

Elon Musk: "I am terminating the interview."  - RockyMcNuts
http://online.barrons.com/article/SB50001424052748703578204578523303280053948.html

======
steve19
Tldr;

"As a result, Tesla's balance sheet will sprout a contingent liability for the
"residual value" of those cars, and analysts worry that the amount will
quickly rise to hundreds of millions of dollars -- on the order of half of the
company's book value. The deferred impact of all those used batteries will
become clearer in coming years, after Tesla also starts running low on the
government-legislated zero-emission-vehicle credits that offset $68 million in
expenses in the March 2013 quarter. We had hoped Musk would advise us on these
points, but our scheduled interview with him ended abruptly on Friday, when he
hung up on us."

~~~
hga
His ending of the interview is pretty critical and lays out the proposition
that appears will make or break Tesla given the above (I will for this comment
ignore the very real problem of loads on grids that weren't designed for this,
e.g. blowing transformers by using them at night when they need to cool down):

" _I have no interest in an article that debates what we consider to be an
obvious point -- which is that there is a dramatic reduction in battery costs,
" Musk said, after a few questions. "You clearly do not understand the
business. My apologies. I am terminating the interview._"

I don't follow this field; is it _that_ obvious costs will go down (ADDED:)
enough for these high performance (at least as claimed in the article) battery
packs?

As they note immediately after, " _Elon Musk is not a guy you like to bet
against._ ", and I note he has a bachelor's degree in physics, he is very much
not a "suit" divorced from hard reality, e.g. his comments on the Dreamliner
battery pack issues sounded like they had a good grounding. And I know more
about "rocket science" and SpaceX really impresses.

Note also this is not exactly Moore's Law envy; current size/energy density
seems to be OK, he's just talking about cost.

~~~
bradleyland
> I will for this comment ignore the very real problem of loads on grids that
> weren't designed for this, e.g. blowing transformers by using them at night
> when they need to cool down

I know this isn't part of your central thesis, but this comment really doesn't
pass the sniff test. Yes, transformers generate massive amounts of heat, but
I've never heard of the need for a cool down period at night. Do you have any
additional information?

> I don't follow this field; is it that obvious costs will go down for these
> high performance (at least as claimed in the article) battery packs?

Well, certainly no one is talking about increasing prices. If you look in to
the projected costs of LiIon batteries over time, the majority of the analysis
suggests that the prices will continue to go down. The disagreement is over
how much. Some say they're going to plummet, but most agree that cost
reductions will fall in a moderately-significant range. McKinsey & Co
published a decent report that disaggregated LIB pricing in to 40 components,
and analyzed each of them for potential future savings. That's a pretty
thorough breakdown.

[http://www.mckinsey.com/insights/energy_resources_materials/...](http://www.mckinsey.com/insights/energy_resources_materials/battery_technology_charges_ahead)

~~~
hga
I've read the transformer problem is one that California utilities are already
addressing, as in as few as one or two charging at night could blow out a
neighborhood transformer.

Do a search such as
[https://www.google.com/search?q=electric+vehicles+california...](https://www.google.com/search?q=electric+vehicles+california+transformer+cooling+night);
that eventually got me to the article I remember reading, appropriately
published in IEEE's _Spectrum_ [http://spectrum.ieee.org/green-tech/advanced-
cars/speed-bump...](http://spectrum.ieee.org/green-tech/advanced-cars/speed-
bumps-ahead-for-electricvehicle-charging):

" _Speed Bumps Ahead for Electric-Vehicle Charging

"Plugging in cars, even overnight, will strain local grids and could boost
pollution

"Turning on two or three Level 2 chargers could burn out the street-level
transformers that are the distribution grid's weakest link. Most utilities
employ undersized transformers, which are designed to cool overnight. Without
time to cool, sustained excess current will eventually cook a transformer's
copper windings, causing a short and blacking out the local loads it serves._"

Note that the usual suspects have made it impossible to run one of
California's two nuclear power plants:
[https://news.ycombinator.com/item?id=5846188](https://news.ycombinator.com/item?id=5846188)

~~~
bradleyland
> I've read the transformer problem is one that California utilities are
> already addressing, as in as few as one or two charging at night could blow
> out a neighborhood transformer.

Be very careful who you trust on these issues. A typical level 2 charger is 30
amps by 220 VDC. That's 6600 watts. That's the equivalent of four standard 120
VDC, 15 amp household circuits. If two people using level 2 chargers would
blow out a neighborhood transformer, there are _significant_ design flaws with
the local infrastructure, and the utility company has set themselves up for
failure.

I'm not saying the increase in the number of EVs charging at night won't cause
any problems at all, but utilities are heavily regulated. They have to provide
reasons for rate increases, and this looks like a honey pot for them. Expect
them to shout about it at the top of their lungs.

~~~
bradleyland
* Correction, 110 VDC, 15 amp household circuits

------
Bud
Stupid article. Within the first two paragraphs, they make a massive factual
error, misstating the entry price of Tesla's car by $40,000. This error is
repeated later in the article. Nowhere is it stated that the "Grand Canyon
leap that Tesla must make", according to the article, of reducing the price,
has already been made.

Don't count on mainstream US business magazines to be accurate about an
electric car company.

~~~
abawany
Thank you. It is only on the second page in the article do they obliquely
clarify where the $90,000 figure comes from. The article was filled with
snark, such as "ELON MUSK IS NOT A GUY ...." after he hung up on them. Pretty
sad.

~~~
RockyMcNuts
You mean where it says, "Elon Musk is not a guy you like to bet against" ?

It's a positive article on the company. It says the stock is high priced and
there are technical and business challenges if it's going to justify the
price.

Musk and the fanboys don't take it very well if anyone falls short of
unconditional adulation. To me this is a source of great amusement.

