Tesla has been facing resistance from dealer associations with its factory-owned dealerships since the start-up automaker first started selling cars, but it won another big case in Massachusetts when a judge dismissed a lawsuit brought on by the Massachusetts State Automobile Dealers Association (MSADA). According to Automotive News, the case was dismissed after the judge said the association “lacked standing to sue” despite the fact that MSADA executive vice president quotes the state law as saying, “A factory cannot own a store.”
The latest lawsuit follows a similar suit from back in October where the MSADA attempted to prevent Tesla from opening a store in a suburban Boston mall; the electric car maker received approval to open another store in Natick, MA, which brought on this second lawsuit. It’s unlikely this is the last we’ve heard about this issue in Massachusetts and in other states, but Tesla seems to be coming out victorious in each case so far. While laws pertaining to dealerships vary state to state, factory-owned dealers are usually noncompliant with state law – a lesson Chrysler learned back in 2011.
A public battle between the New York Times and Tesla CEO Elon Musk is still sprouting news after the disgruntled executive told Bloomberg that the article likely cost the electric car maker $100 million.
Musk spoke about the article in an on-camera interview with Bloomberg, and said the article cost Tesla tens of millions, maybe even “on the order of $100 million.” When pressed about the fact that such a number would suggest the brand suffering roughly 1,000 order cancellations, he quickly corrected himself, saying the number wasn’t that high.
SEE ALSO: Tesla CEO Releases Official Rebuttal to NY Times Story
Instead, he said his estimate was based on the valuation of the company after the article was published and order cancellations – of which he said there were probably a few hundred.
Regardless or the scandal, it also sounds like Tesla will reach its 20,000 unit annual sales goal based on current sales. Tesla is currently building 400 Model S sedans per week.
Discuss this story on Tesla-Buzz.com
A recent report indicates that there’s a dark and shadowy secret just waiting to wreck havoc on Tesla Motors: a federal probe into whether, as the conservative Washington Times puts it, “the automaker was using foreign instead of American parts in manufacturing their electric vehicles.” Tesla has openly said it uses Panasonic battery cells, for example, so the need for a probe is not quite clear.
According to a PDF that the Times says comes from an Immigration and Customs Enforcement (ICE) investigation, ICE asked the Department of Energy for documents about the Advanced Technology Vehicles Manufacturing (ATVM) loan program on December 5, 2011. There are lots of “may” and “possibly” phrasings in the memo, and it reads like someone saw a mention on the DOE website about a “buy American” requirement and went fishing for information. The DOE responded on December 22 that “the $465m Tesla loan was not appropriated through the Recovery Act of 2009. The $465m Tesla loan was actually appropriated through Public Law 110-329 and does not have the buy American requirement,” adding that “The DOE [Office of Inspector General] would not be investigating this matter any further.” For some reason the Times concludes that the memo, “provides no information on how, or whether, the customs probe concluded.”
A Seeking Alpha contributor notes that the ICE:
is still proactively investigating whether Tesla is using its foreign trade zone status to bypass the so-called “loan requirements.” A foreign trade zone facilitates the creation of certain areas at or near customs port of entry where products can be imported without standard import duties and customs entry procedures. Tesla’s application for a “subzone” within San Jose’s foreign trade zone was approved in September. ICE is neither affirming nor denying an investigation. Also, Tesla has made no mention of this investigation in its SEC disclosures.
He add that he’s not worried about a negative impact on TSLA stock or the company based on the investigation. For the record, Tesla’s official statement is as follows:
We have not at any time been made aware of an investigation regarding this issue by ICE or any other governmental agency. It is customary for car manufacturers in the United States to use imported parts and we have openly indicated throughout the development of Model S that we purchase certain parts, like the cells used in our battery pack, from foreign suppliers.
Related Gallery2012 Tesla Model S: First Drive
Tesla is preparing to deliver its first Model S electric sedans to customers next month, but in the spirit of full disclosure, has outlined why it anticipates its 300-mile version will be rated by the EPA for 265 miles.
