July 13, 2024

Tesla Roadsters are becoming collectible

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Tesla was started by a couple of guys convinced there would be a market for an electric sports car after watching AC Propulsion Systems Tzero spank some Italian exotic sports cars on the track.  Martin Eberhard and Marc Tarpening, a couple of visionaries, and engineers, boldly put the business plan into play, ran out of money, were turned down by a number of VC and angel investors, until they approached Elon, who has an appetite for risk, and the rest is history.

Since all Tesla had was a proven electric drive train, and no ability, facility, or equipment to make car bodies, they went to Lotus, who made cool sportscars, picked the Lotus Elise chassis, and planned to electrify them.

Once they attempted to cram a 1000 lb battery system into the motorless Lotus Elise chassis, things got interesting.  The frame was too small, body panels had to be stretched and widened, and with the new weight and changed geometry, expensive crash and validation had to be redone since only 6-7% of the car was now original Lotus Elise.

The supply chain was under constant turmoil.  Finding vendors willing to create small run parts for only 2400 cars, proved an endless challenge, often forcing Tesla to find secondary vendors, or less than mainstream sources.  Add to that the fact that most of the drive train design had to be created from scratch without any precedents or anyone to copy, it is a miracle this car ever made it into production.

Although the Roadster was the car that put Tesla on the map, it was also the car that brought them to the brink of bankruptcy due to unanticipated cost overruns, engineering problems, and seemingly never-ending rework and warranty issues.   Remember, unlike ICE vehicles that have matured for 100 years, with this undertaking, there was no one to copy and trial and error reigned supreme.

We understand the early Tesla challenges well, since we have been reverse engineering the Tesla Roadster for years, and very much like an archeological dig, we are able to reconstruct the design and engineering challenges they went through, by reconstructing the roadmap.

(B-Roll – Al on Microscope, Ken on PCB)

Popularity

Our Phoenix Service Center specializes in early Roadsters.  There are more Roadsters under roof at our facilities than anywhere else on the planet these days.  These customer Roadsters, Test Mules, and Parts Cars, are visible our customers who bring us SEXY vehicles for repairs.  No one has ever walked over to a Model S, X, etc. and oooohed and ahhhed.  In the same space, side by side, the Roadsters, hands down, always get all the attention.

The reason visitors are repeatedly drawn to the Roadster, is it is far more sexy, both body and styling curves, colors, and rarity.

Some have never seen a Roadster on the road.  No one will contest that the next generation Tesla vehicles are a far more sensible modes of transportation with more than 2 seats, far more advanced features, super charging for long trips, and even better performance.  

(B-Roll – )

Roadster valuation history

The Roadster originally sold for $109K – $157K dependent on options, and cars were released in 2008.  Over the years, values began a long and steady decline, mostly because that is what cars do as they age.

Concerns over whether Tesla would create a replacement battery pack was one dampening effect.  This concern was alleviated when Tesla came out with the 80 kWh 3.0 battery pack in 2017, increasing range expectations from 240 to 400 miles. 

It was a short lived program however due to engineering problems and the replacement program was shelved for a few years.  Uncertainty crept back in, and unmet assurances from Tesla another battery pack was imminent, resulted in renewed Roadster support concerns. 

By fall of 2020, functioning Roadsters were exchanging hands for just under $40K, hitting an all time low.

By the end of 2020, and ongoing assurances from Tesla, that a replacement battery pack was imminent, values began to climb again.  A new twist was that collectors and speculators who remained on the sidelines, began entering the market, even buying dead, or bricked Roadster, putting them into storage speculating either Tesla, or 3rd parties will recreate a main battery solution.

Tesla first attempt at a replacement battery pack in 2017, was presented as an “at cost” solution since low volume production costs, or “hand built” as they claimed, make production costs skyrocket considering just shy of 7000 cells need to be inserted without automation. 

We know how labor intensive a project like this can be we have drafted a number of proposals over the years encouraging Tesla to outsource the replacement Roadster battery project to companies like us, who are not only have Roadster engineering expertise and logged lots of R&D time on the battery system. 

Additionally a company like ours also specialize in small run manufacturing, and equally as important, involved for decades in a battery pack rebuild business, for our critical power customers.

The main battery pack issue is far from resolved since everyone is still waiting for the next Tesla solution.  3rd Party independents like us tackling a project of this magnitude have a huge capex cost in molds, dies and tooling.  With only 2000 customers, ROI is elusive at current Roadster valuation.  As vehicle values climb however, it will begin to attract 3rd party companies who have a more direct path to ROI.

