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

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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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 February 15, 2014, at 6:52 PM, Jim5437532 wrote:

    I think electric vehicles are here to stay, but I would write off gas vehicles. Gasoline will eventually become cost prohibitive for most uses. However gas as in methane, hydrogen and other forms are liable to gain in popularity. I also suspect that bio diesel and alcohol might take up some share of the market.

    Tesla will necessarily be an electric market leader. I think it's shady practices is a liability. It's disregard for safety and dishonest practices is jeopardizing its future.

    There has been at least five significant Tesla related fires. Tesla has been dragging its feet on safety and the recall

    The most recent Tesla garage fire to hit the news was in Toronto. The car supposedly wasn't even plugged in, so the charging system isn't likely to be a source. I'm hoping to hear reports from the fire departments investigation, because I don't trust Tesla's "fire investigations", which seem more like coverups.

    There has been at least five Tesla fires. Two Teslas caught on fire after only running over road debris. One Tesla caught on fire and exploded after being in an accident in Mexico. There was a Tesla fire in a California garage, that the Tesla charger connection was ruled as a possible source of the fire by the fire department. Recently there was a Tesla garage fire in Toronto, that so far I haven't heard the fire department give a ruling. Arguably there has been scores, possibly hundreds of minor Tesla fires. There has been a plethora of Tesla charge connectors that have overheated, melted and burned. Though many Tesla shills will argue that they are not fire. Categorically and scientifically they are often classified as fire. Rapid oxidation or rapid decomposition is often classified as fire. Like the metaphor; where there is smoke, there is fire.

    A few months ago there was a Tesla related garage fire in California that the fire department ruled that the Tesla charging system was a possible source of the fire. The suspect portion of the Tesla charging system that the fire department in California determined was a possible source of the California garage fire, is also suspected in many other Tesla charger reported cases that Tesla charge connections have overheated, melted and burned. Tesla issued a software "fix", however Tesla charge connectors have continued to overheat, melt and burn despite the so-called "fix".

    The Tesla model S. still has defects that make it a fire hazard. Tesla charger connections are still overheating, melting and burning. Tesla batteries are poorly located and poorly protected. Tesla is Junk.

    On 1/9/2014 Elon Musk said that replacement adapters that are part of the recall would be mailed out within two weeks. A month later Tesla customers have still not received the replacement adapters that are part of the Tesla model S. recall.

    Several people have been injured by faulty Tesla charge connectors. Tesla is big on making promises and hype, but short on delivery. Tesla needs to start making safety a top priority. Tesla needs to stop playing blame games and games with semantics. Tesla needs to stop lying. Tesla needs to be proactive instead of reactive. Tesla is being a follower of technology, rather than a leader. Tesla is a greedy corporation that has a disregard for safety. The Tesla model S. is an E-Pinto.

    Tesla manufactures more excuses, then cars.

  • Report this Comment On February 15, 2014, at 6:59 PM, Jim5437532 wrote:

    Correction" I would not write off GAS vehicles. Though GASOLINE's days are numbered for ordinary use. As gasoline becomes more expensive other types of fuel will become more viable.

    The word gas is typically wrongly used for the word gasoline. In proper grammar has become mainstream.

  • Report this Comment On February 15, 2014, at 7:07 PM, Albertico wrote:

    ICE vehicles are like Dinosaurs, they might as well be extinct. Within the next 10 years we will see a drastic shift in transportation and the primary energy source of the same. EVs are largely convenient and very cheap to maintain or "fill" up.

    Hydrogen vehicles seem like the most green future option, but you would still have to go to a "hydrogen" station to fill up and pay fuel costs comparable to filling up your gas guzzler.

    Both have their ups and downs, but both are an improvement over ICE.

  • Report this Comment On February 15, 2014, at 7:25 PM, duuude1 wrote:

    Yo, Jim5437532 duuude, do you work for the National Auto Dealers Ass.? I recognize the usual glib lines of mis-direction, exaggeration, and outright lies that I always get walking into a dealership. And it's clear that you and your dealer duuudes are trying to snuff the first innovative new American car company in a hundred years. Stuff it already.

    Duuude1

  • Report this Comment On February 15, 2014, at 7:30 PM, NavyChum wrote:

    Jim - Tesla is the safest car out there. And the company is awesome. Sorry those things are driving you nuts.

  • Report this Comment On February 15, 2014, at 9:40 PM, Ustauber wrote:

    @jim5437....

    Are you still licking your wounds..

    Reading all your articles seems that you had lost

    A lot of principal on Tesla shorting strategy .

    It i was you, just keep driving your Toyota Prius

    Oh wait .... You can't because they have RECALLED

    OF THEM.lets say over 2 million cars.

    Why you make a comment about that instead .