The Model S’ drawn-out unveiling has ingrained three specific driving ranges related to battery size – 160, 230, and 300 miles – but the EPA will have its own stamp of approval. An official blog bylined by CEO Elon Musk and CTO JB Straubel dives right into the matter, presumably foreseeing questions and concerns about the 35-mile disparity with the farthest-traveling selection.
The difference between 265 and 300 miles extracted from the Model S’ substantial 85-kilowatt-hour lithium-ion battery comes down to the EPA’s testing methodology. The stated 300-mile range with the highest-capacity battery was always Tesla’s target. From one perspective, it has actually exceeded the mark, claiming 320 miles under the EPA’s old 2-cycle fuel economy evaluation. It’s when the EPA’s updated 5-cycle test enters frame that “265 miles” rears its head. For comparison, the 245-mile-rated Roadster and Roadster 2.5 endured the elder cycle while the Nissan Leaf has a 73-mile range under the 5-cycle assessment.
Going from the 2- to 5-cycle test can drastically impact vehicle ratings. The simpler 2-cycle had an approximate weighting of 55-percent city and 45-percent highway use; the more comprehensive 5-cycle is more representative of 43-percent city and 57-percent highway driving. The certifications are run on dynamometers, and the specifics are as follows:
1) Federal Test Procedure: 2-cycle, 5-cycle
2) Highway Fuel Economy Driving Schedule: 2-cycle, 5-cycle
3) Cold Federal Test Procedure (run at ambient 20 vs. 75 degrees Fahrenheit in standard FTP): 5-cycle
4) SC03 (air conditioning test at ambient 95 degrees F): 5-cycle
5) US06 (aggressive acceleration test, up to 80 mph): 5-cycle
Exactly how much the 85-kW-hr battery’s claimed range figures matters will likely be determined as Model S driving impressions roll in from customers and media outlets.
Tesla hasn’t disclosed its anticipated EPA ranges for the 160- and 230-mile batteries, but a 12-percent loss like the 300-mile option would peg them at a predicted 141 and 203 miles under the EPA 5-cycle, respectively. The 160- and 230-mile estimates from the respective 40- and 60-kW-hr packs can be achieved from a steady 55-mph cruise, per Tesla spokesperson KC Simon.
Interestingly, the blog gives insight into the Model S’ range and electricity consumption behavior with graphs. These graphs often have little bearing on the real world since Main Street USA is not a laboratory with fixed inputs. Nevertheless, considering the less expensive Model S is considerably heavier, it’s reassuring to see the family-friendly electric four-door head and shoulders above the Roadster from an efficiency standpoint.
The Model S costs from $57,400 (160-mile battery) to $105,400 (Signature Performance model with 300-mile battery) depending on battery size and trim, excluding the highly touted $7500 federal tax credit that gets applied to your income tax return. Depending on your state of domicile, there may be additional state and local tax credits or rebates as well.
By Benson Kong
Tesla Motors has just revealed the latest edition of it 5-part announcement trilogy. Whereas the previous first installment had to do with the company’s new leasing program, this episode is all about service and warranty, comes gift-wrapped in the glittery descriptor of “World’s Best,” and is accompanied by hints of a future battery upgrade.
The new plan improves on the California automaker’s service program by adding a valet service that brings you a top-spec Model S Performance – or a Tesla Roadster, if you prefer – to temporarily replace your personal vehicle while it’s being serviced. CEO Elon Musk states that this fleet of Model S service vehicles, which will initially number about 100, will ideally be less than three months old and also be available for immediate sale. Like your loaner more than your own car? You can keep it, paying “a price that is lower by 1% per month of age and $1 per mile” for your new ride and taking, likely, a similar hit on your trade-in.
Musk hinted that a 500-mile battery would not be an unreasonable thing to expect in four or five years.
