Tesla Motors plans to roll out a “compelling, affordable electric car” that will sell for about half the price of its high-profile Model S by the end of 2016, company chairman Elon Musk said last week.
“We definitely need to be able to bring a lower cost car to market,” Musk said at the company’s recent annual shareholders’ meeting. “Hopefully, in about three to four years we will be able to do that.”
Musk’s statement was consistent with past comments. In 2012, he predicted that half of all cars on the road would be fully electric within 12 to 15 years. Last week, he added that an affordable EV “has really been my goal since the start of Tesla.”
Tesla CEO Elon Musk: “That has really been my goal since the start of Tesla.” (Source: revengeoftheelectriccar.com)
Musk, clad in blue jeans and a T-shirt, provided few details to attendees at the shareholders’ meeting. He did say, however, that the vehicle would be a “smaller version of the Model S at about half the price.”
To date, Tesla’s vehicles have been sold at luxury-car prices. Its Roadster started at $109,000. The base Model S starts at $69,900 for a 60-kWh battery pack and goes up to $79,900 for an 85-kWh pack, before federal tax credits are applied. If the new vehicle sells for half the price of the Model S, it could potentially run as low as $30,000 after tax credits are applied.
At the meeting, Musk talked little about battery technology, except to say that he believes the creation of a battery for an affordable EV with a 200-mile all-electric range is doable. “There’s definitely a significant improvement in technology needed to have a compelling, affordable electric car,” he said. “We are working with companies like Panasonic and others on new cell electrochemistry that’s really optimized for automotive use. I feel pretty optimistic that we can get there without any miracles occurring.”
Even if the electrical distribution network were capable of handling that future demand right this moment, the base problem of charging stations is still a huge problem. We're talking about replacing a system of gas stations and gasoline distribution that's had a century to mature, and replacing it in less than a decade to suit peoples' desire.
The problem is not one of market saturation. In fact, it is the opposite. The people who really need to have electric vehicles - those whose income is mostly from driving (cab drivers and some small limousine lines come to mind) cannot afford to move to an electric vehicle because the unit price is still relatively high for a 'base' model. Also, the guy who drives 90 miles each way to work as a software developer for a company that is paying him H1-B Visa wages rather than what he actually needs to make to pay for his student loans (well, come to think of it, it is not just the software industry that faces that idiocy now is it?) cannot afford to shell out half of his salary for a new car, regardless of how little gas it burns. The problem is, who defines 'affordable'? Henry Ford once said that his goal was to '..make a car so inexpensive that any man making a decent salary could afford one...' Again, what is deemed to be 'a decent salary'?
If we really want to make an 'affordable' electric or even hybrid car, we need to look at the median American salary. Yes, for all of you math geeks out there, I said MEDIAN, not MEAN or AVERAGE. For non-math-geeks (in an engineering forum, that is highly unlikely, but this is a web site after all) the median salary is the one real salary that is closest salary to the middle of the pack. Now, perhaps a better choice would be the mode (the most frequently occurring) salary, but we should settle for the median, which is most likely a lot lower than the arithmetic mean. In fact, salaries like those of Bill Gates and Warren Buffet won't affect the median at all, nor will H1-B's sub-standard wages. By the way, that median salary in 2011 was $26,364 according to http://www.huffingtonpost.com/2011/10/20/us-incomes-falling-as-optimism-reaches-10-year-low_n_1022118.html.
What we need is for these vehicles to be produced at a price point that will allow that severly underpaid American worker to buy one. By the way, I worked for under $26,000 in the late 90's. Considering 52 40-hour weeks per year, that works out to be $12.50 per hour. I remind you that minimum wage is less than $8 an hour in most states. My best car at that time cost me $900 and was wiped out in a flood. I lived in a one-room, roach-infested slum in rural Lycoming County, PA that the health inspector refused to inspect. I am not saying that we need to lower the price to $900. That would be impossible. What I am saying is that if the cost of the vehicle were lowered to the point where I would be paying about $900 per year at that rate, I would have bought one. Let's make it more realistic. Most of the best-selling cars are priced below $20,000. You want electric cars to sell better, price them in the low $20k range. My Nissan Rogue cost me about $18,000 when I bought it new. If there had been an electric or hybrid for $4,000 or so more, I would have bought it. Instead, the closest in price was the Ford Escape Hybrid, at $35,900. Well, that is not strictly true. I could have bought a Prius for $32,000, but I needed cargo room. My question to GM is, and always will be, "You released a hybrid vehicle. It was the Cadillac Escalade Hybrid. You took the biggest, bulkiest, ugliest vehicle, slapped in a hybrid system and then complained because you did not sell them. Did you take the short bus to school?"
As EVs become more popular, the need for electrical infrastructure will increase greatly. I don't see plans in the works to build powerplants to handle the switch from gasoline to electricity. It appears that my future cars will be using far more electricity than my home. That calls for doubling the infrastructure.
If true is this a sustainable buisness model? Are they losing money on the product itself?
On the Volt I have been reading that sales are down even though the car market is up in general. Incentives from GM are on the way. Are we looking at market saturation already? And this is a PHEV that is already in the price range Musk is looking at, plenty of green cred and no range anxiety issues. Hmmm.
IMO until the battery range is reliably (and affordably) well above 200 miles and recharging is quick and widely distributed the market for pure EVs will be very limited at any price.
I agree, Al, so don't worry, Cabe. It will happen, maybe not in the time frame Elon is suggesting but at some point in the near future (I hope, too!). Although 2016 seems like a doable time frame.
On another note about "lifetimes," is it me or are leaders of these visionary companies seeming to get younger and younger?? (Or am I just getting older? Probably the latter.) From his photo, Mr. Musk looks like he could be designing Tinker Toys, not affordable EVs. ;) I looked it up, though--we are the same age! I should be so accomplished...
Excellent update on this technology. It's easy to see the tipping point in creating affordable EV is hitting the lower price point while also maintaining range for the vehicle. That will make a big difference in how quickly the technology will be adopted.
Nice article, Chuck. An affordable Tesla could make a big difference in the development and acceptance of EVs. Recharge will become a big issue, especially the time involved. I understand that the switching batteries model has crashed, so it probably comes down to the speed of a recharge and the number or recharge stations.
EVs face issues like driving range and recharging times. Driving range for EVs can go about 100–200 miles before recharging, which is a concern on long distance drives. Number of recharge station is very less compared to number of fuel station. Recharge station and recharging time are also main issues needs to be addressed by EV manufactures.
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