# How Green (and Efficient) is my Tesla

Much of the investment thesis behind Tesla, as well as a reason for the government subsidies, is based on the premise that its cars are more green and efficient. Nonetheless virtually no one knows how much more green or efficient the cars actually are. As the owner of a 2015 Tesla Model S 85D, I decided to find out by comparing my car to my son’s Prius. Here are results of my experiments.

Both my son and I drive similar distances daily around Pasadena, California (where Teslas are very popular). Our trips are divided equally between freeways and surface streets. He gets an average of 43 miles per gallon. A gallon of gas contains the energy equivalent of 37.9 kilowatt hours (KWH) of electricity. Therefore, my son’s Prius gets 1.14 miles per KWH.
To compare, I charged my Tesla fully at which point it said I had a range of 238 miles and then ran it down to a range of about 30 miles several times. The first piece of bad news for Tesla owners is that while my range dropped an average of 208 miles, the car only traveled an average of only 144 miles – less than 70% of the promised range. To cover those 144 miles, I used 51.2 KWH of electricity which comes to 2.80 miles per KWH – more than 2.5 times better than the Prius. An apparent smashing victory for the Tesla. BUT, Edison, my electricity supplier, had to produce the power. At the margin, Edison generates electricity by burning natural gas. On average, only about 43% of the energy in the natural gas is converted to electricity, the rest being lost as heat. The Prius has the same problem only more so. For every gallon of gas burned only about 25% serves to move the car forward. However, that fact is already accounted for in the miles per gallon number. Therefore, to compare apples to apples, account must be taken of the energy loss at the power plant. Doing so reduces the effective mileage for the Tesla to 1.21 miles per KWH – nearly identical to that of the Prius.
From a green standpoint, the Tesla has another advantage. To produce a KWH of energy from natural gas, Edison emits 190 grams of CO2. To produce a KWH of energy from gasoline, the Prius emits 250 grams. (Natural gas burns cleaner than gasoline.) Consequently, the Tesla emits 154 grams per mile, compared to 220 grams for the Prius. Furthermore, the Tesla does hold out the possibility of becoming greener as electricity generation moves to renewal sources like wind and solar. On the other hand, it presents the problem of what to do with the used batteries. Given the current scale of renewal generation and electric car use, these are both issues for the future.
The bottom line is that from an efficiency standpoint the Tesla and the Prius ended up in pretty much of a dead heat. To give the Tesla it due, it is larger and faster. With respect to the green factor, the Tesla turned out to be 30% better in terms of CO2 emissions. Whether that currently is enough to justify the Tesla’s snob appeal, its dramatically higher price, and its state and federal subsidies is another question

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This Value Fund Generated Significant Alpha In 2021

GrizzlyRock Value Partners was up 34.54% net for 2021. The fund marked 10 years since its inception with a 198% net return, resulting in an annual return of 11.5%. GrizzlyRock enjoyed 14.8% long alpha against the S&P 500 and 26.9% against the Russell 2000. Q4 2021 hedge fund letters, conferences and more The fund's short Read More

Bradford Cornell is an emeritus Professor of Financial Economics at the Anderson School of Management at UCLA. Prof. Cornell has taught courses on Applied Corporate Finance, Investment Banking, and Corporate Valuation. He is currently developing a new course on Climate Change, Energy and Finance. Professor Cornell has published more than 125 articles and four books on a wide variety of topics in applied finance. Professor Cornell is also a managing director at BRG where he heads the practice on Climate Change, Energy and Finance. In addition, he is a senior advisor to the Cornell Capital Group and to Rayliant Global Advisors. In both capacities, he provides advice on fundamental investment valuation.
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