Not only should the purchase scheme keep the loaner fleet nice and fresh, it may also create a cache of certified pre-owned inventory for buyers who are looking for a deal on a Tesla that starts at $69,900 from the factory, or who would rather not wait a couple months for a new, made-to-order car.
As well as no-travel hassle, Tesla has also made its $600 annual service optional without effecting the standard 5-year/50,000-mile warranty. The company has also made the battery portion of the warranty unconditional, meaning that, if you manage to somehow turn it into a useless brick (something that should be quite difficult to accomplish with the Model S), you will get a replacement unit of equal capacity free of charge.
Speaking of battery capacity, during the media call, Mr. Musk also offered some hope for those anxious for packs that hold more energy than the current EPA-estimated 265-mile/85 kilowatt-hour packs now available. In response to a question about upcoming technology improvements, he hinted that a 500-mile battery would not be an unreasonable thing to expect in four or five years. He then added that, eventually, Tesla would likely offer owners the opportunity to upgrade their vehicles with longer-range capabilities.
It all sounds pretty good to us, and we can’t help but think if this upstart company keeps it up, surpassing sales of the Chevy Volt might seem a minor accomplishment. For more details on this newest warranty arrangement, you can get more details in a blog post on the Tesla website.
Related Gallery2012 Tesla Model S: First Drive
For a while there, Tesla CEO Elon Musk was having a kumbaya moment after the public editor The New York Times, Margaret Sullivan, wrote that her publication may have been overzealous in its criticism of the Tesla Model S and admitted that Times reporter John Broder was not entirely precise with his mileage or speed logs.
Musk, writing on the official Tesla blog post, thanked Sullivan and the Times for the response and also singled out CNN, CNBC and Consumer Reports for duplicating Broder’s test (without running dry, of course). Musk also sent a shout out to Tesla owners who wrote the Times to tell the publication it may have been off base with its findings. The Tesla chief also used the post to pitch the fact that Tesla’s installing more fast chargers along the East Coast and improving the model’s software.
That was on the blog. On Twitter, thing have been a bit more heated. The New York Times automotive editor, James Cobb, wrote a series of tweets to Elon, which we get into below.
Related Gallery2012 Tesla Model S: First Drive
Cobb praised Musk for what he’s done for plug-in cars but then defended Broder, saying that Musk calling the original post “fake” was “over the line & impugned reputation of a good man and a consummate pro.”
To which Musk responded that there were, “enough sour grapes … to start a winery. Can we just bury hatchet & move on?”
Earlier this month, the Times started the entire brouhaha with a report that a Model S fell well short of its advertised single-charge range during an East Coast drive between Superchargers. Musk responded by calling the article “fake” in a tweet and said the car in question wasn’t fully charged and was driven at faster speeds than reported. As Twitter shows, this story continues to inflame passion on both sides. Check out Musk’s official blog post here.
By Danny King
What if you could have a 17-inch iPad built into your car? It’s almost a reality for one of the more than 250 folks who own a Tesla Model S, save a few key features.
Unfortunately, those features are probably some of the most important ones that give the iPad its massive appeal. Take the interface — it’s something Apple guards dearly. So Tesla can’t copy exactly how an iPad works, and probably doesn’t want to. Or maybe they do?
George Blankenship, vice president of Tesla sales, recently spoke with AutoGuide and hinted at some of the cool developments buyers and owners might look forward to soon. Easily topping the list, there’s a chance Tesla might open its coding crypt to outside program developers.
“Asking us is there something we will never do? That page will never fit in our dictionary,” he said. “Do I see a day when [outside app development] will happen, yes I do.”
Much like what made the iPhone so successful, Tesla wants to think “10 years into the future,” Blankenship said. While offering an app store is hardly forward thinking when it comes to handhelds, porting that possibility into a car with a massive touch display might be.
“What we want to make sure of before we enable something like that is that we have a complete separation between two things in the car. One is the interface where somebody could do things like that in and the other being the operation of the car itself,” Blankenship said.
