Building a Company: 0 to 60 in 4 Seconds
Since the June publication of this article, Tesla has be struggling with a number of issues that are delaying shipments 6 to 12 months past original targets. The company blames the durability and reliability of the transmission. But 700 pounds have been added to the vehicle. There $43 million sale of battery packs to Th!nk was cancelled. Major auto makers have announced their electric vehicle plans.
(6/5/07). Hundreds of Silicon Valley’s brightest minds and most successful venture capitalists joined with many of California’s political leaders on Friday night to celebrate California’s Cleantech Revolution and to raise money for the California League of Conservation Voters.
Many arrived in fuel efficient hybrids. Martin Eberhard, CEO Tesla Motors, arrived in a zero-emission vehicle that can accelerate from zero to 60 in 4 seconds. At the moment, his Tesla Roadster must be shared with the firm’s engineers who are working overtime to finish the vehicle. In October, Martin Eberhard will be driving his own Tesla. As I talked with him, it was easy to see why he was smiling.
Globally, over 40 million people now drive electric vehicles. Most are e-bikes and light electric vehicles. Most are in Asia with ranges of less than 40 miles before battery recharging becomes necessary. Few of these vehicles reach freeway speeds.
400 people have placed orders for Tesla Roadsters with 100% deposits of about $100,000 per auto. Soon they will turning heads when they drive this ultimate sports car. With the body designed and built by Lotus, the car is beautiful and aerodynamic. With the average American household having two or more cars, the Tesla with its 200-mile range is perfect for over 90% of the trips taken by Americans daily.
At the moment each Tesla has a minimum purchase price of $92,000. You will need to get in line behind Arnold Schwarzenegger, George Clooney and other luminaries who eagerly await their ordered vehicles. Even though the company is still evaluating how much of a warranty it can offer, new orders continue with checks attached.
Tesla is just getting started. The founders, including Martin Eberhard, have ambitions to make Tesla a major car manufacturer. On May 1, Mr. Eberhard gave the following testimony at a U.S. Senate Finance hearing:
“Tesla’s second model will be a roomy four door family car starting at $50,000, to be manufactured in our own plant in New Mexico beginning in 2009. Our third model will follow as quickly as we can, and will be more affordable still.
“Tesla intends to become a major car company with a full line of highly efficient – but also highly desirable – electric cars. Our strategy is to enter at the high end of the market, where customers are prepared to pay a premium, and then move down-market as quickly as possible to higher production levels and lower prices with each successive model. This strategy also allows us to change radically the public perception of electric cars, opening the market for a full spectrum of electric car models.”
A secret to making a five-seat sedan electric vehicle for $50,000 is lowering the cost of the battery stack. While major auto OEMs are betting on new lithium chemistry in larger form factors, Tesla integrates 6,831 commodity 18650-sized lithium-ion cells into the 56 kWh Energy Storage System (ESS) pack. The 18650 size is somewhat larger than an AA battery. The size is popular in a range of consumer electronics. Millions are made in high-volume, low cost manufacturing. Amp hours keep increasing; prices keep falling. Tesla will buy the batteries from one, or more, Japanese suppliers. The Japanese market share leaders are Sanyo, Sony, Matsushita, NEC, and Hitachi.
As I sat in the Roadster, Tesla’s Joe Powers explained, “The Roadster can handle charge from a 110 or 220 Volt circuit, and be adjusted to charge at rates between 15 amps and 70 amps. This can take anywhere from 3.5 hours (70 amps at 220 V) to over 24 hours (15 amps at 110 V).In both cases the ‘charger’ itself is on-board; there is no required charging infrastructure for the car other than access to the grid.” A 50 amp mobile charging system can be purchased separately.
Tesla has devoted thousands of hours to designing and building these packs. State of charge, recharging, and heat must be managed for safety and long battery life. Cell failures must not lead to thermal runaway. Tesla’s expertise lead to a recent $43 million sale of battery packs to Th!nk, the resurrected Norwegian manufacturer of light electric vehicles. Tesla Energy Group has been established to support this and other OEM energy storage opportunities.
The energy density of lithium-ion batteries has improved 500% in 15 years. With new energy storage chemistry, future electric vehicles could go much further at even lower cost. Japan’s METI has published a roadmap to reduce battery power cost 40X by 2030. METI Roadmap
Some very bright individuals and venture capitalists continue to bet of Tesla. Early investors included PayPal founder Elon Musk, Google founders Larry Page and Sergey Brin. Tesla Motors recently completed a $45 million Series D investment round. The round was co-led by Technology Partners, a venture capital firm with a focus on Cleantech and Life Sciences, and by Elon Musk, entrepreneur and CEO of Space Exploration Technologies. A significant investment was made by Capricorn Investment Group.
All major investors from prior rounds of financing fully participated in this round, including Vantage Point Venture Partners, Draper Fisher Jurvetson, JP Morgan Bay Area Equity Fund, Valor Equity Partners and Compass Venture Partners.
With $45 million of new venture capital, Tesla Motors will build its new 150,000 square foot automobile assembly facility in Albuquerque, New Mexico, to produce the WhiteStar, This four-door, five-passenger all-electric sports sedan will utilize an aluminum chassis and body to reduce weight and extend range.
New Mexico Governor Bill Richardson has directed the state’s General Services Division, and other appropriate agencies, to investigate the purchase of 100 WhiteStar vehicles for the state fleet over a two year period as a demonstration of the state’s commitment to clean energy.
As gas prices push $4.00 per gallon, public outcry has launched a Congressional investigation of oil companies. There are growing demands for more competition. Good news. Competition is here. You need look no further than the electric outlet in your garage.