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Thursday, June 13, 2013

The End of the ICE Age Is In Sight Now

When we say “ICE” we're talking Internal Combustion Engines. The handwriting is clearly on the wall now that Tesla has become the star performer in the markets this year.

But, what about the other automakers? Are they standing still? No, they aren't. General Motors has leaked the news that they are working on building a mass-market electric car with a 300-mile range to sell for only $20,000. Tesla plans to produce a similar car in the future, but to sell for $30,000. Thus, on the surface, it appears that if GM succeeds, Tesla's huge momentum in gobbling up market share could see a roadblock.

The new GM battery will almost double the performance of Tesla's current one, which sports a performance of 240 Wh/kg (watt-hours per kilogram). The new GM battery is said to perform at 400 Wh/kg. Don't expect Tesla to stand still, though. Tesla performance will be increasing as well and could leave GM in the dust. Battery technology could be just moving into the acceleration lane.

At the same time, battery prices are dropping fast. Thus, the consumer will get a break: much higher range for an electric car, a lower price and free charging at Tesla's Supercharger stations which will be ubiquitous around the country by the time GM tries to enter the competition. In fact, charging your Tesla will take less time than filling up your ICE car with gasoline.

This points up the ludicrous article which appeared in Barron's recently which claimed that costs for batteries would not decline enough to allow Tesla to compete. It seems that Barron's, as well as the New York Times, is suffering from advertiser-induced brain malfunction. Prices for batteries are plummeting, making it far more likely that Tesla will not only move far ahead of the competition, but eat their lunch as well in coming years.

The bottom line: enjoy your ICE while it lasts. It won't be long before it joins Dinny the Dinosaur as a distant, but obsolete, memory of the past.