With the Model S, Tesla already started offering remote updates. Customers wanted to change steering feel to offer normal, sport and comfort modes. They also wanted a “creep” feature to make the Model S feel more like an internal combustion engine (ICE) car with an automatic transmission. A few weeks after those requests came in, a remote update appeared and the car suddenly met those requests.
SEE ALSO: Tesla Flagship Store Opens in Canada
But those are only a couple of the tweaks Blankenship said customers can expect to see soon. Among the others: automatically extending door handles.
Just one of many steps Tesla engineers took to make the Model S extremely aerodynamic, the car features door handles that sit flush with the panels when they aren’t needed. With the push of a button, those handles extend to offer access, but that’s not good enough. Blankenship said owners will be able to customize their cars soon to make the handles extend automatically when the key fob comes close enough.
At launch, the car offered memory for two driver preference presets, but now there’s capacity for 10. One thing is clear: Tesla is committed to offering its customers a dynamic driving experience.
The Tesla Model X electric crossover won’t start production until late 2014, a major delay as the car was slated to go into production this year. Tesla had initially promised the Model X would debut in late 2013 with “volume” production beginning in earnest by 2014, but now it appears the Tesla factory won’t even start building the crossover until the end of next year.
The Tesla Model X is a three-row crossover with upward-opening “Falcon Wing” doors that is based on the company’s Model S all-electric sedan. It was originally slated to go on sale in limited numbers by the end of 2013, with production ramping up significantly by 2014. In fact, the automaker’s website still indicates that, “Deliveries begin 2014.”
Tesla appears to have quietly delayed the introduction of the Model X by about a year. The company’s latest SEC Filing, which also revealed Tesla will repay government loans early, confirmed the new production date. “We currently plan to start production of Model X in late 2014,” the filing reads. “We currently intend to target an annual production rate of approximately 10,000-15,000 cars per year.”
That means the car probably wouldn’t reach more than a handful of customers until early 2015. The company previously reported it would have total production capacity of 20,000 units in 2013.
Tesla warned in its filing that development of the Model X hasn’t been completed, signaling that production couldn’t start for some time. “The Model X design is not yet finalized and we may be unable to use the adaptable Model S platform to the extent we currently intend,” the filing reads.”We may experience… delays, cost overruns and adverse publicity… We are in the initial design and development stages of Model X. Furthermore, we have not yet evaluated, qualified or selected all of our suppliers for the planned production of Model X.”
A Tesla representative told us, “Tesla has been intensely focused on Model S, its production and product enhancements and believe there is increased volume potential for Model S. As a result, we are pushing back the development and timing of Model X to 2014. ”
By Jake Holmes
Julie Christie, the rumors are true. After plenty of hint-dropping over the past few months, Tesla officially released 2013 first quarter (Q1) financial details today, and it was the first quarter in which the ten-year-old company was actually profitable. CEO Elon Musk, speaking on a conference call to investors today, made it clear that the numbers are good, but behind-the-scenes factors make them even better.
Take, for example, Tesla’s capital expenditures. The automaker was profitable in Q1 despite spending a lot of money on things like new stores and Supercharger stations, things that won’t require as much money moving forward. Tesla says it plans to spend about $200 million on capital expenditures in 2013. Or how about the Tesla’s gross margin, which grew from eight percent to 17 percent from Q4 2012 to Q1 2013. That’s the average for the whole quarter, Musk said, and “the gross margin at the end of Q1 was much better than at the beginning.”
The call wasn’t all about money-rolling-in news. We knew Tesla would make money selling zero emission vehicle (ZEV) credits to other automakers, and it did, to the tune of approximately $68 million (12 percent of revenues). Musk said Tesla expects ZEV credit revenue to decline throughout the year, going to zero in Q4. The shareholder letter reads, “We expect this to decline significantly in future quarters, as ZEV credits will only apply to about 1/6 of worldwide deliveries, versus roughly half of US deliveries, and the price per credit has declined.” Some estimates put Tesla’s annual ZEV credit income at $250 million.
