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Tesla Motors and the Future of Electric Cars

The Tesla Roadster and the Tesla company have an unusual history. The company has almost no connection to the traditional American auto industry, and its founder had no experience in the auto industry when he decided to create the world's first high-performance electric car. Martin Eberhard and his business partner Marc Tarpenning founded a company based on a portable eBook reader. Frustrated at the mainstream auto industry's inability to create an effective electric car that had mass appeal (he often refers to early electric cars as "punishment cars"), Eberhard decided to create one himself.

The Tesla Roadster's chassis is a heavily-modified version of the Lotus Elise chassis.

Image courtesy Group Lotus PLC Image © 2006 Tesla Motors, Inc. All rights reserved.

The Tesla Roadster's chassis is a heavily-modified version of the Lotus Elise chassis.

Image courtesy Group Lotus PLC Image © 2006 Tesla Motors, Inc. All rights reserved.

Instead of creating an entire car and all its systems from scratch, Eberhard took advantage of outsourcing, which made the various elements easy to acquire. After netting $60 million in investment funds, (including over $30 million from Elon Musk, co-founder of PayPal), the new company chose a design from England-based Lotus.

The Tesla-Lotus partnership works well for several reasons. Lotus' Hethel, England facility is well suited to producing cars in small runs. This allows Tesla to basically manufacture cars to order, rather than building thousands and spending money to warehouse the overstock. Also, the Tesla Roadster is based on the Lotus Elise -- they look superficially similar and have the same basic chassis (though the Roadster's chassis is heavily modified) and other parts. This added to the savings. While most of the Roadster's parts and systems, such as the stereo, the brakes and the battery chargers are off-the-shelf, final assembly happens at Lotus facilities.

Tesla claims that the Roadster offers double the efficiency of popular hybrid cars, while generating one-third of the carbon dioxide.

Image © 2006 Tesla Motors, Inc. All rights reserved.

Are Electric Cars Finally the Next Big Thing?

Tesla's business plan recognizes that innovative technology is often very expensive and that the very rich are usually the first people to adopt it. Once prices come down, the technology can move down into the market. That's why Tesla's first car is a high-end sports car only made in limited numbers. However, Tesla has set its sights on a 2008 release of a four-door electric sedan (codenamed White Star). The Roadster seems to be a success within its limited production numbers -- the first 100 limited edition "Signature Series" Roadsters sold out, and the next run of 100 is ready for pre-orders. A fully-loaded Roadster will cost $100,000, with a $75,000 down payment required to reserve one.

Electric cars will probably always be more expensive than cars that use combustion engines. The savings comes when you look at its the fuel costs and environmental impact. An electric car has zero emissions and doesn't add to pollution. Driving an electric car a mile costs a fraction of what it costs to drive a gas-powered car a mile. Critics rightly point out that the energy to power an electric car still comes from somewhere -- in this case, a power plant that provides energy to the electrical grid. Shifting the source of the energy from oil to coal doesn't necessarily make it any cleaner.

Tesla and other electric car proponents respond that electric cars are more efficient for several reasons. First, generating power at a power plant, even a coal power plant, is more efficient and creates less pollution than millions of small combustion engines creating the power. Plus, some of our electricity comes from cleaner power plants like hydroelectric plants, wind farms and solar cells.

In an interview with Wired.com, Eberhard claimed that the energy in a gallon of gasoline could drive an electric car 110 miles. Comparing average gas prices and electricity prices, the Roadster could go 150 miles for the price of one gallon of gas. Tesla reports twice the efficiency of even the greenest hybrid cars.

For lots more information on the Tesla Roadster, Tesla Motors, electric cars and related topics, check out the links on the next page.