Future maintenance issues

Even if an OEM were to decide to abandon parts or service support for a particular vehicle, if valuation is increasing, there are usually specialty shops that will fill the void and continue support for a collectible vehicle.  In some ways, this process is already under way, as some Tesla Service Centers no longer accept Roadsters for repair, and refer customers to regional hubs, or other Service Centers staffed with more Roadster techs.

A handful of independent Roadster service shops exist in the US and Europe.  Each has a particular specialty, and in the US, it is usually low tech auto or paint and body repair.  Europe has more shops like ours specializing in advanced electronics repair, which is the biggest vulnerability in ongoing Roadster support.

The car is actually quite simple to maintain.  Low tech auto issues like tires, wheels, brakes, suspension, windshields, tint, PPF, paint, body, carpet, upholstery, audio upgrades, can all be done locally.  The Roadster, mechanically, is a still very much like a Lotus Elise, and these is really little reason to send a Roadster cross country for simple services like this.

The electronics however, in the drive train from the Main Propulsion Battery, to the DC to AC inverter, known as a Power Electronics Module or PEM in the Roadster, requires not only an electronics lab full of specialized equipment, but a high skilled team staffed with engineers and technicians, typically not found in auto shops. 

(B-Roll – GPS Lab fully staffed)

As with any exotic cars, an astute owner does not wait for something to fail like you would with your Chevy, Ford, or Nissan.  Roadsters, which are in this more lofty league have predictable maintenance events to resolve deferred maintenance.  Waiting for failures, especially in a critical component, becomes much more costly, and if catastrophic, could idle a car. 

A Roadster Power Electronics module, called a PEM, is a complex module full of electronics, loaded with predictable wear components, which need to be replaced every 8-10 years.  In addition, original PEMs have unresolved engineering problems that are like ticking time bombs waiting to fail, like the decaying transistor insulating material.

(B-Roll – IGBT Heat Sinks)

Inside a PEM has aging electrolytic capacitors, with a service life of 8 years.  PEMs are going on 10 years.  Capacitors tend to blow up in high voltage and current applications when they age and become resistive.  A capacitor blowing in a PEM, throwing conductive shrapnel throughout the logic boards, can destroy expensive electronics, no longer in production.

Almost all the electronic modules, and PCB’s in a Roadster have been out of production for 10 years.  Replacements are unlikely due to the high cost of replicating small run electronics and rebuilding them is the only cost effective option.  An electronics lab like ours has been reverse engineering all the Roadster electronics for years, rebuilding these vital and non-existent parts.

(B-Roll – GMC Services Screen Shots)

A battery replacement is also an obvious predictable Roadster maintenance event at the 10-15 year window.

What makes a car collectible?

Cars with historical importance—ones that pioneered new technology or raised the bar for consumer expectations—can become collectible, especially if they are rare and beautiful. (Being good-looking is an advantage.) … The most expensive collectible cars combine these attributes.

(B-Roll – Ralph Lauren’s Atlantic, Lambos, McLaren, Evija)

The Roadster hits all these check boxes.  It is the first EV that woke people up demonstrating a car running on electrons can be sexy, fast, and very stylish.  The fact that the Roadster performance, competed with all the exotics costing substantially more, clinched its place in history as a serious contender.  And, unlike many of the other exotic sports car manufacturers, Tesla followed up with more sensible luxury family sedans, setting even more performance records surpassing even the Roadster.

(B-Roll – Over the top MS, M3)

Automobiles have not changed much in the last few decades, and a vehicle or brand moving into the realms of collectible, usually takes a few decades.  Tesla and the Roadster ushered in a rapid level of disruption not seen for over 100 years in transportation.  It would then preclude that timelines for moving into collectible status are accelerated.  The Roadster has become the icon which ushered in this this revolution to sustainable energy transport, and the imminent death of fossil fuel cars.

(B-Roll – EV1, Baker, Golf carts)

A couple of very common question we are asked by Roadster owners, watching their cars climb in value, is:

1 – Should I sell my Roadster?

2 – What is my Roadster worth?

The first part of answering these questions is that we do not believe we have ever come across an ex-Roadster owner that does not regret selling their car, and in the same breath, we often hear they also regret selling TSLA stock and taking profits too early.

My personal opinion is that if you sell an appreciating asset, and take profits and park money in the bank, are you going to enjoy watching the numbers on that bank statement as much as you enjoy driving the Roadster, while watching the valuation climb?   You cannot drive and enjoy a bank ledger.

Conclusion

The next couple of years will be critical to determining the fate of the first generation Roadster.  Any stumbling with the replacement main battery could send current appreciating Roadster prices into a tailspin, making it even more difficult for a third party solution.  Without a replacement battery solution, 2000 cars will be idled.

Our communication with corporate Tesla indicates repeatedly a solution is actively in process.  The outsource offer still stands.

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