Among these are the question whether Tesla has become a darling of the public and media and is getting off easy while garnering lots of free publicity. Or, are state and national level auto dealer associations trying to strong-arm poor aspiring Tesla and its ideals intended to better the world? Or is Tesla a half-baked scofflaw with a pretty face and lots of promises that does not understand the precedents it could set to undermine the American economy? Or are the dealer associations the actual thugs, albeit dressed in business suits, protected by laws, money, legislators, and attorneys?

Tesla’s factory owned retail stores are located in high-traffic, upper socioeconomic-level retail areas, and aim to benignly present the award-winning Model S and models to come. They follow Apple stores in concept, and are being established with direction by former Apple marketer George Blankenship who’s now a VP for Tesla.

Tesla store locations from its Web site.

Its associates are friendly, upbeat, helpful, and not commissioned. It will be considered a job well done if after a person wanders into the Tesla store, he or she feels positively disposed toward Tesla and wants to come back.

The hands-on stores feel very liberating, and shun haggling and attempts to close the sale – things many car shoppers detest.

Meanwhile, this contrarian and seemingly egalitarian retail model has been opposed in various ways by state dealer associations including those in Colorado, Massachusetts, Illinois, New York, Oregon, Texas, and North Carolina.

Twenty nine states have some type of statutory prohibition on the books against factory ownership of new vehicle dealerships, according to Texas Auto Dealer Association President, Bill Wolters.

The National Automobile Dealers Association (NADA) told Automotive News that including these 29, a total of 48 U.S. states have at least some form of restrictions on factory owned dealerships. Tesla CEO and co-founder Elon Musk has said he’s aware of 20 states that make it “extremely difficult” for Tesla to operate as it would like.

A Tesla associate talks with a shopper at the new Tesla store in the King of Prussia Plaza shopping mall which just opened Friday, May 17.

George Blankenship has said Tesla rolls with what it has to, while otherwise being staunchly determined.

“We do what we’re capable of doing, and we do whatever they let us do,” said Blankenship to Automotive News. “It’s unique for each location. If we can’t be a dealer in a mall, we won’t do reservations on site. We tell people where to go on our Web site to make a reservation.”

And whether Tesla is getting a pass as a new-age Robin Hood of sorts or not, it does do fairly well in the deliberate campaign to rouse public opinion to its side, and has succeeded in getting its way in some fights to date.

“We certainly have a lot of battles in a lot of places,” said Musk. “So far we’ve been successful in those fights. It’s because right is on our side.”

The car dealer associations meanwhile have often been portrayed as self-serving, hypocritically opposing free trade for which they might otherwise clamor.

Skateboard chassis. Unlike Apple stores, Tesla lets you whip out your camera and snap away.

Musk has pointed out the seeming protectionist stance enforced by varying state-by-state laws is an American phenomenon not seen to such a degree in Europe.

Others have likened the car dealer associations to unionists who’ve gotten too big for their britches, are now getting their come-uppance, and others besides have expressed no love for auto dealers which have been generally accused of unethical practices.

A leaked e-mail from Musk himself about Texas says such attitudes have been stirred up by Tesla.

“If the people of Texas knew how bad this was, they would be up in arms, because they are getting ripped off by the auto dealers as a result (not saying they are all bad – there are a few good ones, but many are extremely heinous),” wrote Musk in an internal e-mail that was “unfortunately” leaked, according to a Tesla media rep. “For everyone in Texas that ever got screwed by an auto dealer, this is your opportunity for payback.”

Of this e-mail, in an interview with Automotive News April 15, Musk explained.

“One uses stronger language internally than one would use externally,” he said. “But I feel like we are being attacked all over the place by dealers, and they’re causing us to spend a ton of money on legal battles, and they’ve slowed down our licensing approvals at DMVs in various states, and they’re just generally being pretty negative and behaving in an anti-competitive way.”

And on and on goes the back-and-forth portrayal of Tesla’s views and those which compete against its vision. Both sides make points held by some as valid and compelling, but it all adds up to a question:

Aside from the letter of the law, who holds the moral and ethical high ground? Is it Tesla or the car dealers associations of America? Or is the truth somewhere in the middle?

Untold Story?

Yesterday we had an in-depth phone interview with Texas Auto Dealers Association (TADA) President Bill Wolters who had been recommended as highly knowledgeable on the big picture by NADA Vice President of Public Affairs, David Hyatt.

TADA President Bill Wolters.

Wolters, who joined TADA in 1982 after 13 years working for Ford Motor Co., said Musk is waging a successful PR campaign. Wolters said he’s mindful of the good, the bad, and the ugly alleged against auto dealers, and associations representing them, but said their motives are not well understood.

“Most people don’t call us and ask for the dealers’ side and I’m grateful that you did,” said Wolters. “And a lot of the interviews that I’ve done over the phone they did not print what I said.”

We told him we would print what he said.

And what is said in Texas does matter a great deal to Elon Musk who has said Tesla is considering Texas for a second manufacturing facility, it views the state as second only to California in potential importance, and it’s a possible a hub also for Musk’s separately managed SpaceX operations.

Unfortunately for Tesla, Texas has very narrowly written franchise laws that Musk “cannot wiggle through,” said Wolters. In April, Musk traveled to Austin to speak before the state’s House committee on business and industry in defense of proposed House Bill 3351/Senate Bill 1659.

These have since died in committee, and Tesla has until Monday, May 27 for a sliver of a hope that some amendment could be approved to give breathing room to Tesla’s two retail locations in Austin and Houston presently hog-tied, Texas style.

