"We will not stop until all cars will be electric" - this is Elon Musk's motto and it speaks volume about his ambitions. The company now is closer than ever to become the game changer and the real electric car launch and is firing on all ... electrons.
Lithium Drive: Elon Musk, CEO and founder of Tesla Motors, introduced Model S
"We are following Tesla Model S and holding our breath - the targets for this Electric Car are so ambitious that we do really count on Elon Mask to deliver. After so many disappointing delays and over promises in electric space Tesla Model S is shaping up as a game changer. Everything with this electric car: styling, range, capacity and price are putting a very high bar to beat by any auto maker. How can VC start up beat all the big boys in the end with their billions in R&D?"
Mineweb: Demand for lithium expanding as battery manufacturers make major investments
"Lithium investments story is getting to the headlines again. With the end of the world postponed today in Europe we still have the luxury of market prices for Junior miners and Lithium developers as in the near end of the world scenario. You can not step twice in the same river, but Mr Market has again provided us with a time machine and we can accumulate the Lithium juniors at the very attractive valuation. Catalyst will be the more Electric Cars on the road, soft lending in China and the price of Oil above 80 dollars. Insiders are already signalling that the value is there - at least according to their personal view."Matt Rosoff, provided by
Wednesday, October 26, 2011
Documentary filmmaker Chris Paine is obsessed with electric cars: he's driven one for the last 12 years, and his 2006 movie, "Who Killed The Electric Car?", followed GM's recall and forced destruction of the EV-1, one of the first mass-produced electric cars.
But the electric car is back, and Paine is documenting its return.
Last week, he released a followup movie, "Revenge Of The Electric Car," in New York and LA, and it's coming to the Bay Area the week of November 4 and the rest of the country after that.
One of the heroes of the movie is Tesla founder Elon Musk, who is trying to build an entire company around the idea of the electric car. The movie follows Tesla through its cash crunch and production delays in 2008 and 2009, and then through its successful IPO in 2010.
The $226 million from that IPO and a $465 million loan from the Department of Energy gave Tesla enough cash to move beyond its very limited production of the high-end Roadster sportscar and build the mid-market Model S, which will begin shipping next year.
We caught up with the pair recently to talk about the movie and the future of the electric car.
Here's some of what we learned:
"You have enough electricity to power all the cars in the country if you stop refining gasoline," says Musk. "You take an average of 5 kilowatt hours to refine [one gallon of] gasoline, something like the Model S can go 20 miles on 5 kilowatt hours."
Look for charging stations in parking meters. As Paine explains, "You look at places in Denmark, they're retrofitting parking meters and adding electric chargers to them, taking advantage of the electric circuit in every parking meter."
After the Model S, Tesla will ship a third-generation car that's even cheaper. The company hopes to ramp up production from 20,000 a year for the S to 200,000 a year for that next vehicle, which could start shipping in about four or five years.
Don't look for gas prices to drop any time soon. Chris Paine: "There's no saying what the short term price of gasoline is going to do but if you consider that a spike in gas prices today in the midst of a recession, it's likely that peak oil, that curve, is going to be steeper then people expect." Elon Musk: "The reality is gas prices should be much more expensive then they are because we're not incorporating the true damage to the environment and the hidden costs of mining oil and transporting it to the U.S. Whenever you have an unpriced externality, you have a bit of a market failure, to the degree that eternality remains unpriced. That's why we're doing Tesla, to try and bridge the gap of that unpriced externality with innovation, by making an electric car that's so compelling that you want it irrespective of the price of gasoline."
Electric cars get cleaner over time. As the grid moves to cleaner sources of energy like solar power, the carbon footprint of electric cars decreases. As Musk puts it, "Obviously Tesla is about helping solve the consumption of energy in a sustainable manner but you need the production of energy in a sustainable manner...The growth rate of solar in the country is on the order of 50% a year. You compound that, it's enormous growth." (Musk is an investor in SolarCity, a solar panel company.)
Here's a full transcript of our conversation.
Business Insider: The story in the movie was grim and sad until the last 15 minutes -- it looked like the economic crisis would kill the electric car again. But then things picked up with Tesla's IPO and the launch of the Chevy Volt and Nissan Leaf. How have things developed since you stopped shooting earlier this year?
Chris Paine: I know the model S is on track and Elon can talk to you about that. The Volt sales have been weak, 3,000 to 4,000, and I think their goal is 10,000 this year and they don't have many months to do it. They've lowered their price since then and I think they got out the door with an unusual marketing campaign that the car was "more than electric," I'm not sure that was the right focus to market that car. They've lowered the price and I think they'll probably get on track now that they've opened their plant in Detroit. Nissan has done a lot better, I think they've hit their sales numbers, they're at 7,000 at least in the U.S. and I think they're on track to hit their numbers by the end of the year. This is the first year so everybody had ramp up all their dealerships, it's kind of a big process to get everybody in sync on this and so everybody had fairly low targets to start with.
