Snapshot of where things really stand with Tesla Motors

Elon Musk on investor conference callAs seen in Green Auto Market and automotive media in general, Tesla Motors can seize center stage for periods of time and then do it again. In the past few years, other automakers (like Subaru, Hyundai, and Kia) have surged forward in sales and market presence; but their brand imaging pales in comparison. That being said, here’s my latest reality check on Tesla’s performance:

  • Stock prices have dropped. The share price closed at $151.04 on Friday after having hovered around the $200 per share mark for several weeks. The high point reached in the past year was $286.65 per share. The fourth quarter earnings report last week was strong enough to get shares to jump nearly 6% to 10% on Thursday, but they declined again on Friday. The upcoming launch of its Model 3 and strong results from its energy storage division have helped, but analysts and large investors now think that prior price targets needed to be adjusted downward. Tesla’s market cap is now at about $20 billion.
  • Company has yet to be profitable. On Wednesday of last week, Tesla posted its eleventh straight quarterly loss. Last year at the Detroit Auto Show, CEO Elon Musk said it won’t be until 2020 that the company becomes profitable (on a basis that includes charges and executive compensation). During last week’s investor conference call, Musk told investors that the carmaker will start turning profits this year. The company is forecasting a 60% to 80% increase in vehicle sales this year and promised to turn a profit on an adjusted basis. The company also reported that it planned $1.5 billion in capital spending this year but had just $1.2 billion in the bank – but investors where enthusiastic enough to drive up stock prices up to 10% that day in after-hours trading. How does this come to be? “Investors look at Elon, and some say he’s a promoter or that he steps over bounds with what he promises,” said Robert W. Baird analyst Ben Kallo. “But his track record is pretty good. That’s why he still attracts the type of institutional investors he does.”
  • By the numbers. Tesla said net loss nearly tripled to $320.4 million, or $2.44 per share, in the fourth quarter from $107.6 million a year earlier. The cost of launching its Model X crossover has taken its toll. The company will be spending $1.5 billion on machinery and equipment to manufacture the Model 3, and to enhance cell production at the Gigafactory.
  • Status of Gigafactory: Tesla Motors has been criticized in the media lately for falling way behind on its commitment to build advanced lithium ion batteries at its Nevada plant – and to support the local economy and hire more workers. Musk scoffed at the recent news coverage, and once again defended the $1.3 billion tax incentive package the company was awarded by Nevada lawmakers. Tesla and partner company Panasonic have started up the one-million square foot factory near Reno, and permanent jobs have been created in line with what the companies reported would be in place by now. However, the job creation number is significantly smaller than what state-hired economists projected during the 2014 special session to pass the tax breaks. Musk said the Gigafactory is “moving at a very good pace.”
  • Competitive pricing on Model 3: Tesla will begin taking pre-orders of its Model 3 next month, which will be selling for $35,000. With incentives, that could drop down to as little as $25,000 in its closing price. That will be price competitive with the upcoming Chevrolet Bolt battery electric car, which may open at $30,000 before incentives. Tesla has managed to do very well selling its Model S in the $80,000 to $90,000 price range; and its newly launched Model X crossover is starting at around $80,000. Tesla’s creative leasing programs with bank partners such as Wells Fargo have helped close sales transactions. Eyes will be on Tesla on March 31 when it reveals the design and details of the upcoming Model 3.
  • Performance in 2015: Last year did look good in sales performance for Tesla with revenue up 59% over 2014. Model S sales increased 35% in the fourth quarter compared to Q4 2014. The company set a record for deliveries in the fourth quarter even though gasoline prices were way down. To better service its electric cars, Tesla will be opening about 80 retail locations and service centers and adding 300 more Supercharger locations.
  • Energy storage: During its quarterly report, the company announced that its Energy division has installed its first Powerwall home-battery storage units in the U.S., Australia, and Germany.



Automakers see a nexus between electric and autonomous vehicle technologies

Nissan Leaf autonomousGeneral Motors Co. is betting big on its future in the fast-changing automotive space. Along with its investments in Lyft, Sidecar, and its Maven startup brand, GM has announced management changes to support its next-generation vehicle technologies. Doug Parks, GM’s vice president for global product programs, is now vice president for autonomous technology and vehicle execution. Parks will oversee projects to develop new electrical and battery systems and software for autonomous and electric vehicles, the company said. There are other executives taking positions in GM’s new Autonomous and Technology Vehicle Development Team with similar backgrounds in electric vehicles and technology innovations.

There are other OEM executives who see a logical integration of electric and autonomous vehicle technologies. “The two most profound innovations in automotive since the moving production line are electrification and autonomy,” Tesla CEO Elon Musk said to Automotive News.