The Texas state legislature meets every two years, so if Tesla is not successful, it could be two more years before it gets another chance.

“The governor can call a special session of the legislature at any time but it is unlikely that Tesla’s legislation would be considered in a special session,” said Wolters.

American Economic Safety Net

Wolters said a major concern of auto dealer associations everywhere is keeping hard-won rights and privileges afforded to businesses and communities both large and small.

Tesla’s efforts are generally seen as setting the stage to erode a careful balance upon which many people depend for their transportation needs, economic base, and even their direct livelihoods.

Franchise laws presently stipulate that if a dealership has viable management and can meet the manufacturers’ requirements for dealership standards, the manufacturer must continue to support the dealership, and cannot close it down.

“I tell people that franchised dealers have a greater presence in our state of any significant organization except the public school system,” said Wolters. “You don’t find major retailers or major businesses in these towns of less than 15,000 population and the reason they exist there is a lot of our citizens [with transportation needs] live there.”

Auto dealers have already seen what happens when franchise laws are suspended, Wolters said, citing General Motors’ and Chrysler’s bankruptcies in 2009 when many viable businesses across the country through no fault of their own were shut down to save the manufacturers.

Customers are free to get in and sample the powered, but otherwise not drivable cars’ features.

Texas has 1,240 dealers in 248 cities. Of these 163 operate in towns of less than 15,000 population, and parallel example exist in various states, Wolters said.

In these small towns, there are many grandfathered-in domestic car dealers, but a clue to what would happen if franchise laws were eroded is also seen by the rise of imports, said Wolters.

Not forced to locate franchises in small, less profitable towns, import car manufacturers that have come along in recent decades did not waste their time and money, and in so doing, contribute nothing to small town economies.

Wolters likens this to the effect of big box retailers which only bother to operate in denser areas. They go where the money is, and in effect deprive local communities of direct economic support. Similar ramifications can be seen by the arrival of a Walmart or Walgreens or Best Buy, said Wolters, which can choke off local businesses besides.

Tesla has shown it is going where the money is, and auto dealer associations are concerned, said Wolters, citing the precedent set by the imports.

“They’ve proven where the manufacturers would go to make the most money,” said Wolters suggesting domestic makers are also loyal first to their bottom line but held in check by present franchise laws. “I don’t have a Toyota dealer in West, Texas [pop. 2,800], I don’t have a Honda dealer there; I don’t have a Nissan dealer. I have no import dealers, I have a Chevrolet dealer, and a Ford dealer.”

Having been down this road longer than start-up Tesla, auto dealers across the country echo Wolters’ sentiment, including Bob O’Koniewski, executive vice president of the Massachusetts State Automobile Dealers Association.

“If a manufacturer sees that Tesla is successful with this kind of business model, who’s to say they don’t break out their own EV product lines and create a separate system that bypasses dealers?” said O’Koniewski to Automotive News. “It’s extremely problematic.”

And a broad dealer network also constitutes a safety net, said Wolters, as it protects consumers with more dealerships to find recourse with their automotive issues even in remote regions.

“To me it’s part of the fabric of this country that car dealers of every size provide transportation but they also provide service and safety to the consumer,” said Wolters.

Hop in and check it out.

His view agrees with the NADA’s Hyatt who said in a statement:

“Buying a car is different from buying other products on the Internet. For example, when you have a problem with your iPad, it affects only you. When you have a problem with your car, it’s a matter of public safety, both for the driver and the driving public. The franchise dealer network promotes public safety and instills confidence in the consumer that there will be a place to go when help is needed.

Wolters also echoed Hyatt who added:

“When a manufacturer goes bankrupt – such as start-ups Fisker and Coda – at least the independent franchised dealership remains, where a dealer is motivated to do everything possible to help the customer. When manufacturers discontinue a brand – such as Pontiac, Mercury, Oldsmobile, Suzuki, Saab and Saturn – auto dealers still remain and they are motivated to do everything they can to help the customer. In other words, manufacturers and brands may come and go but dealers are there for the long term.”

Who’s Really Served By Factory Direct?

Wolters contends fewer outlets do not automatically mean savings to the consumer, as has been implied with factory direct sales.

If franchise laws were successfully eroded, other manufacturers besides Tesla – which themselves continually propose legislation to weaken franchise laws – could re-arrange their distribution to maximize profits for themselves and not only starve or cut off some local dealers, but this could reduce opportunities for consumers as well, Wolters said.

“Now to me fewer dealers drives the price up. Fewer dealers drives the service down. Fewer dealers make people less safe on the highways because I don’t have a dealer in West [Texas] to take recalls,” said Wolters. “The price doesn’t go down when they have fewer outlets. And when they talk about the manufacturer being able to save more selling direct, there’s nothing that says they pass that along to the customer.”

The car business has actually become more consolidated with fewer dealers having to be very savvy to make a living from customers armed with the cost of the car, Wolters said, and who are willing to shop till they get the deal they want.

What’s more, Internet sales were not invented by Tesla, and dealers routinely get many sales via their Web presence.

Model S Signature Performance.

Among retailers, Wolters said car dealers are unique in that dealer invoice can be discovered.

“I can’t go online and find the cost of a flat screen TV, a suit of clothes, a couch,” Wolters said, and the same is true of a Tesla Model S he added, which is sold at a non-negotiable price ostensibly to relieve buyers the stress.

In fact, Wolters said, the public has shown it has a love-hate relationship with car dealers. People say they dislike wrestling over price, but they insist on it anyway, he observed, because they want to save money.

