Sometimes the media misses big news even from such colorful, flamboyant and larger than life figures as Elon Musk. Last week the Tesla Motors (NASDAQ: TSLA) CEO made an announcement that indicates electric cars became competitive with fossil fuel vehicles and only a couple of bloggers seemed to notice
A $3,000 battery pack upgrade will give the Tesla Model S a 300-mile range on a full charge of electricity, Musk told reporters. By increasing the amount of electricity, the Model S can hold from 85 kilowatts to 90 kilowatts; that’s competitive with Toyota’s hydrogen fuel cell-powered Mirai and most gasoline vehicles. The Mirai currently has a range of 312 miles on a tank of hydrogen.
“The net result is that with our longest-range version, the 90D, you will be able to do almost 300 miles of highway-range at 65 mph,” Musk said at a press conference. That’s pretty competitive because the average U.S. vehicle gets around 25 miles a gallon and has a tank that holds between 10 and 15 gallons of gasoline. The mileage for diesel vehicles such as the 2012 Mercedes-Benz S350 Bluetec is about the same, according to Fueleconomy.gov.
This overcomes one of the major advantages that fossil fuel vehicles have over electric cars range. Previously they were only useful for short trips, such as commuting, because of the limited range. Now it sounds as if Tesla has created an effective freeway cruiser.
Obviously, it is not necessarily that cost effective; you could buy a lot of gasoline for $3,000, but the price could come down fast, especially after the Gigafactory comes online. The giant battery production facility near Reno is expected to be open for business by 2017.
Musk Hints Battery Range and Performance Could Someday Exceed Gasoline Cars
If that prediction comes true, electric vehicles could have a greater range on a charge of electricity than gasoline or diesel vehicles would on a tank of fuel. Since electricity is cheaper than electricity, that’s pretty bad news for Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX). Musk also revealed that some electric-powered vehicles already exceed traditional cars in performance.
Model S buyers can now upgrade to the “Ludicrous Mode” for $5,000 to $10,000. Among other things, Ludicrous Mode lets a driver go from 0 to 60 miles per hour in 2.8 seconds. That’s comparable to the legendary supercar, the Bugatti Veyron, which takes 2.46 seconds to reach 60 miles per hour. The Model S previously took 3.1 seconds to reach 60 mph.
That means Tesla was able to increase the performance of the Model S by 10% with a basic upgrade. Musk claimed that ludicrous mode was created by upgrading the battery contacts from 1,300 amps to 1,500 amps.
If this trend continues, electric car performance could soon exceed conventional vehicle performance. That could force all automakers to go electric and make fossil fuel-powered vehicles obsolete. It also calls Toyota Motors’ (NYSE: TM) investment in the Mirai into serious question.
Musk Plans Gigafactories
Better performance for electric cars is not the only thing closer to reality. The Gigafactory is also far closer to completion than we think. Panasonic Corporation (OTC: PCFRY), Tesla’s partner in the project, is planning to send hundreds of employees to the factory site in Storey County, Nevada, just east of Reno, Reuters reported.
The employees will be there to get the plant ready to start churning out batteries next year. Panasonic is planning to invest $478 million in its battery business this year and pay for 30% to 40% of the plant. The Gigafactory is supposed to manufacture 500,000 batteries a year and produce batteries for home and business storage as well as vehicles.
There could be much more to come; on May 1, 2015, Musk called the Nevada facility Gigafactory Number One, indicating that he’s planning more of the plants, The Reno Gazette Journal reported. Musk did not say where the new Gigafactory or factories would be built or who would run them.
“There will need to be many gigafactories in the future,” Musk said. “Many companies will build gigafactory-class plants of their own.”
The billionaire said Tesla will open source the battery technology patents so all could replicate it. If that prediction comes true, it would be catastrophic for an oil industry already reeling from an oil price collapse.
Oil Price Collapse Underway
Morgan Stanley released a report stating that the oil industry was in its worst downturn in 30 years, Bloomberg reported on July 23. Its analysts found that oil prices are in a freefall that could be worse than the massive oil price crash of 1986. In that year, oil prices fell by 67%, falling to $10 a barrel largely because Saudi Arabia flooded the market with cheap oil in an attempt to hurt the Soviet Union. One result of that event was the almost complete collapse of the U.S. oil industry.
The prices will keep falling because oil production will surge in 2015, and the glut of black gold in the market could grow as Iran starts pumping again after the nuclear deal, Morgan Stanley predicted. Among other things, it noted that OPEC will probably increase production this year, possibly in order to make up for lost oil revenues with increased volume.
This means we’re going to have more oil at a time when there is less demand for the mineral sludge. It also probably means we’re likely to see a freefall in oil stocks similar to that we’ve seen in gold stocks with many oil producers joining gold miners in the junk stock bargain basement.
In today’s world, electric cars could soon be cost competitive and high performance while oil companies are struggling to survive. One wonders what sort of havoc Mr. Musk plans to unleash next.