    If funny looking at the time of your numerous

    Negative comment about Tesla and the time you wrote them is always following an uptrend of the Tesla shares.

    Sad

  • Report this Comment On February 15, 2014, at 9:40 PM, Ustauber wrote:

    THX TSLA

  • Report this Comment On February 15, 2014, at 10:57 PM, CarFanatic wrote:

    Jim5437,

    I see your same rant pasted on numerous financial sites, copied word for word. You must be a busy boy.

    Its getting old.

    You should invest in stocks that you believe in.

    Instead of shorting and bashing Tela.

    You will find that in the end all your time will be for not.

    Your false statements are falling on deaf ears.

    Advice: Get out of your short position soon.

  • Report this Comment On February 16, 2014, at 12:16 AM, wsrtwo wrote:

    The assumption, it seems, is that electricity comes out of thin air. The reality will rear it's ugly head when everyone owns an electric car, and when they plug into their charger at night, the power grid, and/or the power source fails from overloading.

  • Report this Comment On February 16, 2014, at 6:17 PM, Pietrocco wrote:

    Beth,

    You say "the driver will largely be able to plug in and charge up while parked at work, a restaurant, a shopping center, and so on"

    And this is not true (much, much, much more so in fact!) of stansard gas stations??

    If "convenience" were the reason why people buy electric cars, then they`d be doomed!!

    Another terrible article by TMF, which used to have a lot of good pieces, and a few poor ones. Now it`s the other way round!

  • Report this Comment On February 16, 2014, at 6:19 PM, Pietrocco wrote:

    Let me add. With the difference that petrol cars take 4 minutes to refill, EVs half an hour.

    So much for convenience.

  • Report this Comment On February 16, 2014, at 6:57 PM, 68surfer wrote:

    @jimmy

    What the heck is your problem? Go get a LIFE and stop all of your stupid idiotic trolling and FUD spreading please. I guarantee people giving good honest comments would appreciate it.

    @wsrtwo

    Do some research and you will easily find out that the grid can handle many millions of cars charging at night, and that it is also getting much "cleaner" by the year. Cheers.

  • Report this Comment On February 17, 2014, at 2:34 AM, DrDauger wrote:

    @"Jim": Links? Evidence?

    Otherwise you are committing libel.

  • Report this Comment On February 17, 2014, at 12:06 PM, damilkman wrote:

    Technology advances. It is only a matter of time. The question is when. The other question is what is the definition of convenience and at what cost. The author discusses convenience as being important and sweeps the entire recharging issue under the rug. In my opinion this is what needs to happen for EV to be accepted by the public.

    A vehicle must have a range of at least 200 miles. Its cost must not be significantly greater then ICE equivalents. Its okay for it to be on the top end. So if the mean for a segment is 25K, the cost should not exceed 30K. Recharging must approach the convenience of refilling an ICE vehicle. Recharging locations must have a density such that I do not have to plan a trip around where the recharging stations are.

    What the author left out is the cost of convenience. I would hazard to guess the people who are capable and willing to throw 30K of mark ups on a 70K car have lots of money. They can purchase an EV because if an EV does not do what they need they have three or four other cars that do. Most of us own one car. If we are a family most of us have one car we say is ours. Most of us depend on that car doing everything. I would say for EV cars to be the car of choice it must be convenient in that it does everything we need.

    For me that is not the case. I live in a rural area where the roads rut out. I own a Colorado that I was able to get marked down to 27.8K because of a combination of A plan, end of year, plus paying cash. I like to garden. So sometimes a ton a cubic meter of dirt gets dumped in the back. My family likes to rustic camp. My aunt lives in Indianapolis and another in Evansville. Even in 2015 there will be one recharging station for the entire I-69 corridor. When I go road tripping I do not want to stop in Angola Indiana for 30 minutes because my destination is 300 miles from my house. I find it inconvenient any other way when my Colorado loaded gets me there on one tank.

    Me personally, I see lithium as a dead end technology. It just does not carry the charge we need. If someone can come up with a combo fuel cell or hybrid that extends the range that is more convenient. Perhaps if they get over the engineering hurdles of the glucose battery, now your talking 500-600 miles of range. Then the inconvenience goes away

  • Report this Comment On February 17, 2014, at 12:09 PM, gjsuhr wrote:

    A 200+ mile range is adequate for most people and Tesla meets that with the Model S. The only issue I see is cost...and I have serious doubts that they will solve that problem in the near term.

    When cost doesn't matter,or when you are willing to pay more than we do today for gasoline, you open up a number of possibilities to prolong the ICE usefulness. ICE engines can run on a number of things beside gasoline. Most everyone knows about diesel, ethanol and compressed natural gas...but methanol....like the INDY cars used to run on, can be produced from natural gas, coal or CO2 and water if you are willing to pay enough.

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