Benton Crane

Tesla Motors recently revealed their up and coming Model S. It’s beautiful, luxurious, and if it lives up to all of its promises it will be a certain hit. They received over 500 orders the first week. It seems to me, however, that some of their promises are a little too grandiose—the $49,000 price and the late 2011 delivery date just seem too optimistic.

To frame my opinion and argument correctly, it is important to note that I have nothing against Tesla. In fact, they are impressing me more than any other automotive start-up. They delivered their 250th car last month while most companies are still toying with prototypes. Last year I called Tesla an “American car company to be excited about” and I predicted that they would end up benefiting from the recession. I’m still excited about this company.

Tesla promises Model S will be an amazing car at an amazing price:

• 4-door Electric Sedan (manufactured in-house)
• Seats 7 (back 2 seats are for children and dwarfs only)
• 0-60 in 5.9 seconds
• 160, 230, or 300 mile range
• Base price: $49,000 (after federal tax rebates)
• Deliveries start in late 2011

Now compare those promises to what they are currently delivering in the Tesla Roadster:

• 2-door Electric Coupe/Convertible (manufactured by Lotus)
• Seats 2
• 0-60 in 3.9 seconds
• 244 mile range
• Base price: $101,500

Delivery Date

To fulfill these promises Tesla has 2.5 years to raise the needed capital; build, buy, or lease a factory; set-up all its tooling; hire and train its workers; and start producing cars. Keep in mind that this all has to be done by a company that has never built a car from the ground up. Until now, they have only been building and installing electric power trains in specialized cars built off site by Lotus. In the meantime, this small company has to continue fulfilling orders for the roadsters (already well behind schedule). I predict that as 2011 approaches, Tesla will announce delays and push back delivery dates.

Price

I was shocked to see that Tesla is promising a price for the Model S that is half what they are charging for the Roadster. I knew that subsequent Tesla cars would become more and more affordable but I never anticipated such a quick dive in price. The batteries are by far the most expensive component of these cars. While time and technological advances will certainly bring the prices down, I can’t imagine that 2.5 years is enough time to see that type of reduction. I predict that Tesla will be forced to raise the price as they get closer to delivery.

I hope I’m wrong

Over promising seems to be in style with automotive start-ups. I hope they don’t do it on purpose, but it wouldn’t surprise me if they do; maybe it has become a necessary evil in order for the companies to generate hype in hopes of attracting investors. I think I speak for a lot of people when I say that I am ready to see an automotive start-up live up to its claims and promises. Will Tesla be the one?

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