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Tesla to Build Electric Sedan in California; State Introduces New Incentive for ZEV Manufacturers
30 June 2008
Enticed partly by a new package of incentives, Tesla Motors has decided to build the assembly plant for its upcoming electric sedan in California at a still-to-be-determined site in the San Francisco Bay Area rather than in New Mexico as it had earlier announced. (Earlier post.)
California Governor Arnold Schwarzenegger, Treasurer Bill Lockyer and Tesla CEO Ze’ev Drori made the announcement at a press conference today at Tesla Motors headquarters in San Carlos, California.
Tesla’s upcoming Model S (earlier named “White Star”), will be a $60,000 car, said Tesla Chairman Elon Musk at the press conference. The Model S is being designed to seat five and have a single-charge range of 225 miles. Musk also said that the company had some projects in the works that could deliver a pure electric car for less than $30,000 “maybe a lot sooner than anyone thinks.”
In a statement posted on the Tesla blog, Drori said that after a thorough review of the operational and logistical elements for the sedan program, it was decided that the best strategy to ensure its success would be to locate manufacturing as close to headquarters as possible.
There are several key reasons why California is the right location for Tesla’s manufacturing facility: first, the operational advantages of locating our operation in the Bay Area close to our management and engineering teams. Second, the proximity to our most important markets. Last, but not least, Governor Schwarzenegger’s commitment to leading the nation and the world in addressing climate and energy concerns. Together, these reasons make the decision to move the sedan manufacturing program back to California clear.
Let me close by pointing out the decision that we announced today with the Governor represents a major milestone in the sedan program. Having set down a marker of where we will be establishing this critical operation, we can move forward on many fronts. This will allow us to bring the sedan program to fruition and to continue to drive toward Tesla Motors’ mission of making the electric vehicle the dominant mode of automotive transport for the 21st century and beyond.
—Ze’ev Drori
A key component of the incentives is a newly adopted waiver on state sales tax on manufacturing equipment for zero-emission vehicles (ZEVs) built in state.
Existing law exempts the California Alternative Energy and Advanced Transportation Financing Authority’s (CAEATFA) from paying the sales tax on equipment used to manufacture advanced transportation products.
Under the new policy, CAEATFA will pass through that tax break to qualifying ZEV manufacturers under “sales-lease-back” agreements. Under such an agreement:
A ZEV or ZEV component manufacturer applies to CAEATFA to have a project approved pursuant to the policy. If approved, CAEATFA buys the equipment, and finances the purchase by taking out a loan or selling bonds. CAEATFA does not pay the sales tax on the transaction. The manufacturer makes lease payments to CAEATFA for use of the equipment, and CAEATFA uses these payments to repay the bonds or loan.
Under the lease arrangement with CAEATFA, the manufacturer has the option to purchase the equipment outright. If it purchases the equipment, the manufacturer obtains the benefit of the sales tax exemption, saving seven percent to nine percent on the purchase price.
Tesla will ask CAEATFA to approve such an arrangement to finance the purchase of equipment to build the Model S.
The tax incentive policy approved by CAEATFA covers several ZEV and near-ZEV technologies, including fuel cell electric vehicles, battery electric vehicles, plug-in hybrid electric vehicles, hydrogen internal combustion engines, advanced technology partial ZEVs and neighborhood electric vehicles. Any qualifying ZEV manufacturer can apply.
Today’s announcement is great news for California, our economy and our environment. We want these cutting-edge companies not to just start in California and do their research and development here—we want them to build in California. Tesla’s announcement today is just one of many we will celebrate as we implement AB 32 and reach our greenhouse gas emissions reduction goals.
—Governor Schwarzenegger
ZEV makers can also apply for funding from the new alternative fuel and vehicle technology program outlined in AB118.
June 30, 2008 in Electric (Battery), Policy | Permalink | Comments (38) | TrackBack (0)
Comments
Posted by: Henrik | July 01, 2008 at 02:02 PM
For a very interesting report from Shai Agassi, Project Better Place and cost estimates for charging infrastructure and cost estimates for renewable energy infrastructure to support the EVs electricity needs see
http://www.autobloggreen.com/2008/07/01/shai-agassi-pitches-100-billion-plan/
Posted by: Henrik | July 01, 2008 at 02:25 PM
Henrick, 100 miles covers much more than 90 percent of the user trips. I believe it is in the high 90s and many of the long trips are by the same people. The numbers are skewed. Still, even if it was 90 percent, I just don't follow this line of reasoning. How is renting a car out of reach for the poor?
Even if renting was out of reach for the poor, how extensive would the recharging network need to be? People generally wouldn't need fast charge/exchange around town. It would only be truly needed in route. At best a few around town would be needed.
I personally don't think any amount of recharging stations is going to make the trip from NY to LA feasible on a vehicle with a 100 mile range. It is way too many stops. But, it doesn't have to. People can rent cars. As k notes:
"The weasel words are 'if it matches your needs'. During hard times some people quickly realize which 'needs' are merely wishes or whims. They adjust."
