When Tesla Motors (NASDAQ:TSLA) launched its Model S, it arguably changed the face of the auto industry forever. The company proved once and for all that it could build an all-electric car that consumers wanted to buy. Detroit was put on notice that it needed to really shift gears to catch up or it could be innovated into extinction. However, while Tesla is looking to speed past American icons such as Ford (NYSE:F), its success could save another American icon: Alcoa (NYSE:AA).
There's no doubt about it: The aluminum giant and Dow Jones Industrials member has seen better days. Its stock is down some 80% since the dawn of the financial crisis. Many airline manufacturers that were among its biggest customers have switched from aluminum to composite materials for the body of their next-generation planes. However, while composites might be next generation for the aviation industry, aluminum represents the next generation for the automobile industry.
In fact, the driving force behind Tesla's Model S might not be the electricity coursing through the car, but instead the lightweight aluminum that makes it all possible. The aluminum-intensive design saves Tesla precious pounds, which enables the car to deliver performance never dreamed possible from an all-electric car. At 4,650 pounds, Tesla needed the weight savings from aluminum, in this case roughly 33% over steel, or more than 200 pounds, to offset its hefty battery pack. Its success with aluminum is now rekindling hopes that Alcoa can once again thrive.
Tesla uses an enormous amount of aluminum to build each Model S. In fact, each car starts as a huge aluminum coil that weighs up to 20,000 pounds. It's used to form virtually everything from the hood to the trunk. In fact, nearly every piece of visible metal is aluminum, which totals more than 660 pounds. That's more than twice the industry average. What all this means is that as Tesla ramps up its production, its aluminum usage should skyrocket.
However, at its current rate, Tesla doesn't really put much of a dent into the aluminum market. The company hopes to be able to double its production to 800 vehicles per week by the end of next year, which would be about 40,000 per year. That's a far cry from its capacity for 500,000 cars that its founder Elon Musk envisions in the future. Even at that rate, Tesla alone wouldn't drive the aluminum market. Instead, what it's doing is leading the charge -- and its competitors are beginning to follow.
Ford, for example, is said to be considering an aluminum body for its next-generation Ford F-150. The move could shave off 700 pounds, or about 15% of its total body weight. That would provide a big boost to Ford as it strives to meet the upcoming increases in CAFE standards. While the F-150 would represent its largest foray into aluminum, Ford currently does have several vehicles with at least 10% of the body weight being finished aluminum, with the Fusion, for example, using 336 pounds, or 10.2% of its curb weight. Overall, the company's percentage of aluminum is only expected to increase in the future as it looks for ways to cut weight to increase gas mileage.
Not only is a lighter vehicle important for fuel consumption -- or, in Tesla's case, range -- but a lighter vehicle also accelerates and brakes more quickly and handles corners better than a vehicle built with heavier materials. This is why I wouldn't write off a company like Alcoa just yet. While demand from Tesla alone won't drive Alcoa's business, it is driving change within the auto industry in more ways than one.
Matt DiLallo has long January 2014 $10 calls and short January 2014 $10 puts on Ford. The Motley Fool recommends and owns shares of Ford 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.