BI: And then, Elon, how many model Ss have you taken pre-orders for? You had the factory opening in October, correct?
Elon Musk: We gave all customers a tour of the factory and a rise in the beta model S, October 1st and 2nd. I will be careful with non-public information, we've got an earnings call coming up, but I'm comfortable saying we have over 6,500 deposits on the model S and it's a minimum $5,000 to reserve a model S. People need to think about it, it's not $99.
BI: When is production due to start on that?
Elon: We will deliver cars to customers no later than July of next year. Some companies out there quote a start of production that is substantially in advance of when customers get their cars. Just to be precise, we'll deliver cars to customers no later than July of next year.
BI: Do you find it challenging to compete with the Leaf, which is around $30,000 if you add the subsidy in? The Model S is $50,000 or just under $50,000, has that been a barrier at all?
Elon: No, it really hasn't been an issue. When we think about the Model S competing against other cars, and customers perceive it competing against other premium sedans, not against other electric vehicles, and our goal with the Model S is not to be the best electric car but to be the best car in its category of any kind.
Chris: You'll be very pleasantly surprised with the Model S when you get a chance to drive that. It's interesting that Tesla has taken the attitude that this is going to be the best car period. We set up the title, "Revenge of the Electric Car" not for the horse race of what car sales would be like in 2011 or 2012 but how the industry is making a huge turn. Kind of like the Spanish Armada, which doesn't happen very often. We thought the real turning point is industrial change at the center of all these car companies. Whether it came from the outside like Elon's been able to pull off or even inside companies as old school as GM or companies as international as Nissan. When you have that kind of change, the sales will come as oil prices go up, as consumers accept these products and as the quality of these cars go up. We wanted to get in there at the beginning and that was the goal of my film.
BI: What do both of you think is the biggest barrier to making an electric car affordable for the mass market? What about a $20,000 electric car that's going to replace my Honda?
Elon: For Tesla, we do want to get to that region eventually. We've got to take it one step at a time. Even going from the Roadster to the Model S, we're talking about a 30 fold increase in production volume, going from about 700 vehicles a year to 20,000. That's a huge step for us as a small company. With our third generation vehicle, we're aiming to be at 200,000 a year but that's probably 4 or 5 years from now because we have to bring the Model S to market and bring the production line up to full speed, and then with the revenue from that, use that money to build out the high volume vehicle production.
A company like Nissan or what we're doing with Toyota or Daimler where we're providing the whole power train for the electric Rav-4 that's coming out next year, I think that will be a very compelling mass market vehicle. I'm not sure what price Toyota will sell it for but it will be a really great vehicle with a range of 150 miles and much better acceleration than the gasoline version of the Rav-4.
With Daimler we're providing the battery pack for the electric smart car and for the E class Mercedes. Unfortunately those are primarily in Europe but I think there's a good chance Daimler will start to bring that stuff to the U.S. Because we don't have the economies of scale of the big car companies is to try to provide affordable vehicles by working in partnership with companies like Daimler and Toyota, and thus accelerating the time to market of affordable vehicles.
Chris: I think this time on the electric car the smartest kids in the room are choosing a strategy of you start with the highest line vehicle and work your way backwards instead of a neighborhood vehicle that goes 30 mph and you try to convince people over time that that's a car they want their kids in driving at 90 mph on the highway. This way they're coming back, taking advantage of the higher price point, with lower numbers, and they eventually get to the $20,000 car and cheaper but along the way they pick up a lot more people for the ride.
BI: What about the infrastructure for charging stations, is that a barrier? How do you see it getting to the point where charging stations are as common as gas stations?
Chris: From my perspective, I've been driving an electric car for 12 or 13 years now. At the beginning it's like the chicken or the egg, which one do you need to have? Do you need the infrastructure first or the car? Of course, there's already the infrastructure of every plug in the world that you can plug your car into for a very slow charge. Ultimately, especially for a higher line buyer of these cars, who are likely to have a garage or a way to put a 220 circuit in so they can charge it. The car lives out of its primary place where it's charging, it's a short haul vehicle for a 100 mile range you live out of and when you have a longer range, you take your gas car, for the time being. As this stuff rolls out the infrastructure and the fast chargers get deployed all over the place, and these cars become more versatile. I think Tesla's got a 440 [volt] charger that charges at 300 mph, Elon?