More numbers and tidbits from the announcement can be seen below.
Related GalleryTesla Motors, Inc. – First Quarter 2013 Shareholder Letter
- Tesla had record sales of $562 million, which was up 83 percent from last quarter and resulted in a profit of $15 million (GAAP profit: $11 million).
- 4,900 Model S EVs were delivered in North America last quarter. This was higher than expected, and likely beat both the Chevy Volt and Nissan Leaf, which has Q1 sales of 4,244 and 3,539, respectively, in the US.
- Tesla now expects US to exceed 15,000 Model S EVs a year, with global demand probably more than 30,000 a year. This breaks down to least 10,000 Model S sales in Europe and 5,000 in Asia (but it could be more, since China is a wild card, Musk said).
- Over a million people visit Tesla stores every quarter. Only a small number actually buy a car, of course, but, “There are lots of people who buy T-shirts,” Musk said. “We actually have millions of dollars in apparel sales, without really trying.”
- Musk said, “We are thinking of reducing the initial [Model S] deposit number, because we don’t really need the cash at this point.” The number is currently at $5,000 but it could be dropped to “some lower number.”
- Production rate for the Model S – currently around 400 a week – could increase. “We haven’t really started to push volume really hard yet, because you need to make sure your house is in order and the car is being made as efficiently as it can be made before you push volume,” Musk said, adding that we could see a “fairly significant increase in volume” next year.
- Musk remains confident that financing the Model S is the way to go. “If our car was exclusively available for purchase and not by financing, it would be available for roughly one million US households. With the right financing, it’s probably available to the top ten million households.” The deal is even better in Europe, where the gas prices are so much higher.
Looking further down the road, Musk said the company is “certainly making progress on the Model X” and will finalize the design of that vehicle in the second quarter. The company’s focus remains on Model S production and service but the X “will become our top focus towards the end of this year” in the lead up to the start of production towards the end of 2014.
TSLA stock jumped way up (over $70 a share as of this writing) in after-hours trading. It closed at $55.79. Musk stands to benefit hugely if all this good news continues, thanks to the 2012 CEO Grant, which you can read about here. You can see Tesla’s shareholder letter in the gallery and find SEC information about Tesla’s June 4, 2013 Annual Meeting here. But get ready for less glowing numbers at the next Tesla quarterly call. Tesla’s letter includes this bit of cold water:
The lease accounting treatment for cars sold through our new financing plan will have no impact on our cash flows, and we expect to be roughly breakeven on cash flow from operations in Q2, despite launch costs in Europe and a huge increase in service centers, stores and Supercharger stations. However, the deferred revenue recognition required by GAAP for lease accounting will lead to a net loss on paper in Q2.
Well, that must’ve been fun.
Inside Line really took one for the team by road-testing the battery-electric Tesla Model S and the Porsche Panamera GTS against each other. It’s a tough life.
Inside Line decided the Panamera GTS was the closest competitor to the Model S based on performance, price and size, even though the Porsche’s base price of almost $112,000 is around $18,000 more than the “base” Model S Signature, the only version currently available (but who’s going to quibble about that when you’re in that type of tax bracket).
Not surprisingly, performance was off the charts by any vehicle standards, let alone two vehicles with an average weight of about 4,500 pounds. Both vehicles were in the low four-second range when it came to 0 to 60 mile-per-hour acceleration testing, with the Tesla showing “just endless forward thrust,” while the Porsche was “unreal” in the slalom. The Model S “felt pretty precise” in the handling tests and IL was also impressed with the suspension in the slalom runs, especially using the “standard” suspension mode.
And in the true, apples-to-oranges fashion of testing an EV against a conventional “super-sedan,” no winners were declared. Except for the guys running the tests, of course. For all the numerical test results, click here.
Related GalleryTesla Model S
By Danny King