With a vast franchised dealer network, profit margins have thus been driven down as a percentage of sales price in the past two decades, he said.

In the U.S., Wolters said NADA data shows the average price of a new car has climbed from $14,142 in 1988 to $30,910 in 2012.

Fierce competition and consumers armed with information have driven gross profits down to around 4.15 percent, or an average of $1,283 out of the $30,910. And from this, dealers must pay commissions and overhead and might keep about $200 more or less.

Not so incidentally, Wolters observed states benefit from the present franchise system too, as they sit back and take in taxes on par with a dealer’s profits before expenses are collected, and the state shares a cut with no one.

Click on to enlarge.

By his estimation, dealers which represent a half of 1 percent of all operating businesses collect a good 6 percent or more of state taxes.

“So they are the largest uncompensated tax collector in the country,” Wolters said, and the state makes more on a car sale than a dealer.

If you think legislators considering whether they should erode franchise laws do not listen to this line of reasoning you’d be sorely mistaken.

HybridCars.com did attempt to get equal commentary from Tesla, but requests via phone and e-mail to its communications people were not returned.

In this store, one can complete a sale as well as schedule a test drive in the parking lot. Tesla has two cars there on chargers. If needed, an associate can walk a customer through order placement in the store.

Musk has told Automotive News many points from his side of the story, however.

“We’re in a tough spot because I’m not fundamentally opposed to franchising, but I think it’s really difficult for a new company with a new technology to be franchised. It’s not possible to effectively sell a new technology like electric vehicles, for a dealer to do that, without undermining the story behind gasoline cars,” said Musk on April 15 regarding his then-recent testimony at Texas.

“In Texas, it’s the toughest of all because [the dealer association president] about 20 years ago was a really tough dude, and he worded it six ways to Sunday. Like Green Eggs and Ham, you know,: Musk added, “If you’re a manufacturer, you cannot sell it any which way, no matter what. You can’t sell it in a house, can’t sell it in a mouse, can’t sell it in a grouse. It’s like, OK, wow. You can’t sell it.”

The road Tesla is taking is actually costing it millions, by Musk’s estimation. If it chose to, it could take a simpler path involving Tesla-only franchises – stores Tesla could not own but it could select management and have some control – and these could meet state laws.

“It would be cheaper for us to use the franchise system,” said Musk to Automotive News, “except I don’t have confidence that the franchise system would actually sell cars. It would not sell enough volume for us to be successful.”

Musk told Texas legislators Tesla would consider franchising but only after establishing a minimum sales threshold.

“If electric vehicle sales from Tesla exceeded 5 percent of new car sales in the state per year, then I’d say yes to that. We’re a million miles away from that,” Musk said to Automotive News.

The idea that a free market, something Texas normally prides itself on, was also broached.

“In Texas, we’ve got a really difficult battle,” said Musk who also had a discussion with the state’s Governor, Rick Perry, adding “it’s unTexan to have this kind of regulation.”

Immovable Object vs. Irresistible Force

What’s happening with Tesla and auto dealer associations over myriad nuanced details – but the same general issue – is a classic case of culture clash, and agreement to disagree.

Wolters is not buying the notion that Tesla’s consumer-friendly model is really going to be any better.

Actually, he said, there’s “incredible competition” among dealers to maintain consumer satisfaction. This is true if dealers expect to stay in business, and even be treated as well by the manufacturers upon which they depend.

Bad old days of unethical and manipulative car dealer experiences do however linger as memories, and Musk has said they will be overturned with Tesla’s sales and service model.

Monroney label from the white Model S Signature Performance. It says: $106,850.

Wolters conceded ambivalence exists.

“I think there’s probably overwhelming public support to get rid of car dealers. But when it comes to negotiating the price of a car, in realty, they operate just the opposite,” he said of car shoppers. “What we find with most buyers is they dislike car dealers but they like their dealer.”

Further, Wolters said dealers are among the most highly regulated, and said this to Musk who he recently visited “with my hat in my hand” in Palo Alto. Wolters said he explained he wanted to help Musk and Tesla succeed, is in no way against electric cars, wanted to help Musk find a legal compromise that would work for him, but Musk would hear none of it.

What does he think Musk’s core motives are then?

“Well, I think his core motives are, one: to publicize Tesla. I think this is a public relations campaign to promote his vehicle,” said Wolters.

Musk has been getting lots of free press, he said, and waging a grassroots campaign to stoke flames of public support, Wolters said, adding that any press is positive press, and in his view, most press has not been that bad, as the charismatic Musk has won over the media.

Tesla’s efforts to rouse support was suggested in Musk’s leaked e-mail.

“The Texas auto dealer association is trying to stop us from selling cars in the state and they have way more money and power than we do with legislators,” Musk wrote, “so we need to rally the people pronto to stop them from winning.”

Secondly, Wolters suspects what Tesla poses as a more egalitarian way will ironically erode safeguards to the marketplace and economy although there may be many who have not seen this.

Musk wants to “give himself a free reign in the marketplace without competition, said Wolters. “He doesn’t want his cars sitting next to a hybrid or a diesel or another battery powered vehicle … And to me that raises a red flag if he just wants to have an isolated showroom that a consumer cannot compare his product. There are a lot of magnificent automobiles that are wonderful for the environment in showrooms.”

But Musk told Automotive News a different story.