Elon: We developed something we call a Tesla Supercharger, which kind of recycles a term from the gasoline combustion engine world. It recharges the battery at over 100 miles every 20 minutes.
Chris: You look at places in Denmark, they're retrofitting parking meters and adding electric chargers to them, taking advantage of the electric circuit in every parking meter. I think you'll see these things roll out but you don't need to have the whole thing's installed for a lot of these cars to be accepted.
BI: What about electric vs. hybrid? Toyota has had a lot of success with the hybrid strategy. How would you answer people who think, I'm getting good enough gas mileage now and the cars are more affordable, why would I want to go completely electric?
Elon: I think hybrid is a bit like an amphibian. There's a transition as life goes from ocean to land but eventually you have to have technology that's optimized for land, if you will. I think that's where things are headed. I view hybrids as something of a transitional technology. It started off with little bit of hybrid, which is encouraged, its a good thing, but for the current hybrids that are not plug in, that's just the beginning of things. If you fill it with gasoline, that end of the day you're still completely addicted to gasoline. Now we're seeing the transition to plug in hybrids and at Tesla we're going to what we see as the end zone of full electric. I think all initiatives in this direction are to be encouraged.
BI: What happens if gasoline prices drop again?
Chris: It's a huge factor in terms of mass customer attraction to electric cars because when gas prices hit $4 in 2008, most car companies didn't have a hybrid to sell people, much less an electric car. Car companies don't want to get stuck in that trap again. There's no saying what the short term price of gasoline is going to do but if you consider that a spike in gas prices today in the midst of a recession, it's likely that peak oil, that curve, is going to be steeper then people expect. That's just going to increase adoption. I hope that car companies can get these cars into their major factories, much sooner then later so we don't end up with this crippling blow if we have a big spike. How do you look at that from a business point of view, Elon?
Elon: Electric cars can compete reasonably well at even lower gas prices then are currently the case. The reality is gas prices should be much more expensive then they are because we're not incorporating the true damage to the environment and the hidden costs of mining oil and transporting it to the U.S. Whenever you have an unpriced externality, you have a bit of a market failure, to the degree that externality remains unpriced. That's why we're doing Tesla, to try and bridge the gap of that unpriced externality with innovation, by making an electric car that's so compelling that you want it irrespective of the price of gasoline. It's better if people desire the car than are forced to the car.
Chris: Electricity is a $1 a gallon or less when you charge it, so right off the bat there's a huge fuel savings if they switch into this world. Once people understand that, because I think almost no one does, it's going to create a lot of incentive for people to think about a new generation of cars like this.
Elon: If you take the average cost in the country, it's around 11-12 cents a kilowatt hour -- there's only 53 kilowatt hours in a Roadster, so you're talking $6 to charge a Roadster and go almost 250 miles. If you fill up a sports car, you'd spend 10 times as much.
BI: Do you think that gasoline car has a future and how long will it last? Are electric cars a 5 year thing, a 20 year thing? Is the writing on the wall for gasoline?
Elon: The writing on the wall can't come soon enough. If the fact that we suddenly have a Northwest passage around the Arctic wasn't obvious enough for people… It has to of course because it's a finite resource and we're using it up. The question is, will it end soon enough to prevent severe harm to the earth?
BI: At least in the U.S., most electricity is generated using fossil fuels. Mostly natural gas and coal. What's the relative carbon footprint of a Roadster or Model S, against a gasoline car? I've heard that argument from people who worked in the oil industry.
Chris: It's funny they make that argument, because they're one of the largest users of electricity in the country, to refine gasoline. That's why the power cords go into refineries. Something like 4 to 6 kilowatt hours of electricity to refine every gallon of gasoline. They're pulling that electricity from the same source as they're critiquing on electric cars and they get much less result out of it.
Elon: Exactly. Chris has a nice way of saying it which is, you have enough electricity to power all the cars in the country if you stop refining gasoline. You take an average of 5 kilowatt hours to refine gasoline, something like the Model S can go 20 miles on 5 kilowatt hours. You basically have the energy needed to power electric vehicles if you stop refining.
BI: 5 kilowatt hours, that's to refine and transport one gallon of gas?
Elon: Chris, does that include transportation?
Chris: I think it's just refining. It does not include transporting it from the Middle East or Venezuela. The more efficient your refinery is, the lower that number is. The lowest number in the DOE study I read was 4, and the highest was 7, it depends on what your refinery is. Beyond that, Thomas Friedman talks about this -- the grid is 50% coal now and the advantage of electricity is you can clean that up, and that's the direction we're all hopefully headed, that we're cleaning our grid, where you can't do that with oil. It has the same number of carbon molecules in it no matter how many times you…
Elon: People need to bear in mind, we need to solve the energy production problem as well as the energy consumption problem. It's not as though we can keep burning coal in our power plants. Coal is a finite resource too. We must find alternatives and it's a better idea to find alternatives sooner then wait until we run out of coal, and in the meantime, put God knows how many trillions of tons of CO2 that used to be buried underground, into the atmosphere.
