Friday, December 20, 2013

Merry Christmas From The U.S. Air Force and Chuck Norris !

Merry Christmas & Happy New Year From The U.S. Air Force and Chuck Norris.

Apparently trying to one-up his friend Jean Claude Van Damme's Volvo Truck Commercial (below), actor Chuck Norris enlisted the U.S. Air Force to send a Merry Christmas & Happy New Greeting to us all!

Volvo's On-Line Commercial featuring Jean Claude Van Damme
has been viewed over 70 Million times in the first 30 days - 
making it the most-successful ever.

UFO Is Car Enthusiast...and Likely One Of Ours.


                                UFO Checks Out Vehicle Using 3D Laser Scan:

With so many credible witnesses from the government, military, aerospace, law enforcement and commercial aviation coming forward to document their own experiences, the debate over the existence of UFO's is clearly over; The question now being asked: "...It it one of Ours or one of Theirs?..." Our bet is OURS.

This is the absolute best-filmed UFO encounter I have personally ever seen. Curiously, it appears the occupants of this craft may be car enthusiasts as well, as they take a good deal of time examining this car with a clearly visible 3D laser scan....

For those interested in the UFO subject, please see The Disclosure Project.

( Note: Actual Video Starts at .59 seconds after the still photography. )

" I live in a rural part of Michigan near Port Huron. I saw a very strange object up in the sky near my home. So, I jumped in my vehicle and followed i ...ended up turning onto a private unmarked road. I got out of vehicle to take a better view of it when suddenly the object started moving towards me. It startled me so I ran like hell for a little bit. "

 " Once I moved a distance back, I zoomed out the camera a bit more and noticed the object was hovering directly over my vehicle. Then it started to lower itself as it slowly rotated directly over my roof! At that point, it appeared to be shining a very bright green beam over it. Then it shot straight up into the sky.  This was a very eerie experience and felt as if there was highly dense static electricity in the air! "

- Bob, 10/27/2013


Sunday, December 1, 2013

TESLA Model S: The Best Automobile In The World ?

 The Tesla Model S.

 We know it's the best electric, but is it " the best car in the world " ? Does Tesla's infrastructure, design and customer service compete? Is Tesla A Takeover Target?

Elon Musk is an extremely bright individual by any standard, and may eventually be recalled by history as the Leonardo daVinci of our times. His success in seemingly unrelated endeavours - Paypal, Space-X, Tesla and possibly The HyperLoop put him on a podium that possibly could only be shared in recent times by Steve Jobs.

Although Tesla manufactured their Roadster for years, The Model S is its' real foray into the real world of luxury automobile marketing. The guardrails and soft shoulders are filled with the debris of good intentions of automobile company start-ups. When one considers that in the last 40 years, only Audi has been able to survive and prosper, that Tesla has made it this far is an extraordinary achievement in itself. 

Tesla has managed to do what no other manufacturer has dared achieve: The creation of a truly viable fully- electric attractive luxury class vehicle that achieves 250+ miles of range and for most consumers, can be driven just like every car they have ever owned. 

Oddly, this achievement is not the result of  " alien technology " nor is it even proprietary. One suspects the "S" in Model S stands for a "s&*tload" of lithium batteries - averaging FOUR times the KW capacity of any rival. Mr. Musk has taken the old adage - " There's no substitute for cubic inches "  and electrified it.

So Far So Good: 55 Sales Per Day.

The "S"  May Stand For "S&#tload" Of KW Batteries.

For the first three sales quarters of 2013, Tesla has been able to successfully sell about 40 Model S cars per day through a worldwide network of Tesla owned storefronts in regional malls, nestled among the Polo, Cheesecake Factory and anchor tenants like Bloomingdale's and Nordstroms. The remaining 15 daily sales are occurring in Europe and China.

Tesla Owns Its Retail Distribution.

This arrangement, in which the manufacturer also owns the distribution channel is unique in modern automobile marketing, as all other manufacturers SELL their vehicles to authorized franchised privately-owned dealers. 

The major manufacturers consider their product "SOLD" when a car is DELIVERED to a franchised dealer - it matters not whether the dealer sells it to a consumer for cash, through installment financing, a lease - or if it just collects dust on the lot.

