The World According to Tesla

TRAVERSE CITY, MI – If you want to succeed in the electric-vehicle business, you can’t do anything halfway. You need truly compelling design inside and out, exhilarating performance and at least 200 miles (322 km) of electric range.

And you need battery chargers in locations where it’s convenient for drivers to use them, not situated for politically beneficial photo ops such as libraries and town halls.

Diarmuid O’Connell, Tesla’s vice president-business development, starts off with an informative tutorial on how to be successful building EVs at the Center for Automotive Research’s Management Briefing Seminars here.

Diarmuid O’Connell, Tesla’s vice president-business development.

But then his speech takes a wrong turn as he seems intent on denying Tesla competitors the same state and government help and taxpayer-funded incentives that enabled his company to build a groundbreaking product and achieve a market capitalization that at times has been half that of giant General Motors.

O’Connell criticizes plug-in hybrids as bad for the environment and knocks established automakers for allegedly hoarding credits they legitimately accrued years ago by doing risky, innovative things that help the environment.

He also expresses concern about taxpayers being forced to finance the development of a nascent hydrogen refueling infrastructure. The irony of Tesla complaining about taxpayers being forced to fund a risky green venture is almost too much to bear.

Without a taxpayer-supported start-up loan of $465 million (now paid off with interest) and taxpayer-paid federal and state incentives that give up to $12,000 in tax breaks to wealthy individuals buying $100,000 Model S cars, Tesla would not exist.

O’Connell says he doesn’t like PHEVs because studies show many owners don’t bother to plug them in, opting instead to run on internal combustion, thus denying society the benefit of zero emissions.

Check any of the online owners’ groups, and you will see Chevrolet Volt drivers are obsessive about plugging in.

I’d guess O’Connell doesn’t like PHEVs because Tesla is losing sales to the BMW i8, Porsche Panamera PHEV and others because there are quite a few rich guys out there who don’t care about the environment and just want a luxury car with EV perks, such as access to carpool lanes and primo parking spots.

O'Connell's Disdain for 'Banked Credits'

Tesla also earns tens of millions of dollars every year selling zero-emissions credits to other automakers that need them. It sounds odd that O’Connell would disdain established automakers for having a great oversupply of “banked credits.” He suggests automakers are using these banked credits to needlessly prolong the life of the evil internal-combustion engine.

A less altruistic motive may be in play. If the EPA or California Air Resources Board could be convinced to erase or devalue old carbon credits, traditional automakers might have to buy new ones, possibly creating a windfall for an EV producer that has new credits to sell.

Then O’Connell argues that if the U.S. had kept CAFE on its original trajectory of 4% annual improvements from 1973 through the 1990s instead of “bringing it to a screeching halt” in 1993, vehicles today would average 75 mpg (3.1 L/100 km).

No, that never would have happened. CAFE stalled because gas was selling for the equivalent of $0.50 per gallon, and consumers would not pay a penny extra for better mileage.

Instead, automakers and the U.S. government formed innovative consortia such as the Partnership for New Generation Vehicles aimed at bringing to market an 80-mpg (2.9 L/100 km) family sedan by 2003. The effort yielded a concept car, and some of its innovations did end up in new vehicles. But car shoppers never were interested.

In the 1990s, consumers wanted to drive SUVs the size of small buildings and did not care about fuel economy.

Tesla is not profitable and is not expected to be for years. Even so, O’Connell doesn’t seem to understand why all automakers aren’t investing billions to make truly unique and competitive battery-electric vehicles.

The answer is simple: Only Tesla is hoping to make a profit. Just about everyone else sees EVs as a loss leader. That’s not a good market to be in if you want to make money, no matter how noble the cause or how good your product is.

But if you work at Tesla, which is valued at about $25 billion and sells just one very good luxury car, the possibilities must seem limitless.

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