Tesla exec: Competitor's vehicles resemble appliances

TRAVERSE CITY -- An executive for electric automaker Tesla Motors used a Michigan seminar Tuesday to take more shots at the traditional auto industry, describing competitive vehicles as "appliances" and bucking the trend by calling for more strident fuel-economy standards.

Diarmuid O'Connell, Tesla vice president of corporate and business development, described the automaker's high-priced electric cars as peerless in their styling, performance and charging capability.

He said he is surprised that there are only lower-performance vehicles in the marketplace and nothing to challenge the Model S. "In some respect, they are appliances, in terms of the way they look." Tesla, BMW and Nissan electric vehicles are the few exceptions, he said.

And if the rest of the industry can catch up to Tesla's technology, the California-based automaker is open to sharing its 480 global charging stations, including 209 in the U.S. Currently, the competition does not have vehicles that can handle the speed or power of Tesla's charging ability, he said.

Once the rest of the industry has caught up with Tesla's technology, the automaker is willing to begin a business discussion on how it can be shared. "It is not a proprietary network," he said. "We just have not seen product on the road that can be charged with our system, but we're open to it."

Further stirring the pot, O'Connell said he thinks proposed fuel-economy standards to get 54.5 m.p.g. by 2025 are not stringent enough; others have decried them as too challenging.

"We are probably the only automaker to suggest regulations should be strengthened," he said.

He has a solution: If automakers don't want to invest in electric vehicles, "they can buy credits from us, and we will invest in electric vehicles for them. We'll do the work for them." He sees government credits for producing zero-emission vehicles as just another form of currency and a way for the industry as a whole to get more emission-free vehicles on the road.

O'Connell plans to use his visit to Michigan to take part in the CAR Management Briefing Seminars to meet with lawmakers to find a way to sell Teslas in the state directly to customers, bypassing dealers but still offering service.

In October, Gov. Rick Snyder signed bipartisan legislation aimed at discouraging Tesla from selling its electric cars directly through company stores. Snyder said direct sales of new vehicles is already banned in the state. The law explicitly requires all automakers to sell through a network of franchised dealers.

There are more than 270 Teslas registered in Michigan. "We have a rabid fan base here," O'Connell said. He would like to see a solution similar to that in other states where Tesla is allowed to open a small number of stores. He said five to 10 would be enough in Michigan to service the customer base.

The series of provocative comments continue to showcase the disruptive and innovative thinking that Tesla brings to the auto industry. Conventional automakers are paying attention. General Motors has a team that studies Tesla's strategy, and Ford has added an innovation center in Palo Alto, Calif., that attempts to tap into the energy in Silicon Valley.

Tesla's niche as an electric vehicle maker, combined with the broad thinking of CEO Elon Musk, have often positioned the carmaker outside industry norms.

Some industry lobby groups argue that low gas prices have quashed demand for electrified vehicles, making it even harder to meet proposed fuel-efficiency and greenhouse gas emissions standards.

The industry is exceeding fuel-economy and greenhouse gas emission standards now, but the regulations will get more challenging, said John Bozzella, president of Global Automakers, which represents many import brands and suppliers. And the pace of sales of zero-emission vehicles is far below levels needed.

Christopher Grundler, director of the Office of Transportation and Air Quality at the Environmental Protection Agency, said he sees early signs the industry can meet future standards.

"So far, so good," said Grundler, cautioning that it is "early days" and much of the optimism is based on data from 2012.

He cites reports that suggest innovation with gasoline engines, which are downsized and turbocharged, with start-stop technology, 10-speed transmissions and hybrid systems are enough to meet proposed standards even if consumers don't buy huge volumes of electric vehicles.

Grundler cautions against assuming final decisions have been made and that the proposal that vehicles achieve 54.5 m.p.g. by 2025 is a done deal. In April 2018, there is a review of the proposed standards, and they could stay the same, become tougher or be relaxed, he said.

Part of the information gathering includes another round of deep-dive visits by Grundler and his team to automakers for an update on their future technologies as well as their business plan and strategy.

For example, more automakers are developing nine- and 10-speed transmissions and Mazda has intriguing high compression engine as part of its SkyActiv powertrain system. A version of the Ford F-150 with a 2.5-liter engine already meets standards for 2024.

Grundler's team has met with some of the German automakers, including BMW and Volkswagen. Next month, they will meet with Ford, GM and Fiat Chrysler.

There are no decisions made yet, and the final decision will be made by the Environmental Protection Agency administrator who will be appointed by the next administration – so the person has not even been identified.

"We're not in the business of establishing standards that are not achievable," Grundler said.

Contact Alisa Priddle: 313-222-5394, apriddle@freepress.com or on Twitter @AlisaPriddle