Can Antiquated Gas-Powered Cars Compete With Tesla Motors, Inc.?

Tesla (NASDAQ: TSLA  ) believes it can deliver 500,000 vehicles per year by 2020 with the combined help of a lower-cost car, or its third-generation vehicle, and a "gigafactory" that produces lithium-ion batteries at unprecedented scale. With just about 22,500 deliveries of its Model S last year and 35,000 planned for this year, half a million seems like a daunting goal. But is the figure really as daunting as it sounds? After all, the value proposition Tesla has fashioned for its electric cars is incredibly compelling -- and much of this value proposition will carry over to the third-gen model the company is planning to launch in 2017.

As Fool contributor Daniel Sparks explains in the video below, there are more reasons to buy a Tesla beyond the fact that it is greener than its clunky gas-powered alternatives. The Tesla value proposition is simply tough for gas-powered cars to compete with. Considering just how compelling a Tesla vehicle would be at $35,000, 500,000 vehicles per year doesn't sound so crazy anymore.

Even more, electric alternatives to Tesla's vehicles would likely benefit the company by accelerating the advent of electric vehicles as a mass-market option. All said, are Tesla's ambitious aspirations really unrealistic?

In the video below, Daniel explores some of the key selling points for the Model S -- many of which the third-gen vehicle may inherit.

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Read/Post Comments (11) | Recommend This Article (4)

Comments from our Foolish Readers

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  • Report this Comment On March 20, 2014, at 9:55 PM, Ustauber wrote:

    ThxTsla

  • Report this Comment On March 20, 2014, at 10:21 PM, Roddy6667 wrote:

    Electric cars can go only half as far in freezing weather, AAA finds

    http://www.latimes.com/business/autos/la-fi-hy-aaa-electric-...

  • Report this Comment On March 21, 2014, at 12:39 AM, TMFDanielSparks wrote:

    @Roddy6667,

    Not all electric cars are created equal. Tesla owners claim only marginal effects in freezing temperatures: http://www.teslamotors.com/customers/story-arne-jakobsen

  • Report this Comment On March 21, 2014, at 6:25 AM, Batteryprof wrote:

    @TMFDanielSparks:

    Yes we know Tesla is above physics laws: All batteries loose energy and power when cold (first 10 min) and electric consumption is higher in the car in winter.

    Range divided up to 2 in cold weather and -33% in high temperatures if electric air conditionning...

    EVs are a problem in cold weather...

    I would like to know what is the max starting speed after 24 h at -40 °C ????

    Can a Tesla engineer answer?

    They are also above commercial laws: they are not a monopoly in Europe like microsoft for instance (electric cars exist for more than 20 years) and in China:

    http://finance.yahoo.com/news/byd-qin-announced-china-q1-184...

    As everybody knows, to sell in China, you have to make an alliance with an official Chinese OEM or people don't trust you for warranty especially when its long like Tesla: like american dealers ...

  • Report this Comment On March 21, 2014, at 10:17 AM, TMFDanielSparks wrote:

    @Batteryprof,

    As I said, Model S owners do see marginal effects in cold weather. But the Model S is not impacted as severely as the average impact of the cars in the AAA study under the described. Notice a Tesla was not part of their study.

    In stop and go city driving in zero degrees Fahrenheit (20 degrees colder than the temp in study, Tesla asserts on its website that even with the heater on the range only declines 49% -- a big difference from the average in the study of 57% in 20 degrees Fahrenheit. http://www.teslamotors.com/goelectric#range

    And apparently your thesis on trust in China doesn't hold true for Tesla. Based on initial orders in the country, the company said in its earnings call Tesla that it sees very good demand, so much so that it likely won't be able to meet all of the demand.

    Further, based on the company's current pace of reservations, Tesla expects deliveries in europe and china combined to double the rate of north american deliveries by year-end (and that's taking into account that Tesla says it can do better in North America this year than last).

  • Report this Comment On March 21, 2014, at 11:03 AM, Batteryprof wrote:

    And about cold start max speed, I think in US regulation is -30°C or -40°C soak time 24h, not plugged.

    I think it is one key characteristic that makes Li Ion no so good for BEVs.

  • Report this Comment On March 21, 2014, at 11:09 AM, TMFDanielSparks wrote:

    @Batteryprof

    Correction on my last comment. The reduction at zero degrees fahrenheit is actually just 39%, not 49%...

    The overall value proposition for BEVs (done the Tesla way) is far more compelling than the proposition for gas-powered cars in my opinion.

  • Report this Comment On March 21, 2014, at 11:34 AM, Batteryprof wrote:

    I believe you wanted to say Celsius.

    The offical studies are at -20°C in Europe, at 0°C, it is almost normal weather ...

    I think because winter is harder in US regulations are at -30°C for you.

    Is Tesla S able to do a cold start at -30°C after being parked outside 24 h and half empty?

    What is US regulation for cold start?

    If everybody does the test he wants ...

  • Report this Comment On March 21, 2014, at 11:41 AM, TMFDanielSparks wrote:

    I didn't mean Fahrenheit, so that's a 39% reduction in battery power at -18 degrees Celsius

    Just to play with the numbers, you can use this tesla calculator, which is in fahrenheit: http://www.teslamotors.com/goelectric#range

    As far as your other questions, I have no idea

    Thanks for your thoughtful comments!

  • Report this Comment On March 21, 2014, at 11:42 AM, TMFDanielSparks wrote:

    oops.. I meant to say I DID mean Fahrenheit...so a 39% battery reduction in city conditions in 0 degrees fahrenheit of negative 18 degrees celsius. A far different story than 57% reduction in 20 degrees fahrenheit for BEVs in AAA's study.

  • Report this Comment On March 21, 2014, at 11:50 PM, CarFanatic wrote:

    Based on Tesla's acceptance, foreign and domestic.

    Sales in China will be huge!

    Especially since they are not gouging them for their cars.

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