“There’s better things to do than attack Tesla. We’re a little company selling a small number of electric cars. And we’re just trying to make a go of it and not be yet another body in the graveyard of car company start-ups,” said Musk. “We’re not trying to poke a finger in their eye or do something unreasonable. If I thought there was another way to be successful, I would take that path. But the evidence suggests if we don’t at least initially pursue a direct sales model, we will fail.

“In the future I could certainly see us embracing a mixed model, where there’s a mixture of company-owned and franchised stores. There are good examples of those, like McDonalds. But we need to be a bigger company.”

What is a “bigger company” in Musk’s estimate?

“Roughly 1 percent,” he said. “That’s not a large number. But I think we’ve got to be at least 1 percent of new car sales in America, which would be around 130,000 or 140,000 cars.”

And On It Goes

Tesla is operating successfully in some states now, and is undoubtedly full of promise.

Musk said to Automotive News he would consider going above states by lobbying the U.S. Congress for legislation allowing direct sales of electric cars made by startup companies. He said such legislation could be tied to an energy or transportation bill.

He said he could also file a federal lawsuit challenging state restrictions as unconstitutional violations of interstate commerce.

The constitutionality of the franchise system was already evaluated a decade ago however, said Wolters, who gave testimony before the Federal Trade Commission on this very subject. It was found to be constitutionally valid.

But Musk said he was still mulling his federal-level options.

“If we’re seeing nonstop battles at the state level, rather than fight 20 different state battles, I’d rather fight one federal battle,” Musk said.

This Tesla store couldn’t be any closer to an Apple store.

The chairman of the NADA, David Westcott, was quoted as saying this would be a “mistake” and “NADA will vigorously defend the franchise system.”

The NADA has attempted to step back for now, although it has previously voiced strongly that Musk will learn the error of its ways.

“The National Automobile Dealers Association supports a state’s right to enact and enforce auto franchise laws in the public interest,” said Hyatt. “State governments require the dealer to invest in brick-and-mortar facilities to ensure there is an independent franchised dealer available to car owners for the life of the vehicle, not just at the point of sale. Tesla should be required to play by the same rules as everyone else.”

But the game is not fair, unrelenting Tesla has insisted while in other quarters it is being rewarded with much praise for its product and the hope it represents to a public among which many remain largely unaware of how alternative vehicles operate, or that Tesla even exists.

Wolters said Tesla’ ability to sell the sizzle and dazzle the less-than-fully informed has further enabled Musk in efforts to win the hearts and minds of supporters, many of which cannot afford his present products, but hope to in a few years when Tesla releases a less-pricey car.

All of which brings us back to the question of who holds the moral and ethical high ground? Both sides say they do, observers have their opinions, but this ultimately has yet to be fully determined.

The post Why Auto Dealer Associations Oppose Tesla appeared first on HybridCars.com.

“Self-driving cars are the natural extension of active safety and obviously something we should do,” Musk said in an interview published yesterday by Automotive News.

Even though a car has no actual pilot, Musk said he liked the positive connotations better from a metaphorical co-opting of the aerospace term to automotive technology, and found it preferable to Google’s words describing driverless technology.

“I like the word autopilot more than I like the word self- driving,” Musk said in the interview. “Self-driving sounds like it’s going to do something you don’t want it to do. Autopilot is a good thing to have in planes, and we should have it in cars.”

Where Tesla would also innovate is the technology itself. Musk said the Light Detection and Ranging (Lidar) system used by Google would be “too expensive.”

Its expenses include a sensor system which Musk sees a cost-effective way around with technology that can accomplish the same task.

“It’s better to have an optical system, basically cameras with software that is able to figure out what’s going on just by looking at things,” said Musk. “I think Tesla will most likely develop its own autopilot system for the car, as I think it should be camera-based, not Lidar-based,” Musk said Monday via e-mail, adding, “However, it is also possible that we do something jointly with Google.”

Google did not offer comment for the story, and further, Musk said “we’re not focused on autopilot right now,” but he indicated it has received plenty of thought already.

A higher priority for now is to bring down the cost of the Tesla cars themselves, including within the next few years, new models reaching down to the $30,000 range.

Automotive News

The post Tesla Eyes ‘Autopilot’ For Its Cars appeared first on HybridCars.com.

Should Model S customers need servicing for any issue, the $600 per year package entitles them to have as close to an “invisible” service experience as possible, Tesla says.

The company will valet a premo Model S or Roadster – to customers – regardless what level and options of Model S they may have.

Saying that “the world’s best” cars ought to get “the world’s best service and warranty program,” CEO Elon Musk laid out points regarding the plan.

The company is building a small fleet of 85-kwh Model S Performance loaners and will also make available in most locations Roadster loaners, and other provisions are included.

And, if while they are at it customers decide they like the Model S loaner better, they can just trade their existing Model S in at a pro-rated difference.

“The loaners will be available for immediate purchase at a price that is lower by 1 percent per month of age and $1 per mile,” said Tesla today in a follow-up blog post. “If you like the service loaner more than your other car, you can just keep it. This ensures that the service fleet is constantly refreshed and gives customers the best optionality.”

As time goes on, Musk said Tesla expects cars it takes in on trade will add to a growing inventory of used Teslas for sale as is the case already for pre-owned Roadsters the company offers.

Of course, if customers merely want to get their existing car back, no problem. The idea is not being portrayed as a means to upsell, in fact Musk said something that flies radically in the face of traditional dealership service models.

“What I’ve told the Tesla Service Division is their job is never to make a profit,” Musk said.

Investors may get “mad” hearing this, Musk said, but the service model he says Tesla is aiming for should be run to the “zero profit point.”

