By Karl Denninger, The Market Ticker
This is enough to make you roll in laughter….
Tesla Motors' lineup of all-electric vehicles - its existing Roadster, almost certainly its impending Model S, and possibly its future Model X - apparently suffer from a severe limitation that can largely destroy the value of the vehicle. If the battery is ever totally discharged, the owner is left with what Tesla describes as a "brick": a completely immobile vehicle that cannot be started or even pushed down the street. The only known remedy is for the owner to pay Tesla approximately $40,000 to replace the entire battery. Unlike practically every other modern car problem, neither Tesla's warranty nor typical car insurance policies provide any protection from this major financial loss.
The problem stems from the use of lithium batteries, which have a minimum safe discharge level. If exceeded, when the battery is recharged it can burst and catch fire. To prevent this lithium cells have a cut-off that activates when the minimum charge level is reached.
R/C car and plane users of these batteries, who tend to abuse the packs more than a bit and sometimes wire 'em up from bare cells without the requisite internal protection in the pack, occasionally find out about this the hard way when their battery pack bursts into flames unexpectedly while being recharged. If this was to happen to a car it would be very bad, so the circuitry is in there.
Unfortunately what appears to not be in the Tesla is circuitry that cuts off the parasitic loads (things like the clock, etc) when the charge state gets low. Oh yeah, and I forgot something else - all batteries self-discharge at a slow rate, so if you leave the car unused long enough, even if they did shed those parasitic loads, the problem could still occur.
This, quite frankly if true, is ridiculous. Among other things forcing a complete pack replacement instead of allowing individual cell replacements is insane, along with not having protective circuitry that disables parasitic loads relatively quickly as the battery discharges, or isolating individual cells long before they reach "brick" range, extending the time before a catastrophic failure occurs from weeks to several months. Not being able to leave a car unused for a month or more when people do take trips from time to time is outrageous - there are things called power failures, circuit breakers do trip and similar events occur, not to mention that you might drive the car to the airport, largely-depleting the battery and then park it there, only to find that two or three weeks later you're utterly screwed.
And catastrophic to Tesla's sales and corporate prospects, if this is true and becomes widely known, especially with the $40,000 price tag to fix a "brick."
Disclosure: No position, but my God, this looks like a nice short; 125% Debt-to-equity, no earnings at present, 200m in revenue and only 8% revenue growth…. oh boy….. the only problem is that a LOT of the float is already out short, so squeezes are quite possible and likely would be nasty.
Update: There apparently is some controversy over the original story. Read it here, and make up your own mind…..
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