The battery powered Tesla Roadster and Daimler Smart cars side by side
In May this year, the German heavyweight automaker Daimler purchased a 10% stake in the Silicon Valley-based Tesla Motors. Tesla, known for their electric Roadster, has been looking to expand their business by building manufacturing facilities in the U.S. for mass producing a new line of electric cars. The Model S would be an electric 4 door passenger sedan- as opposed to the 2 seater Roadster currently on the market. Daimler and Tesla have been working together for over 6 months on lithium ion battery powered technologies for Daimler’s new fleet of 1,000 Electric Vehicle (EV) Smart Cars to be depolyed this year.
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The $50 million deal will bring a massive influx of sorely needed cash for the startup American automaker, along with the backing of an established auto giant. The deal gives Daimler a seat on the board as well as greater access to Tesla’s financial and business plans, perhaps tempting them to increase their stake in the future. Physically, the deal gives Daimler experience in battery pack and charger engineering. |
Tesla Roadster at Yahoo Headquarters, CA
Reportedly, there are rumors that Daimler is testing the waters for a future buyout, however these are purely speculative and probably false as the German maker seems to respect Tesla’s ability to bring products swiftly to market and nimbly respond to changes- attributes which a large manufacturer may stimy. A complete buy out could cause Tesla to lose these capabilities. In fact, a buy out is highly improbable given the fact that Tesla has supposedly designed both of their vehicles from the ground up completely independent of external influence. I doubt they would continue to proceed this way, if their goal was to simply be bought out. Besides, Stuttgart already covers many brands such as Smart, is probably not looking for another “mouth to feed” and is still recovering from their unprofitable dealings with Chrysler. On a very positive note, the $50 million deal gives Tesla a very positive valuation at roughly $500 million.
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Tesla Model S with base price of $57,400
For Tesla, this entire ordeal has acted like a shot in the arm. From a tiny no name brand, to the leading designer of EV cars, Tesla is undergoing a major transform. In fact, they have been able to faithfully follow their business plan over the last several years since I started tracking them. Their goals were to demonstrate that the EV does not need to look ridiculous, like a Toyota Prius or Honda Insight, bring down the price of their roadster (~$125,000) and launch a new highend EV in the form of a 4 door sedan geared towards the average consumer. The Model S was designed to compete directly with consumers interested in purchasing a new vehicles, such as the BMW, but wanted an electric car. Tesla was way ahead of the curve developing EVs and working to remove the stigma assocoated with them for roughly the past five years. The new Model S comes with a choice of three different battery packs with either a 160, 230 or 300-mile range. The 160-mile base price model will sell for $57,400 after the $7,500 federal tax credit. Their batteries are designed to be easily swapped and a larger one could be leased or replaced for extended trips. In addition, the batteries are designed to be recycled when they are totally depleted after approximately 7-10 years, limiting waste and increasing value.
In fact, Tesla is seeking a much larger source of funding from the federal government to build a factory in Southern California for producing the Model S (Images from the LA Times). Honestly, I would have much rather seen Tesla get federal financing than General Motor, as this would have ensured a steady stream of EVs into the U.S. market. In fact, I would thought that GM would be much more interested in aquiring Tesla or at least invest in a stake, with all the hype surrounding the Chevy Volt. Perhaps they could not afford it, however a deal involving a stock swap could have potentially worked.
Daimler Smart EV
In the U.S. last year Daimler sold 24,622 Smart ForTwo microcars. They are continuing to build prototypes and deploy them globally, about 100 of them have been running in London since last year. Ultimately for GM to be competetive, it will have to make a broad niche in this market and seriously start selling EVs now. The hybrid car is a defunct technology - why bother to use gas at all when you can charge your car at home using a solar panel on the roof of your house for free? GM is still continuing to promote their line up of hybrid vehicles including the Chevrolet Malibu, Tahoe and Silverado, GMC Yukon and Sierra, Cadillac Escalade, Saturn Aura and Vue. Notice a large portion of these vehicles are SUV’s with relatively bad gas mileage, even with the hybrid technology. In the future I will try and develop a table which will compare the price, mileage and sales figures of all these vehicles including the Smart ForTwo and Toyota Prius. Why is GM still selling SUVs with hybrid technology? As far as I can see, they are very, very far behind the curve and a stake in Tesla would have given them a competetive advantage. Unfortuantely, for the American manufacturer, they were beat to the punch by Daimler.
GM’s Bob Lutz Shows off the Chevy Volt on Late Night with David Letterman
GM is hoping to have the Chevy Volt on sale by 2011 with a sticker price of $40,000 after rebates. Apparently there has been a back and forth between Tesla and GM on the show, which I think is good to stimulate discussion and thought about the differences between the two products. Elon Musk, CEO of Tesla quirped about the Volt’s 40 mile range, but failed to acknowledge the gasoline powered back up motor which will be used to charge the battery. A more thorough comparison of these two vehicles is sorely needed, however neither of them are on sale yet to it is difficult to speculate.