Tesla

Tesla – zero emissions and zero registrations

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An eagle eyed reader spotted this article in the South China Morning Post today showing that private EV registrations in Hong Kong fell to ZERO in April 2017 from 2,964 in March. The SCMP noted; “Since the April 1 introduction of the first registration tax on EVs, vehicle prices have shot up by 50 to 80 per cent, depending on the model, with tax relief now capped at HK$97,500. A Tesla S was HK$570,000 (under the new tax regime, the price is more than HK$900,000)…the domination of Tesla means zero-emissions motoring in Hong Kong has been largely an elitist activity.” HK is 6% of Tesla’s global volume yet the share price is pricing in blue sky.

Yet more evidence that Tesla product can’t stand on its own without massive subsidies. In previous Tesla dispatches the argument has been the car is an ostentatious fashion accessory to show the world one’s commitment to climate change but only if the price is right.

Tesla – when the plug is pulled on subsidies

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It seems that the removal of generous electric vehicle (EV) subsidies in Denmark shows the true colours of those willing to buy a car in order to signal their willingness to save the planet. While Musk has been one of the most effective rent seekers around, it seems that if consumers aren’t given massive tax breaks they aren’t as committed to ostentatious gestures of climate abatement. In Q1 2017 alone it seems that Danish sales of EVs plummeted 60%YoY. In 2015 Danish Prime Minister Lars Lokke Rasmussen announced the gradual phasing out of subsidies on electric cars, citing government austerity and evening up the market. Tesla’s sales fell from 2,738 units in 2015 to just 176 in 2016. The irony of the Tesla is that it is priced in luxury car territory meaning that taxes from the less fortunate end up subsidizing the wealthy who can afford it!

Naturally if internal combustion engines (which by the way are becoming more efficient by the years as new standards are introduced) are taxed the same as EVs then it is clear they’d sell many more. Do not be fooled – car makers have not heavily committed to EVs for a very good reason – brand DNA. That is why we see so many ‘hybrids’ which allows the benefits of battery power linked to the drivetrain, which outside of design is the biggest differentiator between brands.

While many automakers missed the luxury EV bus, Tesla has opened their eyes. The three things the major auto makers possess which Tesla doesn’t are

1) Production skill – much of the battle is won on efficiency grounds. Companies like Toyota have had decades to perfect production efficiency and have coined almost every manufacturing technique used today – Just in Time, kanban and kaizen to name three.

2) Distribution – the existing automakers have been well ahead of the curve when it comes to sales points. Of course some argue that there is no real need for dealers anymore, although recalls, services (consumables such as brakes) and showrooms are none-the-less a necessity.

3) Technology – The idea that incumbent auto makers have not been investing in EV is ridiculous. Recall Toyota took a sizable stake in Tesla many years ago. Presumably the Toyota tech boffins were sent in to evaluate the technology at Tesla and returned with a prognosis negative. Toyota sold Tesla because the technology curve was too low. Toyota invests around $8bn in just hybrid technology alone per annum. Tesla spent $830mn last year as a group across all products. A ten fold budget on top of decades of investment in all available avenues of planet saving technology gives a substantial advantage.

Tesla is a wonderful tale of hope but it rings of all the hype that surrounded Ballard Power in fuel cells in the early 2000s. Ballard is worth 1% of its peak. As governments around the world address overbloated budgets, trimming incentives for EVs makes for easy savings. Now we have a good indicator one of the electric shock that happens when the plug is pulled on subsidies.

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Tesla recall – Tempting Extremely Serious Legal Action

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Exactly 1 year and 2 days ago I concluded that Tesla was tempting too much fate with its auto pilot function. I wrote along the lines that it’s Mario Kart type rainbow road auto pilot function was distracting so much so that owners were taking cellphone screenshots and videos while they were breaking the speed limit. Even worse Tesla CEO Elon Musk was encouraging its use and talking of its infallibility. I wondered whether his legal team had been consulted before he tweeted there were more such gimmicks on their way.

It now appears that Tesla has a 53,000 car recall on its hands and as predicted a class action lawsuit against it. While Tesla’s market cap may have exceeded the likes of Ford and GM it still doesn’t generate a profit. Car makers are the target of ambulance chasers. Toyota know a thing or two about that. How many traffic accidents in Toyota’s spiked after it was revealed they had a sticky accelerator when so few incidents occurred before.

Tesla’s autopilot has killed people who trusted it to save them. It so happens that the lawyers smell blood with a class action being launched as follows:

“The lawsuit, filed by law firm Hagens Berman on Wednesday in California’s Northern district court, said Tesla’s partial autopilot technology was advertised as safe and “stress-free,” but instead “is essentially unusable and demonstrably dangerous.”

“Unwittingly, buyers of the affected vehicles have become beta testers of half-baked software that renders Tesla vehicles dangerous if engaged,” the lawsuit says.”