Tesla must wait until a retail buyer takes delivery to rack up a sale. As long as demand by early adopters has exceeded the supply Tesla can manufacture, every car they produce has technically been "sold" as soon as it comes off the production line... but there's a catch:

If the Tesla retail customer pays for cash, then no argument - BUT - if the customer takes advantage of the installment loan program Tesla offers through several banks, including Wells Fargo - Elon Musk guarantees the customer Tesla will buy their car back for 50% of MSRP during months 36 to 39;  this is installment financing that acts like a closed end lease, which Tesla needs. The downside is Tesla may find itself issuing 50% refunds - which one imagines MOST finance customers will take advantage of.

Tesla does not account for the extreme likelihood that most of the "financed" sales it reports may be erased within three years; no " 50% buy back reserves " are noted in their quarterly reports for this contingency.  With Tesla's buyback in place, no other manufacturer's dealer is likely to take a Tesla in trade for more than 50% - and will instruct their customers to turn the car back to Mr. Musk.

Big Fish: Little Pond.

Tesla has made a very big deal about the Model S outselling the luxo-barge offerings of Mercedes, BMW and Audi. These headlines may impress investors and the casual public, but is the comparison really meaningful?

The S-Class and A8 are being refreshed in 2014; the new BMW 7 Series follows in 2015 - so sales for these premium cars is typically low given the product life cycle.

Second - sales of the S-Class, 7 Series and A8 account for a mere 3% of Mercedes, BMW and Audi totals - roughly 10,000 units each annually. The bread and butter comes from the compact and mid-sized offerings.

While Tesla sales may reach 20,000 units in 2013 worldwide, BMW and Mercedes EACH sell 250,000 NEW units annually in the US alone; Tesla would would hardly be visible on the graph below:

Tesla's Financing Structure.

Take a look at the websites for Jaguar, Audi, Mercedes or BMW and you will find a page that clearly outlines lease terms for each and every model. Most use the example of a 36-39 months lease but with 10,000 miles a year, with closed-end residuals in the mid 50's to low 60's%. 

Exceed the mileage limitation and you get charged .25 a mile; If you drive 45,000 miles that's a whopping $3750 bill at turn-in, or an additional $105 per month if factored over the term of the lease.

Tesla - for reasons unknown - decided to market its " installment loan that acts like a lease " program using 15,000 miles per year with a 50% buyback residual between month 36/39,  making an "apples to apples" comparison difficult without creating an excel spreadsheet.

Tesla MORE Competitive Than It Realizes: The Excel Spreadsheet.

The Classic Car Factory decided to run some actual purchase and lease comparison with other 2013 vehicles one might consider competitive with the base 65kw Model S: all information was taken directly from the manufacturer's websites.

Comparison: Cost of ownership over 36 months driving a total of 45,000 miles.

 BMW: Grand Coupe, 740i, 750i and 535i
 Audi: A8, A7 and A6
 Mercedes: CLS, e400, s550
Porsche: Panamerra


(1) PURCHASE loan at 3% is amortized over 72 mo, traded at 36 mo. for stated residual.
(2) LEASE is based upon 36 mo/10,000 miles per year with a .25 per mile surcharge for an additional 15000 miles.

(3) Gas is assumed to be $4 gal; 20 MPG is assumed, making cost of operation .20 per mile; (4) Electricity costs .03 per mile;  

(5) A $7500 Federal Tax credit is applied to the Tesla as a down payment / cap reduction - however no down payment from the customer is required.

