Posts Tagged ev history

Why all electric and hybrid cars now – part 3 – in business to sell cars or credits?

Today, Tesla is the shining example of an electric car company.  Their stock is doing great, they’re funded and managed well, and have a good public image.  Anyone who’s interested in cars has heard of the Tesla.  Unfortunately, they’re the exception to the rule.  Coda and Fisker are among the big car companies that went under recently.  Fisker still owes hundreds of millions to its creditors and Codas are still being sold, albeit in liquidation mode.  And Mitsubishi motors is trying to carve a niche in this area?  (check out the i-Miev)  Good luck to them.

But Tesla is not like any other car company.  They only sell one model, don’t have independent dealerships, and actually make some money selling CARB credits to other companies….$40 million worth!   Because they earn more credits than they could ever use (because they don’t sell gas cars), they sell them to other car manufacturers who bank them to avoid paying a penalty in the future.  While the other car manufactures don’t currently need them now, they’re banking them now, especially since they could resell them other.  It’s not like Porsche which at one point, was more of a finance company which happened to sell cars, but it helps their bottom line, about 10% of revenue.  Tesla does currently make a profit.

Tesla also partnered with Toyota and Mercedes for battery and drivetrain development.  The relevance of partnership is more crucial than ever because of economies of scale, costs to develop new platforms, and the fact that so much more technology is going into each model.  Independent manufacturers like BMW and Mazda may be squeezed out as the world shrinks, forcing them to partner to survive.

On a side note, Tesla operates different, not just because they were founded like a tech company instead of an old school manufacturer.  I was reading a Tesla forum and the service department actually reads and monitors the forum.  Some owners complained online about a braking issue and when they went to the dealership, they were advised they had logged an issue which would be checked, despite never having made a complaint.  This isn’t possible when you have millions of sales vs. a few ten thousand vehicles but it shows they care and are carefully monitoring social networking for online feedback.

What does this all mean for VW Auto Group (VAG) since this is a VW-Audi-Porsche hybrid forum and blog?  Although VW has smaller sales in the US, they have very large brand awareness since VAG owns Audi, Porsche, Lamborghini, and Bugatti.  In other countries they also own Seat, Skoda, and are partners with VW China.  China requires foreign car manufactures to partner with a local company.  Even if VAG loses money on each car, the credits could make it worth it, ignoring the research and manufacturing lessons learned.  VW Touareg/Porsche Cayenne hybrid sales have been few and their first mass market car, the VW Jetta hybrid hasn’t found sales success.  Do I think they care?  Not a bit- prepare for the Golf hybrid/A3 E-tron and a lot more EV and hybrid models from VAG.

Please  read part 1 – why now for more on why hybrid and EV are coming now and part 2 – the history of EV for some more background on EV/hybrid.

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