"As a result, Tesla's balance sheet will sprout a contingent liability for the "residual value" of those cars, and analysts worry that the amount will quickly rise to hundreds of millions of dollars -- on the order of half of the company's book value. The deferred impact of all those used batteries will become clearer in coming years, after Tesla also starts running low on the government-legislated zero-emission-vehicle credits that offset $68 million in expenses in the March 2013 quarter.
We had hoped Musk would advise us on these points, but our scheduled interview with him ended abruptly on Friday, when he hung up on us."
His ending of the interview is pretty critical and lays out the proposition that appears will make or break Tesla given the above (I will for this comment ignore the very real problem of loads on grids that weren't designed for this, e.g. blowing transformers by using them at night when they need to cool down):
"I have no interest in an article that debates what we consider to be an obvious point -- which is that there is a dramatic reduction in battery costs," Musk said, after a few questions. "You clearly do not understand the business. My apologies. I am terminating the interview."
I don't follow this field; is it that obvious costs will go down (ADDED:) enough for these high performance (at least as claimed in the article) battery packs?
As they note immediately after, "Elon Musk is not a guy you like to bet against.", and I note he has a bachelor's degree in physics, he is very much not a "suit" divorced from hard reality, e.g. his comments on the Dreamliner battery pack issues sounded like they had a good grounding. And I know more about "rocket science" and SpaceX really impresses.
Note also this is not exactly Moore's Law envy; current size/energy density seems to be OK, he's just talking about cost.
> I will for this comment ignore the very real problem of loads on grids that weren't designed for this, e.g. blowing transformers by using them at night when they need to cool down
I know this isn't part of your central thesis, but this comment really doesn't pass the sniff test. Yes, transformers generate massive amounts of heat, but I've never heard of the need for a cool down period at night. Do you have any additional information?
> I don't follow this field; is it that obvious costs will go down for these high performance (at least as claimed in the article) battery packs?
Well, certainly no one is talking about increasing prices. If you look in to the projected costs of LiIon batteries over time, the majority of the analysis suggests that the prices will continue to go down. The disagreement is over how much. Some say they're going to plummet, but most agree that cost reductions will fall in a moderately-significant range. McKinsey & Co published a decent report that disaggregated LIB pricing in to 40 components, and analyzed each of them for potential future savings. That's a pretty thorough breakdown.
I've read the transformer problem is one that California utilities are already addressing, as in as few as one or two charging at night could blow out a neighborhood transformer.
"Plugging in cars, even overnight, will strain local grids and could boost pollution
"Turning on two or three Level 2 chargers could burn out the street-level transformers that are the distribution grid's weakest link. Most utilities employ undersized transformers, which are designed to cool overnight. Without time to cool, sustained excess current will eventually cook a transformer's copper windings, causing a short and blacking out the local loads it serves."
> I've read the transformer problem is one that California utilities are already addressing, as in as few as one or two charging at night could blow out a neighborhood transformer.
Be very careful who you trust on these issues. A typical level 2 charger is 30 amps by 220 VDC. That's 6600 watts. That's the equivalent of four standard 120 VDC, 15 amp household circuits. If two people using level 2 chargers would blow out a neighborhood transformer, there are significant design flaws with the local infrastructure, and the utility company has set themselves up for failure.
I'm not saying the increase in the number of EVs charging at night won't cause any problems at all, but utilities are heavily regulated. They have to provide reasons for rate increases, and this looks like a honey pot for them. Expect them to shout about it at the top of their lungs.
More than just having bachelor's degree, Musk dropped out of a PhD program in Applied Physics and Materials Science at Stanford to start his first company.
I assume the program was competitive, given Stanford's stature in science and engineering (ADDED: and this is bleeping Silicon Valley, this should be a very hot field for the school); if so, getting into tells us even more.
One thing that stands out on the buy-back scheme is that Telsa might be in a good position to recycle/recondition the battery units for far cheaper than it costs to manufacture them initially.
I'm not all that well-versed on the chemistry of the LiIon tech they use, but other battery chemistries (lead-acid, especially) are reasonably easy to recondition.
"As a result, Tesla's balance sheet will sprout a contingent liability for the "residual value" of those cars, and analysts worry that the amount will quickly rise to hundreds of millions of dollars -- on the order of half of the company's book value. The deferred impact of all those used batteries will become clearer in coming years, after Tesla also starts running low on the government-legislated zero-emission-vehicle credits that offset $68 million in expenses in the March 2013 quarter. We had hoped Musk would advise us on these points, but our scheduled interview with him ended abruptly on Friday, when he hung up on us."