                 Comparison of Model S with BMW AUDI MBZ JAG; 15k Miles Per Year; Gas $4
                                 Assuming 20 MPG AVERAGE; 36 mo. Lease or 72 Mo Purchase Plus Monthly Gas/Electric

          MFGR           TESLA      BMW     BMW     BMW      BMW    AUDI    AUDI     AUDI     MBZ       MBZ       MBZ      JAG     JAG      POR
                              Model S     6-GC      740i      750i       535      A7        A8         A6        CLS      E400      S550      XJ      XF3.0    Pana
Base                      $ 71070    77100    73600   86800   58300 65000  81000    50400   72100   61375    95905   73200  50000   76825
Down                        7500             0             0          0           0         0          0             0           0          0            0           0          0           0
3%/72mo.                  982         1271       1135    1339       899    1072    1249        777     1172     1012      1412     1129     771      1167
.20m gas                    n/a           250         250      250       250      250      250        250      250        250        250       250     250        250
.03m elec                     38

Total Mo.                  1020        1521       1385    1589     1149    1322    1499       1027    1422     1262      1662     1379    1021    1417

45k miles
Upfront                      7500           0             0           0           0         0          0            0          0            0           0           0            0          0
36 Mo. Lease             982         1129        1004   1174       779    1282   1594        996     1404     1209      1887     1441      989    1251
Mo Gas                       n/a           250          250     250        250     250     250        250      250       250        250       250       250      250
Mo Elec                       38
Total Mo.                   1012        1379       1254    1424      1029   1532   1834       1246     1654    1459      2137     1691     1239    1501

As the chart shows: A Tesla Model S - once the cost of gas and excess mileage charges are considered, is actually cheaper to drive than all other models in this comparison including the lowest priced Jag XF and BMW 535i, yet Tesla has not played up the fact the base Model S is competitive with the Mercedes E-Class, BMW 5 Series, Audi A6 or Jaguar XF....Why?

Advantage: Tesla

 Franchise Vs. Factory Store

The beauty of Tesla owning its entire distribution channel is that it not only captures all of the profits between cost and MSRP, it never finds itself under pressure to discount for fear of a  nearby franchised dealer undercutting them.

While the average Mercedes/BMW/Audi dealer is working on a maximum profit margin of 6% plus additional factory incentives of at least that amount, they often find themselves selling cars near " dealer invoice" just to retain the factory holdback incentives for volume. The Tesla Model S currently has a margin of 25%, which should increase over time as the costs of production come down.

Advantage: Competitors

Unfortunately, Tesla also owns its service centers. Traditional dealerships make their real money in the service bays and parts dept, charging parts and labor back to the manufacturer when repairs occur under warranty. Repairs that are done out of warranty afford substantial labor rates and parts margins. Tesla - being the manufacturer - has little opportunity to generate profits from service or parts as almost everything they've produced so far will be "under warranty" for years to come. 

Mall Stores vs. Dealerships.

The mall store concept may be a low-cost alternative to building stand-alone stores, but the disadvantages are obscured when the product you offer has more customers than you need.

It is anticipated, however, that Tesla may produce more vehicles than are already spoken for by the 1st quarter of 2014. The problem this presents is that inventory cannot be showcased at a Mall Store. Though each Tesla store has several assigned spaces for a demonstrator or two, there is no "lot" for a consumer to be swayed by a specific vehicles color or options.

Should a customer be " ready to buy today"  the store has no capability to deliver a vehicle   on the spot. These type of sales - to customers who are " in the ether "- presents a real opportunity for a dealership to sell out of stock and "get the car across the curb". Tesla is unable to take advantage of these sales. 

No Trade-Ins.

Most problematic of Tesla's current setup is its inability to value and take a trade-in. Few luxury car owners want to deal with the nightmare of selling their car themselves on Craigslist or AutoTrader.

Tesla is also not equipped to accelerate a customer lease on a another manufacturers vehicle, something regularly done by the major dealerships who simply pay the remaining few months and bury the cost into the transaction. This forces the potential Tesla customer to return to a competitors showroom to return their vehicle, and chances are high they will be talked out of buying a Tesla by some very savvy Mercedes, Porsche, Audi or BMW sales person. 

Competitors Have The Servicing Advantage.

A Typical BMW Service Customer Lounge For Those Who Wait.

Major dealerships receive factory cash incentives that flow directly to the bottom line by attaining a 100% CSI  ( Customer Satisfaction Index ) Score, as measured by interviewing customers after the transaction or service.

Therefore, dealerships have gone out of their way to make it as convenient and enjoyable as possible to purchase or service an automobile. Free Loaners, Guaranteed appointments, Estimated Completion Times, Upscale Coffee and Breakfast Bars, Internet and TV access, or free transportation to and from the dealership.

