Challenging Tesla: The Last Non-Electric Rolls-Royce

NEW YORK ( TheStreet) --I recently drove the Rolls-Royce Wraith, which is the BMW-owned luxury brand's all-new coupe, with a base price of $285,000. I believe this to be Rolls-Royce's last non-electric car, marking the end of a century-old era of making gasoline-only cars.

Rolls-Royce was purchased by BMW in 1999 and delivered its all-new car, the Phantom four-door sedan, in January 2003. Since then, it has added a variety of new models as well as updated the Phantom a year ago.

Rolls-Royce is approaching 4,000 cars per year, with prices starting under $300,000 but typically approaching $500,000. A large percentage of the cars are "bespoke" -- or customized, with all sorts of leather, paint and other special one-off jobs. These are high-margin options.

You see, once you go much above $100,000 for a car, such things as the basic body, engine and so forth, doesn't get much better. There are diminishing returns. So how do you justify prices in the $300,000-to-$500,000 range?

Rolls-Royce has figured out that it's exclusivity and individuality that can sustain such high prices. Ultra-luxury buyers are eccentric and strong-willed. They are willing to pay a premium for very precise details. They basically want to design their own car. Rolls-Royce gives them that option, and every Rolls is hand-built.

So what about this all-new coupe, the Wraith? It just entered production in September, and it marks a new styling for Rolls-Royce. The back of the car looks like a hatchback.

The doors are giant suicide-doors ("coach doors") and they close with a button by the A-pillar if you can't reach the handle. Getting into the rear seat is almost as hard as in any coupe, but once you get in there, you actually have good room for two large adults.

I'm 6 feet tall and I fit just fine when I got into the rear seat. Unlike so many other cars these days, there is sufficient headroom. Foot and knee room is also slightly more than adequate. The armrests on both sides are outstanding, because they sit high, so as to actually provide support. In this coupe, you actually enjoy riding in the back seat. Take note, Cadillac!

The interior showcases two pieces speaking to the sheer luxury of a Rolls-Royce:1. The doors contain the biggest single piece of wood in any car. The grain is tilted 55 degrees forward to match ... something. It's an amazing piece of woodwork.2. The ceiling in my test car had the optional "sky" headliner. It's a leather roof, but with 1,340 (yes, that's not a typo) small fiber-optic edges providing light, representing the stars. Basically, you're looking at a fake sky. This can also be customized to match the stars the way they looked on any given day in history. All of this is hand-made, with each fiber-optic light angled just the right way.

So how does it drive?

The engine is a 6.6 liter V12 with twin turbos, yielding 624 horses and almost as much torque. Obviously, the power here is fantastic as far as an internal combustion engine is concerned.

However, once you have driven an electric car, any regular gasoline car will feel like an ancient tractor in comparison. I just can't get over the fact that even a basic $35,000 Chevrolet Volt -- let alone a Tesla Model S -- easily beats the Rolls-Royce in the smoothness department.

When you floor the accelerator in the Rolls, you wait almost a second, then the engine roars and the transmission downshifts. This is just so inferior to an electric car, which has no delay and a perfectly linear and silent acceleration after that.

The infotainment and related gadgetry is a mixed bag. The Wraith has the best heads-up display I have seen, but then it's mostly downhill from there. The menu system for picking audio sources and related functionality is as big of a mess as in any Mercedes, BMW, Ford ( F), etc. One really wonders who comes up with this stuff.

Coming from a Tesla Model S, it's clear that Tesla ( TSLA) is 30 years ahead of the industry in terms of in-car infotainment. Whether Rolls-Royce or Mercedes, these people had better wake up and shape up quickly, because they are so far behind.

For my test drive, the on-board navigation had been pre-programmed with a 70-mile route. In short, the navigation didn't work. It sent me into some random neighborhoods near Phoenix, which is not what was intended. I pulled out my $399 Android smartphone and solved the problem instantly with Google ( GOOG) Maps. So much for embedded automotive technology. I would hate to see a billionaire lost in a seedy neighborhood -- sort of a like a modern-day version of the opening scene in "Pretty Woman."

Now to my bottom-line realization as I drove around in this newest and extremely beautiful -- inside and out -- Rolls-Royce coupe: This must be the last non-electric Rolls-Royce.

Clearly a Tesla Model S -- or a Cadillac ELR or a Chevrolet Volt -- are very different cars than a Rolls-Royce. Realistically, very few people cross-shop. But some do, to some extent. A person who buys a Rolls-Royce at least considers a Tesla, for example. People are curious about new experiences.

A Tesla or Cadillac ELR is obviously no match for the Rolls-Royce in terms of leather, wood and overall exclusivity -- 4,000 cars a year, broken down into several body styles. That said, the sheer driving experience of a gasoline car, like the Wraith, doesn't match a Tesla, Volt or ELR. It's not as silent, smooth or responsive. You just can't beat an electric motor, no matter a 624 horsepower 6.6 liter V12.

BMW owns Rolls-Royce and it knows this. For this reason, I'm betting that this is the last non-electric Rolls-Royce.

So what kind of electric car will Rolls-Royce build in the future? Will it be a pure electric, or something of a hybrid?

My money is on the first plug-in Rolls-Royce being a hybrid, of which there are different architectural kinds. BMW i3 and BMW i8 are two such variants.

Electric motors also would make 4-wheel drive a natural for Rolls-Royce. In an electric 4x4, there's no need for a transmission tunnel, important for rear seat room and comfort.

I think we can expect to see Rolls-Royce make its future models with two large electric motors -- one front and one rear. Then add a gasoline engine to provide for backup generator power. This would likely be 3.0 liter V6, or basically the BMW i8 multiplied by two.

The battery would likely be at least 16 kWh, and the range would be at least 30 miles, possibly as much as 50 miles. Then the generator would kick in. Basically, an architecture somewhat similar to a Chevrolet Volt (Cadillac ELR) but with 4-wheel drive and with most drivetrain components sized up by two times or more.

Keep in mind that BMW, which owns Rolls-Royce, hired the key program manager from General Motors ( GM), who was in charge of developing the Chevrolet Volt 2007-2010. His name is Frank Weber and he has been working for BMW and Rolls-Royce since April 2011. I expect to see a plug-in electric Rolls-Royce by 2018 that reflects this Chevrolet Volt heritage. The BMW i3 has already entered production, and the BMW i8 enters production no later than June 2014.

Longer term, I anticipate an all-electric Rolls-Royce. It would need to beat Tesla by offering a range of at least 300 miles, preferably 400 miles. Most likely, within the next five years, probably in 2018, Rolls-Royce would therefore offer two basic drivetrains for its future cars in several different body styles: One 4x4 hybrid plug-in as I described above, and one pure electric 4x4.

At the time of publication, the author was long F and GOOG.

Rolls-Royce provided airfare and lunch in addition to the car and a full tank of gasoline to enable TheStreet.com to give you this first-drive report.

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