Tim Lipman PhD, Co-Director at the Transportation Sustainability Research Center, UC Berkeley, sees a “nexus” between autonomous and electric vehicles. Lipman spoke on a panel that I moderated last fall that was part of the Northern California Clean Technology Forum hosted by the Sacramento and East Bay Clean Cities Coalitions.

Autonomous vehicles are ideal for charging the electric vehicles most efficiently, such as during off-peak hours, Lipman said. Electric vehicles are easier to control and maintain than traditional internal combustion engine vehicles. Electric autonomous vehicles would be ideal for meeting energy efficiency and environmental targets in a fleet, he said. It’s all part of a larger trend that UC Berkeley’s  Transportation Sustainability Research Center is tracking as cities continue to grow in population; increasing traffic congestion and air pollution are driving policy changes with increased use of transportation alternatives such as carsharing, ridesharing, electric vehicles, and autonomous vehicle technologies, he said.

Nissan would agree on the nexus and integration of EV and self-driving technologies, as you can see in the Nissan Leaf photo above from the automaker’s 2014 Autonomous Drive Car test program.

Here’s a look at the latest developments in OEM strategic planning on the integration of electrified and autonomous vehicle technologies…….

  • Along with Doug Parks, GM is appointing to its new Autonomous and Technology Vehicle Development Team: Pam Fletcher, executive chief engineer of global electric vehicles, and Andrew Farah, chief engineer of global electrified vehicles. Scott Miller, current director of global C02 strategy, and Sheri Hickok, current chief engineer of GM’s Next-Generation Light Duty Pickup, will also join the team. Hickok will become executive chief engineer for “autonomous joint ventures and fleet execution,” GM said.
  • GM is investing $500 million in ridesharing company Lyft and has acquired the assets of Sidecar, the third largest ridesharing company in the U.S. after Uber and Lyft. GM President Dan Ammann last month said GM would partner with Lyft to create a network of autonomous cars for hire and a set of ridesharing services. In late January, GM also announced the launch of Maven, a carsharing service allowing users to access a Chevrolet vehicle on the new Maven mobile app for as little as $6 per hour, similar to what Zipcar offers. In the driverless car space, GM will it launch its “Super Cruise” semi-autonomous driving technology for Cadillac next year.
  • While Apple won’t comment on its strategic plans for autonomous and electric vehicles, its hiring practices indicate something is in the works. Jamie Carlson, former “Autopilot Firmware Manager” at Tesla Motors, joined Apple in August to work on a special projects team at the company. Along with Carlson, new-hire colleagues at Apple include Megan McClain, a former Volkswagen engineer with expertise in automated driving; graduate researcher Vinay Palkkode who came from Carnegie Mellon; and Paul Furgale, the former deputy director of the Autonomous Systems Lab at the Swiss Federal Institute of Technology. Apple seems to be considering making in an investment in an autonomous vehicle testing ground at the GoMentum Station in Concord, Calif. Earlier in 2015, news leaked out about Project Titan, the possible code name for Apple’s electric vehicle program. Apple has likely set up a lab to test out a vehicle that looks like a minivan. Several hundred employees were working on the project.
  • Google hasn’t commented on how its self-driving car research and development could tie into future EVs. Google has been putting a lot of test miles on its fleet of autonomous electric cars in use on the roads around the company’s Mountain View, Calif., headquarters.
  • As part of Tesla’s new Version 7.0 software package in the Model S, Autopilot was transmitted to cars in the U.S. in October, which was then followed by Europe and Asia. Tesla’s new Model X sport utility vehicle also offers Version 7.0 and Autopilot. Customers must pay a one-time fee of $2,500 to activate the self-driving software when they buy a car, or $3,000 to activate the feature after delivery. The software update uses cameras, radar, ultrasonic sensors, and data to steer down the highway, change lanes, and adjust speed in response to traffic. The driver can follow a lane on the highway and change lanes using the turn signal. The 7.0 software and Autopilot can deliver parallel parking that detects an open parking space and takes control if the driver asks for the car to park itself.
  • Tesla has been investing in high-resolution maps that Tesla has built in-house by tracking where its cars have driven. If cars appear to be switching out of Autopilot mode at a particular spot on the road, Musk said, Tesla will update its maps and its software. “The big differentiator here is that the whole Tesla fleet operates as a network, so when one car learns something, the whole fleet learns it,” Musk said. It is a “powerful network effect,” he said, adding that “any car company that doesn’t do this will not be able to have a good autonomous driving system.”