Tesla cars with the Autopilot 2 features were first sold in October 2016. The first generation of the system was first unveiled in 2014. The Autopilot 2, or Enhanced Autopilot, feature costs consumers $5,000.

That is the problem with Tesla. It is a victim of its own self created bubble. It promises everything but delivers realities far removed from those dreams. Quality control is still an issue and the endless stream of subsidies has to  have an end date.

Tesla  is valued at 18x more than Mercedes Benz. Musk mentioned how he recently discovered how important production efficiency was. That is much of his battle. Even if he irons out his product glitches the incumbent makers have decades of experience in mass production, distribution and a swathe of new product lining up to challenge the space  Tesla has opened. Don’t forget Toyota sold its stake in Tesla. After  lifting the hood on its technology Toyota realized it was an empty shell. Let that sink in.

Tesla proves autonomous vehicles have a LONG way to go

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I’m not a believer in autonomously driven vehicles. This idea that a computer, if pre programmed, can outsmart a human. Sure, the raft of new safety features (auto brake assist) and lane assist control etc can help in situations when people cruising at brain dead slow speeds are busy texting and checking FB. Yet, there is a point where these systems are dangerous. I have driven cars with them and there have been times where the car outputs are the exact opposite of my inputs. It is unsettling and downright dangerous so I tend to switch these aids off. This excerpt from the Tesla Owners forum on FB shows how the latest and greatest auto-pilot function is flummoxed by such a simple situation. Read on.

Found a bug in 8.1 the hard way. Ruined two rims after 15 minutes of use.
That’s what happened yesterday: I started the AP on a smaller street with a sidewalk with a curb on the right. There was no line on the street next to the curb, but a line for bicycles on the sidewalk. The AP then suddenly pulled right, as it was irritated by the line on the sidewalk and ignored the curb. The rims touched the curb before I was able to react, even though I had my hands at the steering wheel…I already posted this in a German group yesterday and some people told me they had the same situation, but were able to react before it was too late.”

The idea that people put complete faith in auto-pilot systems is a worry. By the same token more advanced systems are supposed to use inbuilt algorithms to determine whether to swerve away from the kid on a BMX bike doing skids on the sidewalks toward the edge of the kerb braking as late as he dares and an old lady on a crossing 5 meters further on. The system may choose to sacrifice you the driver, err sorry passenger. While there is no doubt autonomous systems will continue to get better, would you prefer your airline pilot to be limited to a computer software program only or would you prefer a human in the cockpit who can assess the situation in real time?

Maybe I’m too analog. A fuddy-duddy that refuses to accept the future. I don’t think I’m alone but one day more people will grow tired of an app-driven existence. Life will become too boring and they’ll soul search for more tactile experiences. I was tinkering in the garage on my bikes fitting new parts, tyres, cleaning chains and doing oil changes. There is a something to be said about zen and the art of motorcycle maintenance. I was completely at peace after completing these analog tasks because it requires a focus that can’t be found in a 15 second swipe of an app.

“Made in Australia”Tesla – gimme a break

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Apparently some automotive expert is suggesting Elon Musk will look to produce Tesla’s in Australia as he seeks to diversify production away from a Ginga-factory yet to be completed. I am wondering if the story isn’t a plant to incentivise Premier Jay Weatherill to select Tesla as the battery back up supplier of choice in his panic-fueled rush to cover up South Australia’s self-inflicted energy crisis. Perhaps Musk will promise to put a car plant in Port Augusta. To turn the argument on its head, Nissan, GM, Ford, Mitsubishi and Toyota have given up car production in Australia with good reason. It is too expensive. For Toyota, the company that has coined almost every manufacturing efficiency byword (JIT, Kanban etc) and been seconded by Porsche and Lockheed Martin (to improve F-35 production), to say they can’t do it guarantees that Musk will never consider it without massive long term subsidies. Musk is the master of squeezing a subsidy dollar. Go in front of him entering a revolving door and you’ll be behind him when you exit. Put it this way, South Australians stumping up $550m for an experiment gone wrong might be the least of their worries.

Mulligans to be allowed on the pro-golfer circuit

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Mulligans in pro golf tournaments? Sounds farcical, right? That’s because it is. Yet this sums up the South Australian (SA) energy plan to a tee. The supposed “biggest battery park” in Australia totalling some 1,500 car batteries suggested by Elon Musk would keep the lights on in SA for 3.5 minutes. $150mn buys 3.5 minutes only? Naturally The Greens have lobbed the blame on the federal government for letting South Australia get into this parlous state of its own making. Instead of admitting the abject failure its renewable policy has shown in the real world, South Australia wants to take a $550mn Mulligan and tell its resident taxpayers that this is the shot it would have played. Sadly Jay Weatherill Is stuck in this ‘bunker’ mentality.