~~~
abawany
You got me wrong - I am no fanboy. I was merely pointing out that shouting the
not-a-guy comment in all-caps before going on to say "...you like to bet
against" is sensationalism. Edit: For example, you would probably find the
following print slightly less amusing: "ROCKYMCNUTS LOVES MUSK fanboys'
attempts to defend him" :).

~~~
RockyMcNuts
just a typesetting convention, the way they capitalize the first clause in a
section, wouldn't read anything into it at all, even though it can look silly.
I'd be unamused if I wrote something and it was called sensational or the
meaning was misconstrued due to the way it was typeset.

~~~
abawany
The point I was making is that the wording and capitalization could have been
different to minimize the snark. I also think you were kind of hasty to label
me a fanboy just because I expressed an opinion that you happen to disagree
with. The world is not black and white - if I see snark in an article, that
does not make me a fanboy.

------
theltrj
"Folks who buy $90,000 cars tend to replace them every few years, and the bid
for a four-year-old Model S may prove disappointing if it's going to need an
expensive new battery in a few more years."

Seems odd that there are three different models/pricing options in the model s
but they only mention the $90k price (85 kWh)....smaller battery (65 kWh) =
smaller cost, not sure why this is so difficult to understand.....the Nissan
Leaf is a 24 kWh battery and it is under $30k now

Also the battery has an '8 years, unlimited miles' warranty, idk I could say a
few years or I could say almost a decade.....poor framing of the basic facts

Despite Barron's scare tactics, there is new tech on the horizon for high
energy density/low power density metal air batteries, but somehow that
discussion got left out.

------
johngalt
Seems like cheap high performance batteries will make or break Tesla. Musk is
underwriting the resale value of the model S and planning a move towards the
volume market. Both depend on a cheap battery.

I am certainly no expert on batteries, but I'd bet that Musk is correct. Now
that we are seeing EVs selling 10k/year it makes sense that economies of scale
would start reducing costs. Additionally the smartphone/tablet industries are
also driving battery production.

------
MRSallee
I love what Musk does, but this is another case where he does not get
journalism.

"I'm not going to make an argument because I already believe it to be true."
That is pretty childish.

Frankly, I believe Tesla will accomplish what they aim for. But hanging up on
someone that dare challenge Tesla's assertions? Not defensible.

------
andrewgleave
Likely he's hedging on supercapacitors as well as battery technology both
playing a role in Tesla's future.

He's publicly stated that he believes that supercapacitors will eventually
replace batteries long-term, and there is already some interesting progress
being made, e.g. [http://vimeo.com/51873011](http://vimeo.com/51873011)

A supercapacitor + battery hybrid would be interesting given the difference in
charge profile. Similar to the concept behind Apple's Fusion Drive:
[http://en.wikipedia.org/wiki/Fusion_Drive](http://en.wikipedia.org/wiki/Fusion_Drive)

~~~
theltrj
supercaps need waaaaay more energy density before they are going displace
batteries.....there is a lot of published research into battery/supercapacitor
hybrids, the benefit is primarily seen in short transient charge/discharge
moments

In a car the use case would be driving with a lot of hills or a ton of
start/stop (urban city) driving

Once you get out on the highway where there are long transients discharge
moments, you won't see much benefit from the supercapacitors. Depending on the
circuit topology it could also be a drain on the overall efficiency of the
circuit.

Also, supercapacitors are very expensive....plus you need the high efficiency
power converter ($$) between the two to manage the different power sources

------
rdl
Re the "residual value" balance sheet problem:

If anyone is interested in selling their Model S in decent condition at the
Tesla buyback price in 3-4 years, plus epsilon, please contact me (I'd prefer
P85, black, with the glass moonroof, and 21" tires, and every other option
except the stupid child seats, but am flexible.)

The buyback price is pretty clearly below what the car will be worth (at least
to Tesla); the worst case for them is that some magic new battery tech happens
and the Model S is obsolete, but I'm both pretty sure that won't happen
(sadly), and more confident that if it does happen, Tesla could retrofit the
new magic battery into the old chassis.

------
Aron
The long-term success of Tesla seems to turn mostly on the improvement pace of
batteries, so hanging up because of a debate on that subject seems a bit
unfair.

A 10k-12k$ battery with current ranges would be a miracle.

------
jboggan
If you consider what Musk's time is worth between his roles at SolarCity,
SpaceX, and Tesla, it seems that he is just prioritizing his time by ending an
interview like that.

------
andrewtbham
Batteries improve at about 8% per year. Otherwise cell phones would still be
the size of bricks and very expensive, like they were in the 80s.

[http://seriouslackofdirection.blogspot.com/2013/06/barrons-r...](http://seriouslackofdirection.blogspot.com/2013/06/barrons-
runs-front-page-tesla-article.html)

------
wglb
Headline tampering--this is from deep within the article, and is not the
headline published.

------
jstreebin
Where is that quote from?! Someone switch the links? Can't find it in the
article

~~~
RockyMcNuts
2nd page

"I have no interest in an article that debates what we consider to be an
obvious point -- which is that there is a dramatic reduction in battery
costs," Musk said, after a few questions. "You clearly do not understand the
business. My apologies. I am terminating the interview."

------
maccam94
"The more affordable Gen III, available in three years, will have a less
expensive battery, but at the cost of a shorter per-charge range."

[citation needed]