Posted by: Andy | July 01, 2008 at 02:35 PM
andy you are completely wrong. having taken dozens if not hundreds of long-haul trips (my wife and i used to drive 230-530 mi each way every week to see each other when we went to college or were on assignment in diff states..) i will tell you i'd keep my truck 100 years before buying a short-range ev...and i consider myself relatively "green". additionally, as i'm sure anyone who lives in the west knows 100 miles is not that much. (barely gets you from santa barbara to LAX, nevermind the traffic..)
telling people that they must rent a car or drive only x # of miles is eco-fascism. what it comes down to is that the vast majority are opposed to change and the only way to garner widespread acceptance of ev's is to make them comparable/competitive with regular vehicles.
here is where dual-fuel comes into play. a small gas/diesel/hydrogen/whatever you want to burn engine that can extend a 100-mi ev to a normal range is the optimal solution. i know, i used the h word...
Posted by: marc | July 01, 2008 at 08:43 PM
For heaven's sake - the entire argument is moot. Range extenders give you 1000 mile range if you put in a big enough fuel tank. Sure we want to go to BEV asap, but what's wrong with the 400+ mile range you get from a Volt or other series hybrid? No high density charge infrastructure, drive 400 miles, stop, charge over night drive 40 all-electric miles, fill up on E85, drive another 400 miles. If you use second gen biofuel you'll be green as a grasshopper all the way (tho, not EV green.)
Posted by: gr | July 01, 2008 at 10:32 PM
Our entire "100 mile range is not enough" argument applies only to first generation BEV's.
Obviously a 100 mile range will be a very serious compromise for anyone, which is why Tesla needed the 220 mile range it sports despite the very high battery cost. Within a few years the production and improvement of batteries will let longer range BEVs become available.
The thing to realize is that many people are willing and able to make the compromises necessary to drive a 100 mile range BEV. If there is an infrastructure to recharge, even more people will be willing to make those compromises, as the penalty will be less. My recommendation is to push for the most "user-friendly" infrastructure possible.
@ Henrik re gas stations as recharge infrastructure.
I can understand the rest stops on interstate & toll highways needing to be recharge stations, this is an obvious requirement for any first or second generation BEV to be able to travel longer distances. All other gas stations however are set up without long time (up to 1/2 hour) parking facilities, and without "rest stop" restaurant and activity facilities. It is far better to have inner city recharge at places that are "destination-oriented" such as shopping malls, so the recharge is a seamless pert of your life, not a time wasting nuisance.
Aptera was mentioned by GreenPlease. The approximate price for the all electric Aptera version is $27,000, a much more affordable cost. This is very much a "little sister car" to the Tesla, and deserves the same perks of production opportunities.
Posted by: John Taylor | July 02, 2008 at 03:36 AM
@J. Taylor
One of the very few things that we disagree about regarding EVs is the time it takes to charge the EV’s battery. As I get you, you think it will take 30 minutes or so and I think a typical EV recharge at a gas station will take 5 minutes or 2 minutes more than a gas fill up. I am convinced the most popular way to charge your electric car when away from the slow-charge-home-plug will be to charge it 60% in less than 5 minutes and then drive on at 75 mph for another 60 miles in order to make another quick charge and so forth until you get to your destination and is able to plug-in to the ordinary grid. In this way a 20kWh battery will never need to be depleted by more than 60% and it could last for 200,000 to 300,000 miles or much more than the typical 150,000 miles life of an ICE car.
Personally I will never use the plug at a restaurant, mall or theater simply because I don’t want to waste time, not even 2 minutes, to find a charger and connect a plug in order to save 50 cents for 5 kWh of electricity (because this is what you will get). People shop well within EV driving distance from their home and there is really no need to charge at the mall. It may work as a marketing gimmick and that should be tried for sure (coupons are popular (unbelievable waste of time) so why not free charging at malls). Ordinary grid charge at work and at home and 5 minutes fast charge at the gas station is how I see the coming EVs society.
I shall list some of the battery manufactures that have developed batteries that can fast charge.
A123: Can charge to 80% in 4 minutes.
http://www.a123systems.com/#/technology/power/pchart5/
NEC/Nissan/Reneau: Can charge to 60% in 5 minutes.
http://www.greencarcongress.com/2008/05/aesc-lithium-io.html
Toshiba: Can charge to 90% in 5 minutes
http://www.greencarcongress.com/2007/12/toshiba-launche.html
Toshibas battery is expensive, I think, so it may only be an option for high end cars.