Musk contends service is best if it is painless as possible, and he wants to “minimize not maximize” the cost of any service.

This said, the all-electric cars do not need customary servicing like gas or diesel vehicles, and so, the service policy may not even be used unless a major issue crops up, like with the battery or electronics.

“As such, we are comfortable making the annual checkup entirely optional,” said Tesla. “There is still value to having Tesla look at the car once a year for things like tire alignment, to address a few things here & there and perform any hardware upgrades – our goal is not just to fix things, but to make the car better than it was. However, even if you never bring in the car, your warranty is still valid.”

On the other hand, if the battery or electronics have an issue, Musk said this would be a no-fault thing, and Tesla would not snivel if the owner failed even to have taken minimal steps to become familiarized with the vehicle’s operations and care.

“The intent is to provide complete peace of mind about owning your Model S even if you never read or followed the instructions in the manual,” said Tesla.

Unlike the Roadsters which had a “bricking” problem known to be possible, the Model S is designed to be more fool-proof, so if something goes wrong inside the standard 8-year warranty period, Tesla will cover it, Musk said.

He said Tesla will fix a warranted battery as needed, and if this happens a few years from now, and there happens to be an updated battery available, there may be some leeway in upgrading at that point, it was implied.

Exceptions to the warranty would be such as from collision damage, intentional abuse, or if the battery pack had been opened by non-Tesla personnel.

Musk said the customer-centric program was as close to a dream policy as they could make it. He said he and Tesla designed its provisions putting themselves in customers’ shoes, imagining what they would want in an ideal arrangement if they were the customer.

Showing Itself Smart

While Tesla is bold enough to say its cars are the world’s best, Tesla is never so arrogant as to come out and declare something like “we are smarter,” yet smarter it is potentially showing itself to be.

Is it any wonder auto dealership associations are fighting Tesla’s unorthodox retail store and service center infiltration into their domain, and in cases looking at Tesla like the incarnation of the devil himself?

Talk about upsetting the old way of doing things.

Musk said he tells his service centers not to try and make a profit. He said Tesla is making scant profits selling the cars at this point too.

Of course Tesla is most definitely in business for profit, but how it is aiming to go about achieving this is altogether different.

Traditional dealerships have disparagingly been called “stealerships” by some, and in any case, back-end profits from parts and service are big business to help make up for thin margins perceived from the initial car sale.

Over the years, while many traditional dealerships have made loyal customers who value the relationship, in other cases some dealerships have engendered no love among people who have felt less than valued, if not overcharged or outright burned.

Further, the relationship between salespeople and customer, while typically marked with smiles and surface cordiality, can often behind the scenes be seen as an adversarial affair marked by ambivalence on both sides of the table.

Musk and Tesla are making big efforts to destroy this paradigm.

He said his agenda is not a short-term gain in sales, but long-term loyalty, ostensibly by earning it by maximizing the quality of the service experience.

Reporters today asked Musk what drove him to make the decision – was it knowledge of looming problems he wanted to pre-empt? Was it knowledge of current issues he wanted to head off at the pass?

Surely there have been some issues, but Musk said so far not one battery has failed at the module or cell level, and his goal was planting seeds of long-term buyer trust.

“We want to say ‘just don’t worry about the battery, its going to be fine,’” he told reporters in characterizing the spirit of intent behind Tesla’s motives.

Consumers today are naturally concerned with the expensive battery pack that, being new technology, is due to sooner or later be updated. Jumping into the EV waters does make many people take pause, especially at the $70,000-$110,000-plus prices Tesla is charging for its first sedan.

It would appear Tesla is positioning itself for an above-Mercedes-Benz-level experience, and says it wants to soften the way to the point of being no cause for fear.

Musk said he’d been preoccupied until recently with car design, supply chain, and other issues with launching the Model S, and now has turned his attention to ownership and service issues for Tesla’s growing customer base.

Of course, it all comes at a price, so the program is really like being well insured. It does not guaranty nothing will go wrong, but it is intended to make it as easy as possible should anything need attending to.

Customers who opt in will not need to sit around a dealership listening to air-impact tools ratcheting away in the service bays, with a TV and stale coffee to keep them company.

Instead they get to stay home with a top-line loaner delivered to their door for any reason they need their car looked at.

As for whether this will apply to the Model X and future cars, Musk said Tesla has that as an “aspirational” goal, but would not commit unequivocally that it will.

He said to lower its costs, Tesla may need to bundle out some of the services, but did leave open the possibility the same program could be had in the future for pending models.

The post Tesla Announces ‘World’s Best’ Service Program appeared first on HybridCars.com.

This news was delivered by Tesla CEO Elon Musk in a follow up blog post yesterday to his last presentation of evidence against Broder. Musk wrote the Times’ public editor said “John Broder had ‘problems with precision and judgment,’ ‘took casual and imprecise notes’ and made ‘few conclusions that are unassailable.’

And even if Broder had been fastidious to the Nth degree, Tesla’s take on the highly publicized dispute was verified by other media outlets as well as “several” private owners of Tesla Model S who all undertook to duplicate the allegedly fated run.

“A debt of appreciation is also owed to other media outlets,” wrote Musk, “such as CNN, CNBC, and Consumer Reports, who repeated The New York Times test drive at normal highway speeds and comfortable cabin temperatures without ever running out of range.”

The Times was also flooded with hundreds of letters by owners of the Model S who showed their support for “Tesla and the electric car revolution,” Musk said.