Higher end manufacturers such as Bentley, Rolls Royce and Aston Martin go as far as sending a flatbed truck to your home to pickup your vehicle, and will return it to you the same way.

A Mercedes Benz Service Customer Lounge 

Tesla has no such abilities to service a customer in this fashion, nor has it any need to attain high CSI numbers as it would only lead to paying itself for a job well done.

Customers have no opportunity to take delivery at The Mall Stores, nor can they bring the car there for service. The deliver and service centers are located remotely - sometimes an hour or more away. 

For example, if you lived in the upscale neighborhood of Short Hills NJ and placed your order at The Short Hills Mall Store, you would have to go to XXXXXX to take delivery of your car, and should it need servicing, take it to Queens, NY - easily an hour away not to mention $20+ in tolls. And don't forget to have a friend follow you unless you intend to take public transportation home. Compare all that with dropping off your BMW where you bought it, and being handed the keys to a brand new BMW loaner. 

Once consumers become aware of how different the " ownership experience"of Tesla will be from what they're accustomed to, Tesla will lose sales. Should Audi, BMW, Porsche and Mercedes start training their sales people to stress these differences, the damage to Tesla sales could be significant.

Tesla has said it offers service to its customers through mobile technicians, and if the issue is minor, the customer may only have to wait around with their disabled vehicle a few hours. If the issue cannot be solved in this manner, then consumer frustration will likely turn to anger as the car is flat-bedded away - potentially resulting in some very unfavorable  " word of mouth " advertising.

A third longer-term issue that the current Tesla delivery setup presents is that it separates the sales person ( called Product Specialists ) from the consumer as soon as the purchase agreement is signed. Delivery and demonstration of how the vehicle functions are handed off to someone else at another location entirely.

As there is no better advertising than a positive referral from an existing client, Tesla is likely losing direct referral business from satisfied customers.

Gallery Vs Showroom.

Though Tesla's showrooms are clean and modern, they are not designed to conduct sales in the same way a traditional dealership is; Tesla offers galleries where you may look but not buy - at least not the same day. There is nowhere to sit down, unless you find a comfortable counter top as shown below.

To consummate a deal, Tesla has seemingly adopted the strategy employed by Queen Victoria and her Privy Council: Standing. And as every good salesperson knows - it is extremely difficult to negotiate standing up.

Typical Tesla Mall Showroom Gallery
Standing Room Only
Pull Up A Wall & Get Comfortable.
The Queen's Privy Council: A tradition established by Queen Victoria
who believed meetings wasted her time; By making her Ministers
stand, they would say their peace and leave as quickly as possible; 
Tesla's customers may do exactly the same.

Traditional dealerships employ a time-tested gallery design which allows a buyer to see all available models, with excess inventory located on site to compare colors/options. You can indeed " buy a car today " in most cases. Trades are accepted; Financing offers multiple options for ownership. One sales person develops rapport with the buyer and shepherds him or her through the entire process - including feature demonstration at delivery.

If issues with the car develop, the customer simply returns to where it was purchased and the problems are addressed. 

If you are ready to take delivery of a new car at Mercedes, BMW, Audi, Porsche, Jaguar etc. - you can be driving it within a few hours of walking into the showroom....Not so if you want a Tesla.

Modern & Pleasing, Yet Styling Which Lacks Distinction.

There is no doubt the $75k+ Model S is a beautiful car, with a pleasing modern aerodynamic silhouette. What it is not is distinctive as nothing about the design uniquely says " Tesla " except the badge.

If the badges were removed on the four vehicles below, could you identify the Model S?

Top To Bottom: Hyundai, Mazda, Tesla & Jaguar.

The Model S has none of the hallmark styling cues Mercedes, Cadillac, BMW or Audi have developed over decades - most absent is any attempt at an instantly recognizable classic grille. For $75- $100k, buyer's deserve a more distinctive look.

While an electric car does not require an open grille for functioning - tradition does...(See how BMW and Cadillac address this further below on the i3, i8 and ELR)

Obviously BMW.

