folks because of their range. However, I think the "range anxiety" issue is largely blown out of proportion when it comes to Tesla's vehicles.

The Model S with the 85 kW-h battery has a 265-mile range. Let's somewhat arbitrarily even lop off 15% during poor driving conditions. That's 225 miles.

Americans who drive passenger vehicles drive an average of 12,000 to 13,500 miles per year. That equates to 230 to 260 miles per week. We're talking one or two charges per week, which, for those with a garage, or select other parking facilities, can be done overnight.

Sure, extended drives will mean stopping at a Tesla Supercharger station. I'd guess most people -- especially those with kids -- stop after a few hours on the road to eat and/or use restrooms, anyway. A 20-minute break allows a Model S to get enough juice at a Supercharger station for an additional 130 miles, while a 30-minute break will provide power for about 200 miles. Granted, these sites aren't conveniently located for everyone yet. So it should go without saying that EVs aren't currently a good fit for some. And for some consumers, such as those whose jobs involve regular long-distance driving, even a 265-mile-range vehicle might not ever be convenient.

As to Supercharger stations, Tesla is aggressively expanding its charging network. By 2015, 98% of the U.S. population (and parts of Canada) will live within the Model S rated-range of a station, per the company.

Down the road, EVs should become even more convenient, as battery and charging technology will almost surely improve, so ranges will increase and charging time will decrease.

Foolish final thoughts
Investors might consider asking themselves this question when considering investing in companies that make consumer goods: Will, or do, a good number of consumers largely view this product as adding convenience to their lives? Tesla's EVs pass that test, in my opinion. 

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Beth McKenna has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Google, Green Mountain Coffee Roasters, McDonald's, Netflix, and Tesla Motors and owns shares of Amazon.com, Google, McDonald's, Netflix, and Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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