The Tesla Two-Step

Tesla Motors, the all-electric luxury car manufacturer, is set to have its first ever quarterly profit after a rocky 10-year history.

It was announced in a press release Sunday quoted in the Financial Times (FT). Tesla is the electric car darling of Wall Street. Its stock hit an all-time high Monday of $45.88.

The FT article went on to say that it would be the first time an electric car manufacturer ever turned a profit. If achieved, the story explains, it will be the first time a new start-up automobile company of any sort has succeeded in decades. This is great news for the alternative energy and electric car industries.

Though impressive, that isn’t what caught this reader’s attention. It was something more sinister found in the Tesla press release.

The Tesla Two-Step

Tesla Model S battery pack has around 7,000 lithium-ion cells mounted underneath the car

In the press release, Tesla Motors announced that its bottom-of-the-line Model S luxury cars had so few orders it wasn’t worth producing the 40-kWh batteries for the cheaper model and it is to be discontinued.

Among drawbacks of electric cars are:

  • Long recharge time
  • Few recharging stations
  • High battery replacement cost
  • Limited driving range per charge

None of those things are appealing but, when out driving, limited range is the least appealing of all. Limited driving range is the electric car Achilles’ heel.

That said, what caught this reader’s eye was what Tesla Motors said they are going to do for the customers who still have orders in for the discontinued low-end 40-kWh option. It said:

The customers who ordered this option will instead receive the 60 kWh pack, but range will be software limited to 40 kWh
Tesla Motors Press Release, 3/31/2013

Ouch! Tesla just played a trick on its customers that is all to familiar to every computer hardware techie. It’s the ol’ crippled hard drive switcheroo.

Bubba, you just get off the turnip truck?

Computer hardware techies know that most computer hard drives are built holding enough disk space for the biggest, baddest bad-boy hard drive that they sell.

The manufacturer will then, through software, turn a 3 terabyte behemoth of a disk drive into a little pink pussycat 120 gigabyte drive it sells to wimpy geeks at 20% the cost… and still turns a profit!

Tesla now gives its 40-kWh customer a software limited 60-kWh battery. Tesla also has an 85-kWh option.

If Tesla is like computer hard drive manufacturers, then all its batteries have 85-kWh worth of cells. The lesser ones are simply software limited. A software switch is unlocked to access the higher capacity and performance that justifies a higher cost.

According to Tesla, the high end 85-kWh battery goes 300 miles/per charge; the 60-kWh version has a 230 mile range; and the lowly 40-kWh battery goes only 160 miles. The high-end vehicle drives 140 miles/charge further than the low-end.


For sure, Tesla car batteries are expensive. The 85-kWh Tesla battery costs $12,000; the 60-kWh one $10,000 and the old 40-kWh was $8,000.

Are the different Tesla battery offerings really for different batteries, or for the same battery that is just software limited like computer disk drives are?

All-electric car batteries have gotta be heavy suckers. The more the kilowatt hours, the more cells per battery needed and the heavier it is. An 85-kWh battery should weigh twice as much as the old 40-kWh one.

So what do the different batteries weigh? Tesla isn’t saying. Customers don’t know. Tesla has an active customer forum where there is chatter about the weight of the different batteries and how it should affect performance and driving distance. In the forums there is plenty of confusion and disagreement about battery weight and its meaning.

The only thing Tesla says officially is that its Model S has a “curb weight” of 4,647 pounds. It makes no weight distinction between the different battery options.

If you wanna know why Tesla doesn’t document the weight of its batteries, then go find a computer hardware techie and ask them. They know.

Then, for entertainment value, go tell the answer to someone driving the 40-kWh car and then to the folks who just prepaid $12,000 for a replacement 85-kWh battery (as offered by Tesla) installed 8 years from now!

Then run! People will kill the messenger.


About azleader

Learning to see life more clearly... one image at a time!

Posted on Apr 3, 2013, in automobile, Business, cars, economics, Energy, green energy, news, Politics, science, transportation. Bookmark the permalink. 2 Comments.

  1. The author shows a stunning lack of knowledge when it comes to harddrive capacities. No, the manufacturers do not routinely drop the capacity of their drives. Why would they? It costs real money to add heads and disks to a drive and drive prices go up with higher capacity so it would be financially idiotic to put extra components into a drive and yet charge less. Perhaps the author is confusing CPU clock speeds with drive capacities. It is common practice for the chipmakers to sell the exact same CPU at different speeds for different amounts of money. But they’re not exactly cheating the customer either. Intel and AMD get paid more for higher speed processors than slower ones, so again it would be stupid to intentionally downrate their clock speeds without a good reason. And that good reason is the thermal reliability of each CPU. Due to process variation some CPU’s run hotter or are less stable than others. Dropping their clock allows them to meet all of their reliability criteria and allows the companies to still make some money off a component that won’t function at the highest or even the nominal clock speed.

    The same line of reasoning applies to Tesla’s battery pack. Now I’m no fan of TSLA at all but the author would do well to focus on the massive gov’t subsidies in the form of a $7500 fed tax credit and potentially thousands more at the state level not to mention the subsidy of Li-ion battery manufacture or the zero emission credits that TSLA gets to sell for a profit just for, um, existing. That’s crony capitalism at its finest.

    • By your logic, the Tesla battery solution for older customers – limiting a 60-kWh battery to only 40-kWh output through software – doesn’t make any economic sense. You are right. It doesn’t. It doesn’t even make good marketing sense.

      But that is exactly what Tesla is doing. Why?

      Why not just say they will give the remaining customers of the discontinued model a larger battery, instead?

      Logical dictates that the $8K cost of the low-capacity battery more than covers the cost of the high-capacity batteries, therefore Tesla doesn’t lose any money making them all the same and interchangeable.

      In that case, setting a software switch instantly increased the price of that battery by up to 150%.

      Profit could be Tesla’s motive for doing what they are doing.

      Tesla batteries sell for $8k, $10K and $12k.

      The telling evidence is that the heavy batteries should have different wights but, according to their specs, they don’t appear to.

      Remember, this is the same company that is marketing replacement batteries to its customers at today’s prices even though they should be a lot cheaper to produce 8 years from now when the replacement is finally needed.

      No one is their right mind should pre-buy a replacement battery needed 8 years from now.

      Returning to hard drives…
      A single 3.5″ platter holds 1TB of data. A single 2.5″ platter holds 500GB of data.

      The same logic above applies to any HD drive sold at an in-between or lower size. For example, a single-platter 320Gb 3.5″ drive already has space for 1TB of data. Why limit it to only 320?

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