Tesla Motors Inc. (NASDAQ:TSLA)

CAPS Rating: 2 out of 5


Player Avatar 1technowizard (< 20) Submitted: 8/14/2011 2:52:20 PM : Underperform Start Price: $26.62 TSLA Score: -650.51

Tesla has some hard physics to overcome not to mention its about a decade too soon to survive given the current state of the art in battery technology. The batteries used are essentially thousands, 6831 used in the roadster, of rechargeable AA nicads same as in your laptop. Note Tesla doesn't give a direct answer to replacement cost for these batterys. Most likely because they know this is a deal breaker. The Sept issue of Road & Track claims the lowest estimates for these batteries to be $600-700/Kwh. The roadster has a 56 Kw battery module which hints at a $33 -39K replacement cost. But the Roadster is history, so lets examine the Model S. Teslas website does not mention the size of the battery pack but instead gives range numbers 160, 230, & 300 miles. The additional battery cost appears to be 10K for an additional 70 miles of range for each upgrade. If the cost is relatively linear, the battery (replacement) cost for the base model is 23 K, 33K for the 230 mile range & 43 K for the Model S. So the question to ask is who do you sell your used car too when the battery starts to fade?? This is hardly a sane business model for even the upper middle class consumer. Also note these are rather optimal range numbers, if subjected to hills or sporty driving conditions, the physics dictate a performance hit in range. So the up side to Tesla is that they have strong ties to the White House, but these economic incentives can't overcome a bad business model. When someone develops a low cost, fast charging battery, the equation changes. Until then, Tesla is selling a dream as practical as a jet pack. At least for the next 5-10 years, hybrids will be the dominate game changing technology.

Featured Broker Partners