Tesla: Making Internal Combustion Engines and Sideview Mirrors Obsolete

How much wind drag does a sideview mirror have? Plus, Q2 earnings results.

Eric Wesoff August 12, 2013

Eric Wesoff

Editor-at-Large
Greentech Media

Eric Wesoff is Editor-at-Large at Greentech Media. Prior to joining GTM, Eric Wesoff founded Sage Marketing Partners in 2000 to provide sales and marketing-consulting services to venture-capital firms and their portfolio companies in the alternative energy and telecommunications sectors. Mr. Wesoff has become a well-known, respected authority and speaker in these fields.

His expertise covers solar power, fuel cells, biofuels and advanced batteries. His strengths are in market research and analysis, business development and due diligence for investors. He frequently consults for energy startups and Silicon Valley's premier venture capitalists.

Sideview mirrors "create 3 percent to 6 percent of a typical vehicle's total aerodynamic drag," according to Green Car Reports.

Electric car maker Tesla (TSLA) wants to do something about it. Rather than spend hours in a wind tunnel refining the mirrors' curves and reducing drag, Tesla wants to eliminate sideview mirrors altogether and replace them with cameras wired to in-cabin screens.

Unfortunately, regulations mandate things like rearview and sideview mirrors.

In an interview with Alison van Diggelen of Fresh Dialogues, Tesla Model S Designer Franz von Holzhausen spoke of a "cumbersome amount of regulations that prevent or delay innovative car design," and speaking with "authorities" about changing regulations.

Green Car Reports suggests that the regulations that would require modification are the Federal Motor Vehicle Safety Standards (FMVSS) issued by the National Highway Traffic Safety Administration (NHTSA).

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Here's our reporting on Tesla's second quarter earnings call from last week:

The EV pioneer's Q2 revenue of $405 million beat estimates by $22 million, and its Q2 EPS of $0.20 beat estimates by $0.37. Tesla sold 5,150 Model S vehicles in North America during Q2. The EV builder's surge in gross margin to 22 percent came as a surprise to the analyst contingent, as revenue for Q1 was $562 million at a 17 percent gross margin. (Here's the audio transcript and here is the investor letter. Here's a Tesla high-speed test drive review.)

Takeaways

The company posted a net loss of $30.5 million
There are over 13,000 Model S Sedans on the road in North America (all sales, so far, are in North America)
Tesla opened 7 new retails stores in Q2 and will soon be opening a store in China.
Shipments to Europe started this week
Sales of zero-emission vehicle (ZEV) credits still contribute to revenue -- but promised Q4 margin of 25 percent does not include credits
Tesla maintained its 2013 guidance of selling 21,000 electric vehicles this year. That has meant growing production to 500 cars per week

Last quarter Tesla produced 400 or more Model S vehicles per week for a total of 5,000 units in the quarter. “At this point, making 400 cars a week actually feels like a walk in the park, whereas it was a nightmare in Q4,” Tesla CEO Elon Musk told Bloomberg in July.

Tesla stock is up roughly 300 percent this year.