Tesla's Done, but Driving a Sedan Cross Country isn't a Big Deal

Tesla's all electric cars are modern marvels, but the technology has distance constraints that limit its desirability—the company's wants you to believe it just solved that problem.

Feb 18, 2014 at 9:45AM

One of the biggest drawbacks of battery powered cars is, well, the batteries. For example, Tesla's (NASDAQ:TSLA) Model S can only drive 265 miles before needing a recharge that can take up to nine hours. That's not practical for long drives, but in something of a publicity stunt, Tesla built a quick-recharge network so customers can drive from the West Coast to the East Coast.

If you build it...
Don't be fooled; Tesla's recharge network is no Field of Dreams. But it's a great way to help assuage customer concerns on the sales floor. And it exposes one of the key problems facing new automotive technology—the existing infrastructure supporting gasoline.

The company made a big deal about the first cross country trips using its recharge network, but a look at the numbers is concerning. For example, the drive time was 59.5 hours. The fueling time was 15 hours! The total trip, including 30 minutes to put on tire chains, was around 76 hours. The trip time could have been cut by nearly 20% if they had just driven gasoline powered cars...

But Tesla knows it has to build this network or it will always have to fight the range question. That's why it's building out a similar network in Europe. Essentially, this is the same reason that Clean Energy Fuels (NASDAQ:CLNE) is building out a network of natural gas fuel stations on the U.S. superhighway network even though the heavy truck switch to natural gas is only just getting under way.

A different market with more opportunities?
The differentiating factor here is that Clean Energy Fuels is targeting industrial buyers. It's goal is to provide the fuel for a conversion from diesel for long-haul trucks to liquified natural gas (LNG). It believes this to be a $25 billion market opportunity, and it already has a solid position in regional markets like trash hauling to prove the model out.

This market focus makes a huge difference. Trying to convince millions of individual customers that it makes sense to take a risk on new technology is a lot harder than trying to persuade a few key buyers. That's particularly true since individuals are driven more by emotion than numbers, but a few good numbers will easily convince a company CFO.

For example, United Parcel Service (NYSE:UPS) had been testing LNG trucks for a few years before deciding that the technology was up to snuff in 2012. It then made plans to buy 1,000 LNG trucks! Being able to save up to 40% on fuel costs over diesel made that choice a lot easier.

And UPS isn't the only big company looking to make the switch. Royal Dutch Shell (NYSE:RDS-B) is looking at switching to LNG in its Canadian Oil Sands operation, and CSX (NYSE:CSX) is testing LNG for its trains. CSX is partnering with General Electric (NYSE:GE), which is also a key partner to Clean Energy Fuels.

Support network
Although Tesla is far from alone in its efforts to switch autos from gas to electricity, Clean Energy has a lot of big names in its corner, too. GE is just one of them. The industrial conglomerate is providing LNG technology to Clean Energy and financing support to truck buyers who sign a fuel supply deal with Clean Energy. But it also has key partners in companies like Waste Management (NYSE:WM), which has already started the big switch. And every major truck manufacturer is now offering LNG trucks.

Tesla certainly captures the imagination if you like the idea of switching to a cleaner fuel. However, it isn't the only company trying to convince customers that there's a better way to turn an engine. On that front, Clean Energy and its list of key partners, like GE, appear to have a much better foothold in the industrial market than Tesla has in its retail focused business.  

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Reuben Brewer has no position in any stocks mentioned. The Motley Fool recommends Clean Energy Fuels, Tesla Motors, United Parcel Service, and Waste Management. The Motley Fool owns shares of CSX, General Electric Company, Tesla Motors, and Waste Management. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.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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