Chris: Finally, regardless of the environmental argument, the U.S. exports a billion dollars a day overseas, so if you put that money into the domestic economy, even if it's using coal, that's going to have an immediate shock effect of stimulating the economy here. It's very difficult to get much value out of money that leaves the country.
BI: Elon, you're involved in solar energy as well, right?
Elon: Yeah. I certainly recognize that it's important to address the production and consumption of energy, and obviously Tesla is about helping solve the consumption of energy in a sustainable manner but you need the production of energy in a sustainable manner. Both problems need to be solved. Even if there weren't electric cars, you still need to solve the sustainable production of energy and coal is not sustainable. I think one of the best ways to do that is solar power, and the cost of solar panels has dropped dramatically and most people aren't aware of how much it's dropped. You can see the results in companies like Solyndra because the cost of solar panels has dropped so much. It's gone from being about $4 a watt per panel 5 years ago, to a $1 watt now, that's a huge drop.
The portability of solar and the economic viability has improved massively over the last 5 years, which is why SolarCity is growing like gangbusters. The growth rate of solar in the country is on the order of 50% a year. You compound that, it's enormous growth. It's from a small base but eventually the thing that has the high compound growth, will win.
BI: Is most of the solar energy deployment being done by consumers in their own homes who are feeding back to the grid or are you talking about big energy companies who are building solar arrays in the desert?
Elon: It's a combination effect. It's people putting solar panels on the roofs of their houses, businesses putting them on the roofs of of the business, and then there's also a bunch of stuff happening in the wholesale solar power arena where they're doing solar panels in the desert. I think most of the power that's out there is on rooftops -- homes and businesses -- but we're starting to see increased number of applications for big solar plants in the desert.
Which do you think would generate more power? A nuclear power plant or if you just took that same surface area and made it solar panels?
BI: I'm going to guess you're going to say solar panels, or you wouldn't have asked the question that way.
Elon: Exactly. The reason is, nuclear power plants take up a huge area because it's neither wise or desirable to have your house right next to a nuclear power plant. They take up massive amounts of area and massive amounts of water. They've got all these pumping stations, and so you can actually generate more power with solar than you can with a nuclear power plant.
BI: When I drive into a place like Phoenix or Southern California where they have brown outs in the summer when everybody's using their air conditioning, it's insane that every house doesn't have solar panels on it.
Elon: Yeah, houses and businesses should be self powering, to the extent that they can be. You also save on distribution lines and sub-stations and other things.
Chris: Electric cars come back into this equation on brownouts because as more people have them, when you plug them in, you can tell the power companies that you're willing to sell the power back to them out of the car in the event of a brownout so the utilities like this because a lot of stabilization will happen as these batteries begin to go online everywhere. Right now there is no battery backup for the grid.
BI: What's the future of the car? Are we all going to be driving individualized transport units for the next 100 years, or do you think eventually that becomes unsustainable and we're all mass public transit or pedal power or something like that?
Elon: I think all transportation will go fully electric with the ironic exception of rockets. There's no way around Newton's 3rd law.
BI: What about the idea of a space elevator?
Elon: Haha, no. I don't think that's viable, unfortunately. It relies on a 40,000 to 60,000 mile long carbon nanotube cable and so far nobody has been able to make a carbon nanotube footbridge. There are other issues with that but I think that's an unlikely thing to ever come to fruition. I do think there's a possibility of using solar power to create propellant that is then used to feed the rocket. In order to have a fully reusable Mars transportation system, you need to be able to replenish your propellant on Mars, I think with solar power, because I don't think a nuclear reactor is going to be easy to get there. So if we solve that problem for Mars, we may as well extend that to earth.
Chris: And on earth, the car is a particular creation of the modern age and I think a lot less 16 year olds are fixated on getting a car. At least in the U.S., it's become less glamorous, and Europe as well. This is where car sharing programs are working in big cities and the bicycle is having a great new romance with the new generation. On the flip side, China and India are coming online and everybody wants their own car there so there's tremendous demand for cars.
BI: What about this self driving car that Google is building?
(laughter)
Elon: I think that's cool. It's a bit tricky to get that to pass all the safety regulations but Google seems pretty keen on making that happen, so I hope they succeed."
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