“The bottom line is that the Model S combined with Supercharging works well for a long road trip, even in a cold, snowy winter,” wrote Musk. “Nonetheless, we will keep increasing the number of Superchargers, improving the software in the car (via over the air updates), and the technology behind the Supercharger itself.”

While it was in full swing, the Times vs. Tesla dispute was also temporary fodder for the pundits to practice their punditry, some of which gave passing attempts at objectivity, then proceeded to emphasize Broder’s side, and say such things as “all-electric cars are (basically) dead on arrival.”

True enough EVs are new technology, yet in their infancy, but it would appear reports of their death (in the cradle) have been greatly exaggerated.

UPDATE: Feb. 26, 2013: We were contacted by the New York Times explaining that despite the apparently unequivocal interpretation Elon Musk made in writing his blog post which was the basis for this report, the Times does not in fact “cede” the dispute to Tesla. The write-up cited by Musk by the public editor was explained to be her own opinion, and not representative of an official retraction of Broder’s report. Public Editor Margaret Sullivan’s clarification was pointed out to us as a note she briefly wrote Feb. 21 in the Public Editor’s Journal. It reads:

One addendum, for the sake of clarity: As public editor, I speak only for myself. My opinions about what happened during and after the Tesla Model S road test, expressed in my Monday blog post, are not those of The Times.

Commenting on this, Times Automobiles Deputy Editor Norman Mayersohn said he knew of no change in the paper’s position or support for John Broder’s article.

“Inside, I’ve heard nothing but complete support, and in meetings at the top levels on the news side of the paper, we’ve had no doubts expressed,” Mayersohn said in an e-mail to HybridCars.com. “Tesla has not released any data, only their graphic representations of the feed from the car, so there’s really no basis for any change of that viewpoint.”

The official statement from the Times’ Eileen Murphy, Mayersohn observed, reads:

The Times‘s Feb. 10 article recounting a reporter’s test drive in a Tesla Model S was completely factual, describing the trip in detail exactly as it occurred. Any suggestion that the account was “fake” is, of course, flatly untrue. Our reporter followed the instructions he was given in multiple conversations with Tesla personnel. He described the entire drive in the story; there was no unreported detour. And he was never told to plug the car in overnight in cold weather, despite repeated contact with Tesla.

Tesla blog

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Late last week, Tesla announced that its fourth-quarter net loss widened to $81.5 million, compared to $51.4 million in the fourth quarter of 2010. Still, the company’s annual revenue beat the street’s predictions. The automaker reported annual net revenue of $204.2 million in 2011, where analysts had projected $203.5 million. That’s nearly a 75-percent increase over Tesla’s reported annual revenue of $116.7 million in 2010.

Tesla attributes last year’s losses to nearly $200 million in capital expenditures, which were spent readying the carmaker’s Fremont, California production facility to build the Model S. Tesla now predicts that annual revenue for 2012 may soar to $600 million, with 90 percent of the money expected to come in the second half of the year, when the Model S goes on sale.

During a conference call, Tesla chief executive officer, Elon Musk, stated “The bulk of 2012 revenue is Model S-related.” Tesla aims to sell up to 5,000 Model S electric sedans by the end of 2012. But until Model S deliveries commence, Tesla’s main revenue source is supply deals with Toyota and Daimler.

Tesla concluded last week’s conference call by announcing that it had struck a deal with Daimler to develop an entire electric powertrain, including battery packs, motors, electronic controls and software for an upcoming Mercedes-Benz vehicle. Musk didn’t elaborate on the Daimler deal, but did state, “I do expect that this will be significant, probably more significant than the sum of all deals we’ve done with Daimler to date.”

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Even more impressive is that Tesla claims to have recorded 500 reservations for the vehicle within 24 hours of its unveiling. The company now reports that “one day after the reveal, without any advertising, advance sales of the Model X exceeded $40 million.”

Reservations or the forthcoming Model S sedan, which will begin deliveries later this year, also shot up by 30 percent following the unveiling of the automaker’s Model X crossover. Fully refundable reservations for the Model X range from $5,000 for the standard version to $40,000 for the Signature.

Within 24 hours of the reveal, Tesla claims to have logged 500 pre-orders exceeding $40 million for Its Model X.

Tesla now says that production of the Model X will begin and at end of 2013 and has set a target production volume at 10,000 to 15,000 units per year starting in 2014. The car features an array of innovative design elements, from its gullwing-like doors, to its dual trunk configuration, which allows for additional storage where most cars house their engines.

Through the end of last year, Tesla had already taken in about 8,000 deposits for the Model S, and plans to ship as many as 5,000 by the end of the year. And though now-defunct Aptera’s claim to have collected more than 5,000 reservations for its never-to-be 2e electric vehicle might give some pause, deposits for that car cost just $500, where Tesla demands much more of a commitment from its early customers. Indeed, it would appear that Tesla is well on its way to not only meeting production deadlines for two models many thought would never be released, but also selling those vehicles in significant numbers.

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Yesterday Tesla Motors unveiled a prototype of the highly anticipated Model X SUV/minivan at its design studio in Hawthorne, Calif.

During a splashy gathering of media and prospective owners, Tesla founder Elon Musk said the electric SUV – complete with “falcon wing doors” and due for 2013 production – “has more utility than a minivan and better, much better performance than a SUV.”

What’s with the doors? Well they look cool, and they’re practical, Musk said.

“You can get in and out in the tightest garage or parking spot without hitting the wall or car next to you, or your head,” Musk said, with pride in his innovative and high-performance family hauler.

Falcon wing doors. (Photo by Mark Zimmer).