Obviously Mercedes.

Obviously Cadillac.

Obviously Audi.

Obviously In Need Of Re-Design.

The Interior Wars Have Started:

With the 2014 models, Mercedes has upped the ante for interior design and materials. The new S-Class and soon to follow 2015 C-Class make quantum leaps in the cabin designs. BMW, Audi, Jaguar etc are certainly racing to meet to this challenge, which presents a real dilemma for the spartan and far less luxurious Tesla Model S.

The Gigantic iPad-like control interface is absolutely terrific - but integration
 is poorly executed; panel appears velcro'd to the dash rather than part of it.
The lower 2/3rd forces a driver's eyes to be off the road for extended period, a
potential safety issue and the reason many mfgrs are returning to knobs.

Leather abounds but feels more like molded vinyl; Wood dash is real but
 unvarnished version looks closer to a vinyl decal. Chrome jewelry trim
for vents is a nice touch.
An attractive and clean door panel design lacks the luxury feel
of its competitors; looks like the formed plastic it is. 
The flat back seats of the Model S appear closer in styling
to a minimally padded SUV bench than a luxury vehicle. Compare the
$75k+ Tesla's (above) with a $20k Toyota RAV4 SUV (below).

Tesla has configured the Model S to seat 5 comfortably and 7 if the optional jump seats are ordered. Tesla's competitors are more focused on luxury and comfort, not seating the maximum number of passengers. For buyers who will be driving alone most of the time, Tesla's Model S interior is nowhere near inviting as the competition.

There Is Such A Thing As Bad Publicity.

With Tesla product and sales performing better than most expected, the company earned the attention of the press. Unfortunately, so did at least three major fires of The Model S.

Mr. Musk complained, rightly, that there are thousands of gas-engined vehicle fires every year that get no press attention. True - likely because it's rather common and reporting these would be like chronicling all the planes that land safely at airports. Tesla fires, however, are NEWS and for now are being treated like plane crashes. 

Mr. Musk recently said there will be no recall as the reasons for the smoldering Model S's are investigated. Unfortunately, it is not up to Mr. Musk as that is the mandate of the NHTSA - who IS also investigating the cause of the fires. If NHTSA says there will be a recall - there WILL be a recall.

The Germans & the Americans Are Coming:

It will not be long before the Tesla Model S will face something else they've never encountered: competition. As noted above, Tesla has achieved its remarkable range by using a tremendous number of batteries and a chassis architecture that is custom made to accommodate them.

But one would do well to remember that Toyota invented the practical hybrid-electric with the Prius; Honda is now in full public testing of hydrogen fuel cell vehicles with The Clarity FX. Mercedes, which did not invent the hybrid or fuel cell, invented everything else - including the automobile itself. BMW, Audi, General Motors, Hyundai and Ford cannot be far behind. 

Tesla Gets A Jolt From Audi

The Audi R8 e-tron Coupe

In December 2013, Audi surprised the automotive press by retracting the cancellation of the gorgeous 2 seater R8 e-tron coupe due to a major break-through in lithium battery technology. Originally equipped with 48KW, the R* e-tron had an expected driving range of 130 miles - the newly-developed batteries DOUBLE the range without increasing the battery output. Put simply - Audi can now match the range Tesla has achieved with HALF the KW power.....
46KW = 260 Miles of Range vs Tesla 85KW = 260 Miles of Range

Although Toyota and Mercedes may eventually be able to match Tesla's specs, they may not need to do so exactly as " Good Enough " may become the enemy of " Great ". Tesla Model S sales are obviously attracting buyers who are affluent and could likely buy almost any vehicle they wanted. Some are early adopters, others are eco-minded, and some just want the newest toy. But for those who are simply looking for exceptional economy in a luxury vehicle, that vehicle doesn't necessarily need to be 100% electric - and Mercedes, BMW and Cadillac are counting on it.

Real Competition From Above & Below Is Here.
The 2014 Mercedes S500

The 2014 S-Class S500: 65MPG Real World

Almost everyone who has seen the stunning 2014 S Class agrees that the Mercedes Benz is very serious about re-establishing itself as the Uber Dog. Autonomous Driving Technology and creature-comforts abound in an exquisite new interior that puts BMW and Audi offerings to shame while rivaling those of Rolls Royce and Bentley, starting at $93,000.

