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A Gasoline-Powered Tesla

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  • Jym Dyer
    http://247wallst.com/autos/2013/08/21/a-gasoline-powered-tesla/ A Gasoline-Powered Tesla by Douglas A. McIntyre 24/7 Wall St. | 21-Aug-2013 at 6:36 am Elon
    Message 1 of 1 , Aug 21, 2013
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      http://247wallst.com/autos/2013/08/21/a-gasoline-powered-tesla/

      A Gasoline-Powered Tesla
      by Douglas A. McIntyre
      24/7 Wall St. | 21-Aug-2013 at 6:36 am

      Elon Musk, the most handsome and intelligent man in the world,
      faces an insurmountable task as he works to sharply increase
      sales of his Tesla Motors Inc. (NASDAQ: TSLA) cars. The appetite
      for electric-powered vehicles in the United States is extremely
      small, and that is unlikely to change for years. For Tesla to
      be successful, it will need to introduce a hybrid, which at its
      heart is a gasoline-powered car. He may even have to launch a
      car that runs on a regular gasoline engine.

      A car industry research powerhouse released a piece of research
      in 2010 that said:

      Combined global sales of hybrid electric vehicles (HEVs) and
      battery electric vehicles (BEVs) are expected to total 5.2
      million units in 2020, or just 7.3 percent of the 70.9 million
      passenger vehicles forecasted to be sold worldwide by that
      year, according to a report issued by J.D. Power and
      Associates. For comparison, global HEV and BEV sales in 2010
      are forecasted to total 954,500 vehicles, or 2.2 percent of
      the 44.7 million vehicles projected to be sold through the
      end of 2010.

      Battery electric vehicles are a tiny fraction of that number,
      based on current sales trends. Given that most people cannot
      afford a $85,00 Tesla (with all the options), or even the less
      expensive car the company plans to sell, the market for Musk's
      products is extremely limited. The resistance to sales goes
      beyond price. Among the hurdles manufacturers of these autos
      face, according to the "Drive Green 2020: More Hope than
      Reality" issued by the research firm, are that fossil fuel costs
      need to rise sharply over the next seven years, and drivers
      would need to get over their worry about the range of electric
      cars and the period required to charge car batteries.

      Musk already has the problem of handling demand. If he is lucky,
      the company will sell 30,000 vehicles this year, which would
      translate into $3 billion of revenue. That is not enough to make
      the Tesla cars at any scale, even if there is demand for them,
      which there will not if production rises sharply.

      Tesla has every advantage a car company would want. The National
      Highway Traffic Safety Administration (NHTSA) awarded the Tesla
      S the highest Vehicle Safety Score (VSS) ever. Consumer Reports
      gave the Tesla S its best grade even. However, the nonprofit did
      have some reservations, which can be added to the certain low
      demand of electric cars:

      Drawbacks include tight access and restricted visibility.
      Initial teething problems and a steep sticker also give
      pause for thought.

      Again, in a very limited market, the car is too expensive.

      Tesla needs something in the form of an engine that would
      sharply broaden its appeal. If it only wants to attack the
      hybrid market, it could buy engines made for the Porsche
      Panamera SE Hybrid. The sports car has performance similar to
      a Tesla. If Musk wants to broaden the appeal of Tesla further,
      the number of sports car engines that produce 400 HP or better
      is fairly large.

      Tesla could sell many thousands of its cars, but based on the
      trend of demand for electric cars, the company will need to add
      a gasoline-powered engine.
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