Is Tesla Shine Wearing Off as 2014 Closes?

Elon Musk IronManIt’s been another year of unwarranted enthusiasm for Tesla Motors and CEO Elon Musk, who parlayed that exuberance for his unprofitable company into a $1.3 billion incentives package from the state of Nevada.

But despite that legislatively unanimous award from three months ago, and a stock price that has flown high for most of the year, there are signs that the shine over the luxury electric automaker is beginning to dull.

Perhaps the most noteworthy skepticism has arisen from popular automotive Web site Jalopnik, which otherwise has been a fairly reliable (but not robotically so) cheerleader for Tesla. An end-of-year article written by blogger Damon Lavrinc recounts the automaker’s legacy of non-fulfillment and asks, “What will Tesla and Elon Musk over-promise next?”

“So where are those battery-swapping stations Tesla promised?” Lavrinc wonders. “Or its big push into the energy storage biz? Didn’t we hear something about the Roadster being upgraded? Are we seeing a pattern here?

“Cut through the hype and the accolades and the endless profiles couching Elon Musk as Tony Stark (the hero of “Iron Man”), and you’re met with a long string of Tesla over-promising, under-delivering, or delivering late.”

Lavrinc cites many examples. He semi-praises the deployment of Tesla’s Supercharger network, which delivers free and “fast” (but at 75 minutes, it’s not gas-station fast) battery repowering for its Model S owners, but he slams them for the unaccomplished claim that they’d be solar-powered – making them dependent on coal and natural gas.

He also unloads on the sensationalized plans for rapid battery swapping, which the company promoted online in June 2013 to further illustrate its capabilities to refuel as quickly as gas-powered cars. But while that Internet demonstration took only 1 ½ minutes, it remained just that – an exhibition. No functioning swap sites were deployed (despite promises of them coming over a year ago) until last week, when Tesla announced its first location in central California. However the service is offered only by appointment in a remote locale, at a station that literally stinks – so, so much for parity with gasoline.

And Lavrinc hammers Musk for other undelivered shortcomings such as stationary energy storage products for homes and businesses; adapters for EV chargers that use other standards; the lack of evidence that anyone cares about Tesla’s patents that have been released for use; and the repeated delays of the Model X, which now is pushed into next year.

Lavrinc isn’t the only voice of criticism about Tesla. Two weeks ago Morgan Stanley’s lead automotive analyst, Adam Jonas, cast doubt on the company’s stated goal to produce 500,000 cars by the year 2020. His reasons were skepticism about its ability to mass produce a vehicle model at a cost attainable to a broader, less affluent customer base; and also competition from more efficient gas-powered vehicles that at present are also benefitting from dropping fuel prices.

Another stock analyst, Lawrence Meyers, says the long-term problems with Tesla is the same as that of so many other failed or struggling electric vehicle manufacturers: high cost, short driving range, and long refueling times. The company’s ability to sustain its ridiculously high stock price (currently in the $220 range after a fall from $290) depends on its ability to produce a $35,000 vehicle “and give real meaning to the valuation of Tesla stock.”

Which returns us to the real reason, so far, that Tesla remains alive but is little different from the heavily subsidized electric automakers. So far the hoopla Musk has masterfully mustered has kept investor dough rolling in, and has also excited government officials, but the actual manufacturing of a useful product at a sustainable level has not materialized. The U.S. Department of Energy awarded a $465 million stimulus loan that the company paid back, but probably because it had to, to avoid early default.

The battery swap program flashed with excitement and enabled Tesla to gain millions of dollars from California’s “zero emission vehicle” credits, based on the mere demonstration that it could work, not on its actual implementation. But the state’s Air Resources Board changed its criteria and eliminated allowances for the battery swap, which may explain why it’s no longer a priority for Musk. So that subsidy is gone (unless CARB returns to lenient standards again).

And now there is the $1.3 billion Tesla will receive from Nevada, to build it’s “Gigafactory” for battery production, along with Panasonic. Besides free land, transportation infrastructure, tax breaks and other government goodies, the cost for the facility’s power bill will be shifted to Nevada’s electricity customers in order for Tesla to receive a discount. 

Despite the celebrative propaganda, it only takes a little scrutiny to see that Tesla is no different than any of the other moribund or dead electric vehicle companies that we’ve seen the last few years. It’s just that Musk has skillfully created excitement, shifted money around, and sustained outsiders’ faith while delivering next to nothing. Eventually that won’t cut it any more.

Paul Chesser is an associate fellow for the National Legal and Policy Center and publishes, an aggregator of North Carolina news.