Prior to yesterday’s reveal, Tesla had tweeted that the X will be quicker than a Porsche 911 and roomier than an Audi Q7, that is, it will be able to dash from 0-60 mph in 4.4 seconds “and that’s not even the performance model,” Musk said yesterday.

Powered by a version of the same lithium-ion battery system found in the Model S sedan, the Model X features an all-wheel drive system with electric motors spinning the front and rear wheels independently.

According to Musk, the AWD system “is incredibly precise and accurate in its application of power and traction, much more so than any other type of all-wheel drive out there.”

And, as it’s a pure electric, Musk also touted advantages over internal-combustion competitors, saying the X offers “more packaging opportunities,” or put more plainly, it provides greater potential passenger and cargo space. Preliminary specifications reveal seating for seven plus room for luggage.

The Model X will likely be offered with a choice of 60- or 85-kwh battery packs – but since it weighs around 10-percent more than the Model S sedan, range is expected to be slightly less.

Expected to become Tesla’s volume vehicle, the Model X is projected to start at $57,400 before applying a federal tax credit up to $7,500, although with different options on the table, it will likely be easy to push the sticker to $100,000 if not more.

http://wheels.blogs.nytimes.com/2012/02/09/tesla-unveils-model-x-at-its-design-studios/

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Just because Tesla is discontinuing its Lotus-based Roadster doesn’t mean there’s nothing happening at the California-based electric vehicle maker to be excited about.

On the contrary, the startup was busy last week offering test rides in the pending Model S to around 2,000 customers who’d RSVP’d to invites after putting down $5,000 pre-order deposits.

Tesla says it actually has over 6,000 paid pre-orders for the far-more-accessibly priced series of luxurious and sporty EVs due to be launched mid-2012.

The company is also expected to introduce its Model X crossover in November at the LA Auto Show, and that vehicle is due in 2013 or 2014.

As for the S, Tesla opened the doors of its factory, and slotted in test rides for the vehicle now said to be able to zip from 0-60 mph in less than 4.5 seconds.

“That’s quicker than a 911,” said company CEO Elon Musk comparing his battery-powered car to the venerable Porsche Carrera. “Not bad for an electric luxury sedan.”

And to be sure, development of the S has come along a fair way since we last pre-reviewed it, and at the time sub-6 second 0-60 sprints were in the offing.

For that write-up, some readers spoke favorably, while a few others offered such choice comments as the S was nothing more than “vaporware,” and someone in the U.S. government would one day answer to a hearing for loaning Tesla $465 million.

Ah opinions. They make the world go round, don’t they?

As for us, we’ll just hand over a few brief facts.

The base Model S is to be sold for $57,400 and offer a range of 160 miles. For a respective addition of $10,000 or $20,000 more, buyers can get larger battery packs offering 230 or 320 miles range.

The max-distance version will be made possible by aero wheels to add 20 extra miles to an estimated 300 miles for the full-power S.

Although it looks like a sedan, the S is actually a cleverly disguised hatchback, meant to accommodate five people, plus two people under 4-feet, 11-inch (read: kids) in jump seats in the back.

It will be built in Fremont. Calif., at a plant once used by GM and Toyota to assemble compact cars, but this is a car being compared to the Maserati Quattroporte for its aesthetic features and performance.

Top speed is said to be a limited 130 mph – not enough to blow away Euro supercars, but enough to get you a free ride in a police car just the same.

Inside the sleek interior will be such amenities as a 17-inch touch screen displaying data from a 4G infotainment system.

Tesla will also get the ball rolling on this country’s still-limited recharging infrastructure with fast DC charging in several locations along California’s I-5.

The company says recharge time even for the 85-kwh battery pack in the 320-mile version will be under one hour.

A 240-volt Level 2 charger should take around 5 hours, Tesla says.

As for the Model X (sorry, no photos yet), Musk said “the time is right to unveil” that vehicle as well, which could be four-wheel-drive capable, although that’s not confirmed.

Musk has said previously that the Model X will be the “coolest SUV” available, and its existence has been known about since last summer.

Tesla’s manufacturing chief Gilbert Passan said Tesla’s Fremont factory “had been fitted and equipped with the ability to manufacture multiple body styles off the same platform from its conception.”

The X is expected to be as luxurious as the Model S, albeit more utility focused with ability to carry seven adults.

In June Tesla raised an additional $210 million to pay for Model X development, and this vehicle may sell for a bit more than the Model S.

Otherwise, the company has planned to introduce models in a descending order of price. It started at the high end with a $100,000-plus two-seater, but this was a splash leading toward more bread and butter cars planned in coming years.

First off, the base S takes the company a lot closer in that direction, and is just around $10,000 more than a fully-optioned 2012 Chevy Volt.

Assuming Tesla’s plans come to fruition, it intends to keep offering lower priced models, including an electric city car to sell in the $30,000 range, and who know what else in coming years?

The Truth About Cars, Green Car Reports.

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“If we are to ever achieve profitability it will be dependent upon the successful development and successful commercial introduction and acceptance of automobiles such as the Model S, which may not occur,” Tesla said in the filing. Tesla originally planned to launch the car in 2011—but the current target is 2013.

Tesla defied the odds in bringing its $109,000 Roadster to market. According to filing documents, Tesla sold a total of 937 Roadsters by the end of last year, of which a large number had been reserved in previous years. Yet, the company recorded a bottom-line loss of $31.5 million for the first nine months of 2009—and has lost a total of $236.4 million since its inception in 2004. Tesla said it will use $33 million of its anticipated 2010 capital expenditures budget of $100 to $125 million to pay for parts of the powertrain and Model S production facility costs that are not covered by the federal loan.