Posted by: Henrik | July 02, 2008 at 07:17 AM
"andy you are completely wrong. having taken dozens if not hundreds of long-haul trips (my wife and i used to drive 230-530 mi each way every week to see each other when we went to college or were on assignment in diff states..) i will tell you i'd keep my truck 100 years before buying a short-range ev."
marc, I never suggested the EV was the right vehicle for everybody. I said quite clearly that a limited number of people take most of the long haul trips thereby skewing numbers. For the people like yourself who take that many long haul trips a 100+ mile range EV wouldn't make sense as a primary vehicle. If you have two vehicles, it could still very well serve as your second vehicle. A PHEV could serve very effectively as your first vehicle. For other people who only take long trips once or twice a year, a 100+ mile range EV could easily serve as their primary vehicle with no problem and the only "compromise" being a once a year trip in a rental.
"Obviously a 100 mile range will be a very serious compromise for anyone, which is why Tesla needed the 220 mile range it sports despite the very high battery cost."
No, Tesla opted for a 220 mile range because people think they need much more range than they clearly do. The vast majority of the time when somebody drives 50 miles to get somewhere, they are going to be there a while. As long as the parking spots have charging, an EV will equate to fewer compromises than a traditional ICE vehicle. People will be able to fuel up where they are instead of having to make an additional trip to the gas station. Fast charge and battery exchange aren't needed. They would just make an EV even more convenient than a regular ICE vehicle. Parking spot charging is the only infrastructure needed and many parking spots already have this infrastructure in place. The additional infrastructure can be built as vehicle production ramps up.
Posted by: Andy | July 02, 2008 at 08:01 PM
"I am convinced the most popular way to charge your electric car when away from the slow-charge-home-plug will be to charge it 60% in less than 5 minutes and then drive on at 75 mph for another 60 miles in order to make another quick charge and so forth until you get to your destination and is able to plug-in to the ordinary grid."
Very few people are going to buy EVs and recharge them every 60 miles. I think people will buy PHEVs instead of EVs for longer trips and for remote locations. EVs will tend to be second vehicles and city vehicles until they can reach roughly the range and refueling times of ICEs. Should that never happen, that is still probably 50 percent of the total market.
Posted by: Andy | July 02, 2008 at 08:36 PM
@Andy
Even if charging every 60 miles in an EV whenever you drive long-distance trips during the year will cause the average driver to spend less time at the gas station than in a conventional car. Therefore people do not mind making a few stops for charging during the year. Below is a calculation of the trips needed to the gas/charge station during the year for an average driver.
1) Conventional ICE car:
12000 miles per year / 400 miles per fillup = 30 trips to the gas station in one year.
2) EV car:
(12000 miles per year *10% miles of long distance trips away from grid charging)/60 miles per charge = 20 trips to the charge station in one year.
I don’t think anybody would mind making fewer trips to the gas station. Build the fast charge stations and short range EVs are going to be the preferred vehicle choice for the majority of people.
Also remember electricity at 10 cents per kWh is only 20% to 25% of the price per mile run when gas is $4 gallon. With a battery price of $500 kWh the battery lease is about 30 cents per kWh so electric fuel is in total still cheaper than fueling conventional cars at today’s prices. And with increasing gas prices and decreasing battery prices time is working for EVs.
Posted by: Henrik | July 02, 2008 at 11:41 PM
I don't understand all the fuss about the 1 time in 20 when you'd want to take your EV on trips longer than its capable range. In capitalism, "necessity is the mother of invention". Currently, gasoline generators cost less than $1000. Put a specially designed one on a small trailer. Then sell it to U-Haul. U-Haul then rents it out for $20 a day to EV owners who want to drive from Chicago to LA.
Then, once EV's are out, you can really start to design your charging stations to make EV ownership even easier. I don't see this as a hindrance to the emergence of EV's, providing these gen-trailers are marketed along with EV's and consumers are made aware how easy it would be to drive long distances.
Posted by: Mark_BC | July 03, 2008 at 04:13 AM
Range IS a big issue. Tell someone that their car will stop after 100 miles, but that should be no problem and see how far you get selling them.
Posted by: sjc | July 03, 2008 at 09:40 AM
I suggest an EV-Go-Kart lane for commuters. That would
take care of congestion. Heck, all I take to work is in
a backpack. It sounds stupid, but it's a great idea. I
might even put off retirement if going to work is fun
again. Take all big cars out of the Car Pool lane
including Prii.
Posted by: Clown Willie | July 03, 2008 at 03:01 PM
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@J. Tayler
Why not have both? We could have fast chargers at the typical places at gas stations but also at the malls, the restaurants, the workplaces, etc. The more the merrier. We need fast chargers at gas stations also because that will enable people to live 50 to 100 miles away from where they work and still be able to get back and forth fast in a low cost short range EV (<50 miles). Many people also have several houses. One apartment in the city and another home in the countryside and they need to go back and forth fast without spending time at a mall. Lots of different people with different lives and needs. I am convinced the chargers are more needed at the current gasoline stations because these stations have been carefully located to service as many people as possible in order to be profitable. However, they will also be needed at workplaces and malls most definitely, but I think they will come all by themselves because it is a smart way to attract customers and employees if you give them electricity for ‘free’ while they work, shop or eat.