Tuesday, August 27, 2013

Tesla Defies Gravity

Tesla’s stock has surged once more on the belief that Tesla will be the Porsche of the 21st century.  No doubt as I have oft said the Model S is an engineering marvel that should sell for $30,000 more than it is currently priced.

It is well built, safe, heavy, ergonomic, and stylish but it simply is not green.  I have written enough about how the EPA allows Tesla to fib regarding equivalent MPGs but let’s forget the gangrene at any angle story of the 85 kwh Model S.

Let’s focus on the dropped 40 kwh Model S that was hyped as a big story in the past as the peoples’ EV that would go 160 miles on a charge and cost less than $50,000.  Elon bragged for three years about this “affordable” Model S that he simply could never produce.  The whole story of the Tesla Motor Company for three years was the hype from the green press that Elon was going to give us the Electric Peoples’ Wagon.  That whole hype has been quickly forgotten in the five months since the 40 kwh Model S was dropped on April fools’ day.

Maybe the John Broder story in the New York Times on February 8 had some basis for the pulling of low end Model S?  The 40 kwh Model S would never have had a real range of 160 miles.  Elon certainly knew this!  It probably would have had a range of 100 miles with the heater on in typical winter weather in the Northeast.  Also Tesla would never have made profit selling this version of the Model S for $50,000.  Elon is a savvy businessman and he dropped the whole charade of the peoples’ EV and quickly paid off his Obama loans that were constraining Tesla.   Without the Obama loans he can raise prices to where they have to be to keep the company solvent.

I am not a stock analyst but a $20 billion market cap for Tesla is about as realistic as the 40 kwh model S having a range of 160 miles.  When rationality returns to the stock price and folks realize that Tesla is only about selling high priced fully appointed vehicles I think the price of the stock in dollars will equal the average quantity of kilowatt hours stored in the batteries in each of their cars.  On this non-scientific throw a dart at board basis the price of TSLA should be near $85 a share.  But maybe Elon has a new super hyper duper Model S on the drawing boards with 165 kilowatt hours of batteries and then the stock could stay at the $165 level.

As for the DOE loans that were made to put the peoples’ EV on the road we can thank Elon for paying them back in full and early but alas the folks who are not wealthy will continue to drive a Yaris or a Dart and these motorists can only dream about being part of the Tesla crowd while they buy self-serve regular at a Rotten Robbie.  As for me I still will keep my almost 15 year old car and dream of someday buying an electric pencil sharpener.   For now I will continue to use my mechanical pencil and simply buy lead refills.  I wonder if they will ever make unleaded refills for mechanical pencils??? 

I know lead is made of graphite but sometimes I have to be a little funny.  It will be really funny if Tesla’s stock drops to $85 when the analysts remember that gravity is a fundamental force and the EPA starts to honestly evaluate the MPG equivalent of electric vehicles.  Then the stock will be called a lead balloon. 

Elon will always be called a visionary by the adoring press who think he is the new Edison.  I think Elon is a smart businessman who beat Al Gore and the team at Fisker to a pulp and for that I am eternally grateful.  The photo of the quiet and clean electric car was sent to me by Dean one of my readers who lives in the Silicon Valley.