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

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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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 18, 2014, at 10:07 AM, Albertico wrote:

    I really don't understand the point of this article. Sounds like an advertisement for Natural Gas more than anything.

  • Report this Comment On February 18, 2014, at 10:47 AM, Foolaloof wrote:

    When a brilliantly led company keeps raising the bar and single-handedly takes on and blows away the barriers that historically relegated EV's to a "some day" destiny, I wonder about terming such a successful and costly investment in infrasructure a "publicity stunt".

    Reuben , I hope you are fully up to speed on the much farther-reaching aspects of the charging network , not just in North America, but in Europe and in China ( where, after Tesla has already made sales, opened outlets, has planned a charging station network and resolved an IP dispute over registered naming, you wonder if that country should be on Tesla's radar?).

    I am long Tesla and have a position in it. I have also been a Tesla Roadster owner since 2010, and can tell readers that the customer experience is second to none.

  • Report this Comment On February 18, 2014, at 11:02 AM, ifool100 wrote:

    "The trip time could have been cut by nearly 20% if they had just driven gasoline powered cars..." I think what fuels Tesla is not the idea that gas is easier, more available, etc. It's the fact that Tesla is not tethered to Big Oil. This is important for both economic and social reasons. Let alone LA smog, look at China's air quality issues. People are getting sick and dying from inhaling the stuff our cars puff out. From a purely economic standpoint, freedom from easily manipulated gas prices is, well, priceless. Tesla is a conscious social movement away from the things that are unhealthy, polluting and holding us hostage. When we say we could have gotten there 20% faster with gas - I think we miss the big picture. When we consider that this car company has zero marketing budget to go with it's zero emissions, and it's selling it's cars 6 months to a year in advance, it's clear that demand is off the charts. Much like PayPal, it seems to me that Tesla is an altogether different kind of beast.

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Reuben Brewer

Reuben Gregg Brewer believes dividends are a window into a company's soul. He tries to invest in good souls.

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