One person involved in And advisor to the renewable industry noted:

“I’m an electronics technician, been one for over 50 years, have worked on some of the most amazing bits of gear over the years, have worked in the renewable energy field and have worked with and been an advisor to government and industry on stand alone and grid connected systems and live completely off grid myself. And I can tell you for a fact that no battery ever ever ever will have the energy density storage of any type of fossil fuel, and fossil fuel energy density pales in comparison to nuclear fuel. Anyone that thinks you can run battery back up sufficient to power even a small town is delusional. The size of the battery would be ten times bigger than the town and then you have to have massive inverters to convert it back into 50 Hz mains power as well.”

The two biggest problems with this Mulligan are two fold.

First, the decision on the battery back up system seems in exceptional haste. Where is the sign to taxpayers that the $150mn investment here will be properly allocated and priced? Where is the detail outlining the paltry 3.5 minute safety valve, assuming they can be ready to go at 100% juice if the wind farms stop spinning? Does Premier Jay Weatherill actually get that this is the best he can hope for? Have they relied on the same experts that told them to lever up wind to 40% of power generation for advice? We understand that they are in a real bind but rushing a solution with the bicycle inner tube repair kit virtually guarantees they’ll be running back with $100 millions more in tax payer dollars to swing at  the problem again.

Second, setting up the gas-fired back up generator isn’t an overnight affair. While the building construction might take 18 months from laying the cornerstone, has SA Premier Weatherill considered the location, local government approvals and whether enough engineers who can build such a plant are available? Will they run a tender or draw a name out of a hat? Sounds like a 3-4 year project at a minimum. Also has he managed to cover where the gas will come from? Has that supply been locked down?

You have to wonder at the incompetence in the first place to chase risky renewable targets without getting a grasp of the now too obvious side effects before setting off. To gloat about their virtue by publicly blowing up the evil Port Augusta coal-fired power station last year is one thing. To cover up the folly of that poor decision by gloating again that  another  $550mn of South Australian tax payers’ money is not an oversight tells you how clueless they are. Virtue signaling is a wonderful thing. Now they’ll have the state of Victoria as real competition to see who can run out of power fastest. The only problem Victorian Daniel Andrews will have is posting the problem to Facebook during the blackout.

Politicians seem allowed to take countless mulligans.  Sadly South Australian residents will have to wait twelve months for the opportunity to take another swing.

 

Turnbull’s thought bubble with Elon Musk steals the thunder that Weatherill can only dream of

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It is no surprise that Prime Minister Turnbull is having another ‘thought bubble’, this time with Tesla CEO Elon Musk. I am sure his thinking is it may create another diversion for his weak, indecisive and increasingly unpopular leadership. Using the likes of an international celebrity like Elon Musk he can appeal that he’s hip with global trends. In reality he is trying to steal Weatherill’s limelight. Taxpayers won’t want to pay up for something that hasn’t been proven on the scale that is required in South Australia. Storage isn’t Australia’s problem. It is loony renewable targets like we have in South Australia which are showing the limitations of green power. The Musk plan highlights the stupidity of

100 days or it is free is a gimmick. It is one thing to promise these packs, it is another to be able to install. The guarantee undoubtedly come with huge quid pro quos which will undoubtedly fall on the government – such as provision of land, connection to the grid etc etc. The only thing free will end  up being the set of steak knives. Turnbull can whistle all he wants about storage but Australia will has a growing generation problem which will worsen with the crazy renewable targets being espoused. If states can’t produce enough electricity to meet their own demand, then there is nothing left over to store. That will mean even more expensive inefficient renewables will be sought by governments in order to feed the batteries which sadly won’t lower prices. Taxpayers will get slugged.

South Australia’s (SA) completely disastrous renewable energy policy has caused much chaos, including two recent large scale blackouts. Soaring electricity prices has been behind Coca Cola’s decision to cease operations in the state.

Originally Musk had called up SA Premier Jay Weatherill to solve the total farce his energy policies have proven. South Australia has the country’s most expensive, yet most unreliable electricity supply.  SA scrapped its coal-fired power and relies on wind power for 40%of its electricity. When the wind doesn’t blow, SA relies on backup power from neighboring Victoria, which has its own ridiculous renewable energy targets. Victoria has announced the closure of the Hazelwood coal-fired electricity plant which constitutes 20% of Victoria’s power. So Victoria’s ‘pipe’ of backup will all but disappear.

Musk is a master of the deal. If we place the same faith in Turnbull’s judgement on things like new submarines, child detention centre Royal Commissions, proposals to hand income tax powers back to the states and so on we can be pretty sure he’ll probably try to do a deal with Musk. Might be worth buying Tesla shares on the basis of the Prime Minister’s unbelievable ability to stuff almost everything he touches almost guarantees it. Next thing we’ll see the number plate C*1 (the PM’s car) attached to a Tesla instead of the BMW 7-Series.