January 5, 2022 - 1:30pm
After a brief dip in the last few months of 2021, Tesla’s stock price is soaring once again. At the time of writing, it stands at $1149 —just shy of its early-November high of $1222. But even as the markets embrace the company, consumer complaints are beginning to stack up.
The four key obstacles to successful electric cars have long been: battery life; range; reliability; and cost. Tesla makes a strong claim to have solved the first two of these. If you look at the studies being released you will see attractive charts that show a steady, reassuring decline of battery life from 100% to 90% over around 200,000 miles. This should make a Tesla battery as long-living as a petrol or diesel engine. One study comes from internal Tesla data; the other is from survey data gathered amongst their members by an electric car lobbying organisation with a large funding base in the corporate world.
Recall that just last year Pfizer told us that their lucrative vaccines were 95% effective against Covid-19 transmission. That looks like a funny but expensive joke in retrospect. Studies, especially those released by corporations, should be greeted with scepticism.
In the real-world, there are signs that things might not being going according to plan. Last month a Finnish man blew up his 2012 S Model after the battery clapped out. A few months before that a court in Norway fined Tesla over somewhat murky battery issues. Around the same time Chinese regulators raised various quality issues, including around battery fires — a problem that is getting increased attention across the electric car market. Add to that the criticism the company is facing for opening a showroom in Xinjiang and the problems are starting to build up.
As some of the electric cars on the roads reach their first ten years of service, we may find out that outside of the studies they do not last as long as their fossil-fuelled counterparts. Rapid obsolescence is not a good look when you market yourself as eco-friendly. And once consumers realise that they are paying more for a car that will have a fraction of the resale value in a few years, they may turn back to time-tested technologies.
Costs threaten the industry at every level. Tesla is a nearly 20-year-old company. Yet in its more mature years, it has never managed to turn a real profit. The company advertised record profits in 2021, only for investors to discover these were due to Bitcoin trading. Apart from that, only government subsidies in the form of emission credits have managed to allow Tesla to post a profit.
At a certain point, it will be hard not to conclude that the company is hiding the inefficiency of its cars by milking investors. Add to this the sense that as many of the vehicles edge close to the ten-year mark, murmurs of discontent can be heard amongst actual users, and we may find that many of the old problems with electric vehicles return with a vengeance. We can build them. We can drive them. But are they economical? Are they worth the money? Do they stand the test of time? No matter what the marketing tells you, that question has not been answered yet.
Philip Pilkington is a macroeconomist and investment professional, and the author of The Reformation in Economics
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SubscribeTesla, like Windmills, are really Carbon Credit industries. To tap into the lucrative Carbon Credits they have to make electric vehicles and windmills, although the loss on those is worth it because of the lucrative subsidy.
The irony is that German car manufacturers have been forced to buy Tesla’s carbon credits.
In other news Elizabeth Holmes was charged for fraud. Not related at all.
Some very good points, and given the cost, short life and other issues EVs I reckon we could see a significant spike in the second-hand value of reliable, economical, well-specified petrol cars as 2030 nears.
As long as fuel is still available to run them.
I think the fuel that will be in shortest supply will be electricity.
Agreed! But I think as E-day draws closer, EVs will already start being replaced by hydrogen-fueled cars.
Let me know when a viable H2 fuelled car will be available.
No. Hydrogen is a grossly inefficient technology, and BEVs have a huge headstart.
I make my own: thats what solar panels are for, isn’t it?
And the most expensive!
and the fuel tax hasn’t been hiked to unsustainable levels.
I’m sure that’s what the state would want to do, but I predict a riot if you tell people they either buy an unaffordable EV or pay unaffordable prices for petrol. You’re basically outlawing the private car.
Perhaps the point?
Tesla must be one of the greatest confidence tricks ever perpertrated on a seemingly ever more gullible public- remember the last time that markets ignored financial fundamentals such as credit rating, NAV, ROE, cash, margin… and p/e ratios were deemed to be ” yesterdays metrics”? Yup… in the pre 2001 dot com boom/ collapse, when false valuation and ipo were exposed.
Anyone who can look you in the eye and tell you, let alone believe, that Tesla is actually ” worth” n times Toyota is either deluded, dishonest, or both.
Just one example is Toyota’s massive share of the global ‘ working’ 4×4 market ( the UN allegedly buys 200,000 Landcruisers a year) , the success of Lexus is another, and that is before you take a look at their cash pile, and the pricing of, and demand for Toyota bonds…. AND Toyota going for hydrogen rather than electric is deeply signifigant.
I have no vested interest,personal or otherwise in any auto OEM, but have been in the automotive/engineering sector M and A and corporate finance for over 25 years….. and I cannot believe what I see.
Musk turned Tesla into a Bitcoin proxy.
Recent analysis of the bitcoin industry has shown that more energy is being used in mining the digital currency than will be used by all of the EV’s in the world…
Musk is making more profit from a high energy user than his supposed ‘green’ energy product…
The comparison is always made of battery against Internal Combusion Engine. If the engine in my 10 year old car goes bang then it’s very straightforward to put either a new one or a used one into the car. Can the same be said of a battery? I thought these were built in to the car structure which would make replacement a long and very expensive job. The battery being part of the car’s structure is likely to get more comprehensive than less even though it would seem to make sense to make the whole battery pack a standard “bolt on” part that would open up the ability to replace battery packs rather than plug in charge.
There is a Chinese car company (I forget the name) that has a brilliant solution for this – their batteries are modular and can be swapped out. They even allow owners who are just on a long drive and who don’t wish to stop to recharge, to swap them out a network of locations across the country.
The company’s name is Nio.
I think you will find that Range goes away as a critical problem, if the Charging Infrastructure is as ubiquitous, reliable and easy to use as gas stations – thought not in the same places or on the same just-in-time-on-the-road model (we need destination charging: e.g. supermarkets, which are taking up the challenge, and Hotels, which are very slow to do so).
Tesla is uniquely the only Electric Car supplier which properly identified and addressed that problem. I bought a PHEV, because today and for perhaps a few years to come, I cannot rely on the third party destination charging “network”. If I had to buy a BEV today, it would have to be a Tesla, because of their charging network. Get a Mercedes EQA, or a Renault Zoe for example, and you do not get any such reliable network, you are currently launched into the Wild West of different charging companies, with different ‘apps’ and payment systems, and no guarantee that they will work reliably.
Of course I didn’t buy a Tesla, because the cheapest is over 40K, and I object to the idea of paying a ‘luxury’ car tax for a form of transport touted as everybody’s green future.
The green agenda is to redefine energy itself as a luxury good.
I think you will find that is just a transitional phase. Either we will find a durable supply of surplus energy, and get on with life as we have been expecting it to continue, or else face a coming population and systems collapse. After that the remnant will have plenty of resources to “Build Back ******”. At least until population and hubris again combine to precipitate the next collapse. Civilization seems to be episodic, from the archaeological record.
The main problem with Tesla is their sheer unreliability: owner ratings are very poor by comparison with other EVs. By producing cars in such high volume that fall apart faster than their competition, they have succeeded in alienating many existing owners, and the slower BEV manufacturers will capitalise on this fundamental error. I’d predict that Tesla will be toast by 2029.