Since the beginning, company founders and early investors expected the enter the market with the six-figure Tesla Roadster—merely as a stepping-stone to a more affordable electric car that could be produced and sold in greater volumes. Tesla is credited with spawning an industry-wide shift to electrified transportation, but that imitation could make it more difficult for Tesla to reach its annual sales target of 20,000 units for the Model S. By the time Tesla is selling the Model S, there will be several electric models on the market, including the Fisker Karma, Chevy Volt, Prius Plug-in Hybrid, and the all-electric Nissan Leaf.

A lot could change between now and 2013, but according to the company, the Model S will offer a driving range of approximately 160 miles, with a full recharge time of about five hours. The battery will have a useful life between five and seven years, after which a new battery pack will cost “well under $5,000.” The Model S, with its single-speed transmission, is expected to deliver 0-to-60 mph performance in less than 6 seconds. Tesla CEO Elon Musk says the Model S will be “the best handling sedan on the road.”

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The Department of Energy gave a powerful endorsement of the Model S in June 2009 when it awarded Tesla with a $465 million loan to build the all-electric sedan and the battery packs needed to make it go. Tesla is promising to begin production in 2011, and ramp up to 20,000 units per year by 2013. With the money in hand and the deadline set, Tesla could deliver a winner—if the company and its executives stay focused, avoid controversy, and deliver on the big promise of the Model S.

“Awesome Clean Sheet of Functionality”

What makes the Model S so cool? First of all, the visual design is gorgeous. The New York Times compares it to the striking Maserati Quattroporte sedan, which sells for more than six figures. Second, it seats five—or seven if you count the two side-facing rear seats for small children. The key to the design according to Franz von Holzhausen, Tesla design chief, is a flat floor that houses batteries, motors and the electronic module. “It’s an awesome clean sheet of functionality and available space,” said von Holzhausen. The company fondly repeats the talking point: It can fit a surfboard, a 50-inch television and a mountain bike in the car at the same time (presumably with rear seats slid forward and using the front storage compartment).

More importantly, the Model S is way more affordable than the company’s $109,000 Tesla Roadster. The current price target for the Tesla Model S is $57,900 (minus a $7,500 federal tax credit)—still not in range for most mainstream buyers but moving in the right direction. Tesla reportedly has 1,200 pre-orders for the Model S. ($500 deposit required.) That number will surely grow between now and 2011, as the company expands its dealership network. Tesla has retails showrooms in Menlo Park, CA, London, and New York City, with plans for outlets in Chicago, Seattle, Miami, Washington, D.C., Monaco, Toronto and Munich.

If the visual design, spaciousness, and relative affordability of the Model S break ground, the specs on the electric drive are a bit more familiar. The driving range will be approximately 160 miles, with a full recharge time of about five hours. The battery will have a useful life between five and seven years, after which a new battery pack will cost “well under $5,000,” according to Elon Musk, the company’s chief executive. (Considering the size of the battery pack, the cost is more likely to be $10,000 to $15,000.) Electric drive vehicles are known for speed off the line—expect the Model S, with its single-speed transmission, to deliver 0-to-60 mph performance in less than 6 seconds. Musk says that Tesla is “aspiring to have the best handling sedan on the road” with the S.

Tesla Model S Touch Screen, as seen in Tesla promotional video.

Then there’s the 17-inch touch screen that is “the centerpiece of the interior,” according to von Holzhausen. The touch screen provides all of the vehicle’s interface components such as climate control and entertainment, but also offers 3G or wireless connectivity for Google Maps, Pandora music, and full browser capability. “It’s the iPhone of the auto industry,” said von Holzhausen. “It’s a huge landscape that we can control and continue to update, and re-skin, and make the car feel fresh and personalized.” The touch screen is a bold step toward a future where car and info technology blend and transform the automotive landscape.

Watch Out for Hype

You might expect that a revolutionary list of attractive features would be enough to promote the Tesla Model S—but as late night infomercial hucksters say, “That’s not all.” Tesla is suggesting that it could offer quick charging in 45 minutes, and an option to extend driving range to 300 miles. But these things, and a number of other futuristic features, are examples of Tesla getting ahead of itself. We’re more than two years away from the first customer accepting delivery of the Model S.

In April 2009, when Dan Neil, auto writer for the Los Angeles Times, drove an early prototype of the Model S, he wrote, “This lovely, porpoise-sleek design study, unveiled to worldwide hoopla March 26, is just barely ambulatory—more like a glorified golf cart than a harbinger of tomorrow tech.” Neil reported that the windows were still fixed in frames and the power-steering motor groaned. He wrote, “The 17-inch, touch-screen control panel with haptic feedback in the center console may not even make it to production, concedes Tesla designer Franz von Holzhausen.”

The biggest doubts relate to timing. Unlike the Roadster, which Tesla heavily relied on UK’s Lotus Cars to create, the Model S is a completely original ground-up design that will be manufactured in-house. The company is promising delivery—from prototype to release—in about 30 months. Neil describes that breakneck production pace as “an audacious timeline that makes many in the car industry roll their eyes…And people inside Tesla are leery.”

You should raise your eyebrows when Tesla suggests a 45-minute charging time or the notion that battery swapping might be built in. Don’t count on it. But again, that’s okay. We were already sold at “sleek spacious $50,000 five-seat all-electric sedan.” Bring it on.

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