Tesla Motors Inc. (TSLA), the electric-car maker run by Elon Musk, showed a battery swapping system for its Model S sedan that’s faster than charging and ensures the car earns maximum zero-emission vehicle credits in California.
Musk and Franz Von Holzhausen, Tesla’s chief designer, demonstrated the system late yesterday at the company’s Hawthorne, California, design studio. The device removes and replaces the car’s 1,000-pound (454 kilogram) lithium-ion battery with a fully charged one in just 90 seconds, said Musk, who used it to swap packs in two cars faster than an Audi sedan could be refilled with gasoline.
“What we really want to show here is that you can be more convenient with an electric car,” said Musk, 41, Tesla’s chief executive officer. “Hopefully, this is what convinces people finally that electric cars are the future.”
Musk, who’s also building a U.S. network of rapid-charge stations to let Tesla owners drive cross-country, is creating exclusive infrastructure and features to boost the brand’s practicality and cachet. The pack-swapping for the $69,900 sedans also bolsters Tesla’s revenue from regulatory credit sales.
California and nine states that follow its Zero-Emission Vehicle program require carmakers to generate compliance credits by selling models that emit little or no tailpipe exhaust, including plug-in hybrids, battery-only cars and hydrogen vehicles. Large manufacturers need the most credits to comply and Palo Alto, California-based Tesla, with annual volume too small to be covered by the rules, is a surplus credit generator.
Last month Tesla, which has nearly tripled in market value this year, said its first-ever quarterly profit was aided by $67.9 million in ZEV credit sales to companies it didn’t name. Credit sales will drop in the second quarter and may disappear in 2013’s second half, Musk said in an earnings call last month.
Tesla has said it plans to sell 21,000 Model S cars this year, with deliveries to Europe and Asia beginning in the second half. Demand currently exceeds Tesla’s production capacity, Musk said yesterday, without elaborating.
Each Model S generates between five and seven credits for Tesla, determined by battery size, under a requirement that they can be refueled in 10 minutes or less, according to California’s Air Resources Board.
Battery swapping capability currently satisfies that “fast refueling” requirement, David Clegern, a spokesman for the agency, said by e-mail. CARB is considering a rule change that would remove pack swapping as a fast-refueling option, he said.
Hydrogen vehicles such as Honda Motor Co. (7267)’s FCX Clarity fuel-cell sedan are the only other cars that currently earn as many as seven credits per vehicle, according to California rules.
“Are we simply doing this for the CARB credits? That is not the case,” Musk said. The company’s revenue from ZEV credit sales will decline over time relative to its vehicle sales as deliveries to global markets grow, he said. He estimated that U.S. sales will account for only about a third of Tesla’s volume, of which only half will generate credits.
Tesla will install the first battery swap stations at Supercharger stations in California from late this year, Musk said. They cost about $500,000, and will initially go into the company’s busiest Supercharger stations, he said.
Each unit will store about 50 battery packs that customers will borrow for the price of an equivalent tank of gasoline, Musk said. Users’ credit cards will be automatically billed, and the loaner packs can be returned to the charging station and replaced with the customer’s own pack, fully charged, he said.
The company is open to eventually licensing its battery swap system to other companies interested in offering a similar service, Musk said.
Tesla’s strategy for battery-swapping capability will have to be better than that of Better Place Inc., a provider of electric car services that filed for bankruptcy this year.
Better Place, also based in Palo Alto, offered charging services and battery swapping for an electric Renault SA model at stations in Israel and Denmark. Better Place filed a motion for liquidation with an Israeli court last month after failing to attract new investments, according to a company statement.
Tesla fell 1.1 percent to $99.55 at the close in New York. The shares have risen 194 percent this year, compared with a 12 percent advance in the Russell 1000 Index.
Musk’s fortune has soared 145 percent this year to $5.8 billion, according to the Bloomberg Billionaires Index.
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