The 2014 S-Class Stunning Interior.

A Very Inviting Cabin.

Distinctive, Modern & Classic.

Among the new S-Class offerings is the S500, an extended range hybrid gasoline version that has received a European test range rating of 93 miles per gallon. While real world driving may lower that by 25%, the result is still 400% better than loyal Mercedes drivers are used to.

And that may just be enough to keep them from defecting to Tesla. Ask anyone who owns a Mercedes and they will tell you there IS something special having that Three Pointed Star out there on the hood. And if the economy doesn't sway them, the interior and heritage styling certainly will. Interestingly, the S500 is priced about the same as Tesla's top offering.

The 2014 Cadillac ELR

Also new for 2014 is the beautiful Cadillac ELR Hybrid. This 4 seater extended-range luxury electric vehicle is priced to compete at Tesla's low end of $75k and capable of an estimated 300 miles of range and 83 mpg-e; It also qualifies for Federal & State tax credits.

2014 Cadillac ELR: 4 Seat Personal Coupe

Cadillac Understands The Importance Of The Grille.

High Quality Materials: a Nice Place To Be.

Rear Fascia Is Clean Simple & Elegant with Cadillac Styling Cues.

The 2014 BMW i3 and i8

For years most enthusiasts were divided whether BMW would ever produce an "i" car after spending over $3 Billion in development - but for 2014, they're here. BMW's offerings in the electric extended range wars sandwich The Model S at $45k for the i3 and $135k for the i8.

And while The Model S could benefit from more distinct styling, BMW's cars may just have too much of it; both are radical departures from what the general public is used to. Notice, however, how BMW acknowledges the importance of the heritage kidney grilles.

Both the i3 and  i8 are estimated to achieve 75mpg-e; The i3 will be offered in two versions: all electric with a 100 mile range; Extended-engine option doubles that. Both models should also qualify for Federal and State tax credits.

2014 BMW i8: 4 Seat Extended Range GT Tourer
The i8 Interior is more traditional than one would have expected.

Fanciful Tail Lights and Wings Shown on The Concept i8 Have Been
 Toned Down For Production; Neon Blue Accents Remain.

The New BMW i3 - Love It or Hate It, It's Distinctive.

Great Design Impacted By Rough Feel of Eco Materials.

Neon Gas Tail Lights a Nice Design Element.

Is Tesla a Take-Over Target ?

As stated at the top of this post, Elon Musk's stated aim is not to build the best electric car in the world, but to build the best car in the world, period. To do that successfully, the Tesla infrastructure must be expanded to compete on terms that the car buyers have become accustomed to. Then comes new model development and tooling, features updates, costs of inventory, incorporation of new technologies, costs of trade ins, cost of marketing used cars etc etc......eroding margins.

What no one can take away from Tesla is that they alone have solved the range anxiety issue with a totally electric car, yet for the money - Tesla falls short of the upscale quality interiors or distinctive design of those which it intends to compete with. 

Tesla needs a better solution that accommodates the public for buying, selling, financing and servicing a car. The more Tesla ramps up production and adds models, the more urgent the need and the more expensive to do so it becomes.

There is a term in appraising real estate called " highest and best use " which basically means the asset is being utilized to its fullest maximum value potential. For Tesla, that may not be as a stand-alone company, but instead as a majority-owned Specialty Division similar to Mercedes' AMG or BMW's M - doing what it does best: 100% electric propulsion.

Instead of being forced to compete with the major luxury manufacturers,  "Powered by Tesla" would be an exciting addition to the automotive world if paired with the right would certainly quicken the pace of automotive electrification.

The question is which manufacturer will realize and act on this first....Tesla is a public company, so any offer may indeed be received as hostile. Surprisingly, both Mercedes and Toyota completely divested their shares - making the likelihood of either taking Tesla over pretty slim....

We congratulate Tesla for all that they have accomplished and the contribution they are making to the automotive world and wish them continued success.