Purchasing and Negotiation Training

Robert Menard,
Certified Purchasing Professional,
Certified Professional Purchasing Consultant, Certified Green Purchasing Professional, Certified Professional Purchasing Manager

Last October, a blog post concerning hybrid and all-electric cars cited troubles Tesla Motors was having with its all electric $100,000+ luxury sedans.  According to Tesla’s site, the mile range on a full charge is only 265 and a full charge requires one hour and twelve minute.  Given rarity and dispersion of charging stations, and the high price of the Tesla vehicles, all of these serious impediments are a threat to sales growth.  Add to this the inanity of Carbon Offsets and Tesla vehicles have steep figurative and literal hills to climb.Meanwhile, Texas governor Rick Perry has been crisscrossing the country in a very successful recruiting campaign to have large and small companies relocate from high cost, high regulation, and business unfriendly states (particularly NY and CA).  The crown jewel of this effort is Toyota which is leaving California for the business Mecca of Plano, TX in the Dallas/Ft. Worth metroplex.   Another automotive company being wooed by Texas officials is Tesla.  It wants to build a $5 billion dollar, 6,500 job, 10 million square feet battery factory and it scrutinizing a variety of locations in four states, AZ, NM, NV and TX.  Two reported Texas locations are Dallas and San Antonio.  A drawback for Texas is that it prohibits direct car sales to customers – the state insists on a dealer network, unlike Tesla’s home state of CA.  

The importance of a lithium-ion battery plant was underscored in a statement by Elon Musk, the iconic business genius, founder, and CEO of Tesla.  He wants to reduce the price of the basic $70,000 Model S by at least 30% by vastly increasing the supply and availability of batteries.  Batteries are the most expensive component of the all-electric car.  Although all-electric cars constitute less than 1% of the automobile market, Musk and Tesla have Texas sized plans.  The goal is to drive sales from 22,400 units in 2013 to more than 500,000 in the next few years. 

An appeal to TCO  

You may have noticed the ads for Kyocera pitched by Professor Peter Morisi in his bow tie.  The slant is lowest Total Cost of Ownership.  The automobile sales business has embraced this concept.  All of the major car buying wesites, Kelly Blue Book, Edmunds, Consumer Reports  and others are promoting the TCO concept.  So is Tesla. 

This landing page on Tesla’s site purports to calculate TCO for a Tesla using a fairly sophisticated formula.  About the only important factor it does not take into account is the wasted energy lost in transmission and associated waste due to low voltages of the chargers.  Currently, and ironically, the electric vehicles create more greenhouse gasses  than they save, but that may change as more renewable sources of electricity come on line.