In last week's column on the commercial space race, I mentioned SpaceX and its prominent founder and CEO, Elon Musk.
Since his co-founding of PayPal in 1999 and its subsequent purchase by eBay, Musk has had the money - and brains - to throw at just about any project he chooses. The first of these projects was SpaceX, which has grown from a "simple" space cargo company into Musk's brainchild, hoping to land missions on Mars within the next 20 years.
Though SpaceX continues to break ground in the commercial space industry, Musk's automotive venture seems to make the news far more often. Tesla Motors - named after Thomas Edison's rival, Nikola Tesla - makes its own electric cars and drivetrains for other fleets of electric cars. But Tesla's models are no Priuses. The company's models more closely resemble something like a sporty Jaguar or BMW but run on 100 percent electric power.
The technology for electric cars has existed for decades, but most electric cars have been greatly limited by their power and range - generally two things that car buyers care a great deal about. The Nissan Leaf and all-electric versions of the SmartCar and Chevrolet Spark all have ranges of less than 100 miles and barely 100 horsepower. The average gas-powered compact car has a range of about 400 miles and 150 horsepower.
Tesla's models boast ranges of over 200 miles and horsepower figures in the 300s. To put it simply, Teslas are cool. They look fast, they go fast and most importantly, they can go fast for more than a few trips to the grocery store before plugging in.
Tesla, listed as TSLA on the NASDAQ, is one of the most volatile companies that Wall Street actively follows and trades. The Street loves it. The Street hates it. Rinse and repeat.
Volatility essentially measures how much a stock moves around - something like Chevron, which produces oil, has very low volatility since its value doesn't really change all that much. People still need oil (sorry again, Tufts Divest), and the profits from oil production won't suddenly rise or fall.
Tesla, however, finds itself on much shakier ground. Despite Tesla's commercial success, the technology required to support a fleet of electric cars remains largely unproven. Both the batteries that the cars run on and the charging stations required to keep them running constantly undergo redesigns.
This means more innovation and faster and smarter technology, but also leaves early adopters in the dust. Some of you may remember the equally sporty Fisker Karma - a hybrid that looked like a cross between a Corvette and a Dodge Viper. With similar goals to Tesla, Fisker had to suspend production and prepare for bankruptcy at the beginning of this year.
With a platform this new and untested, Tesla's massive research and development costs - which fluctuate between $50 and $75 million a quarter - will likely make or break the company. Tesla is currently working on a nationwide network of "supercharger" stations, which can refill the car's batteries halfway in 20 minutes and allow for longer trips.
Musk has taken a very proactive stance as CEO when it comes to PR. When a New York Times article denounced many of Tesla's range claims about driving in colder temperatures, Musk took to Twitter to call the article "fake."
If Musk can keep the company afloat with more than charisma, Tesla has the power to make a real impact in the automotive landscape. But it'll be a few more years until you find Teslas doing 90 on I-90.
Walt Laws-MacDonald is a junior who is majoring in quantitative economics. He can be reached at Walt.Laws_MacDonald@tufts.edu.
