Days after Consumer Reports declared that the Tesla Model S might have been the “best car ever,” Tesla Motors’ stock surged 57 percent. While the stock was soaring, financial services corporation Morgan Stanley notably doubled its price target on the company, from $47 to $103. “What Tesla has accomplished isn’t luck, it’s real,” Morgan Stanley wrote in a note to clients.
Indeed, it isn’t luck. The company has managed to build an electric car that not only goes head to head with the Audis, BMWs, Mercedes, and Porsches of the world, but beats them in an objective test. And that takes some great engineering.
But when all the woo-hooing is finished, a bigger challenge still lies ahead for Tesla and other electric automakers. That’s because Tesla’s formidable accomplishment occurred at an elevated price level, which neatly suits the benefits of a big, expensive electric car battery. ”They didn’t fight the price point,” Jake Fisher, director of auto testing for Consumer Reports, told Design News. “They simply said, ‘Let’s make the best car.’ ”
Unfortunately, a $90,000 car with an 85-kWh battery makes more sense for luxury buyers than it does for the larger swath of mainstream consumers. ”Clearly, you need another car if you want to take a long trip,” Fisher told us. “Or you need to rent a car, which is an inconvenience. But most people who buy $90,000 cars have more than one vehicle in the family.”
For most consumers, however, car buying is more a matter of pragmatism. They need cars to get them to work, to the grocery store, or to grandma’s house. Less frequently, they need a vehicle to drive the kids to college or take the family on vacation. Most potential buyers don’t want to rent a car every time they need to take a 100-mile roundtrip. Nor do they want to pay $90,000 so they can take a 200-mile roundtrip.
Amidst the euphoria over the Model S’s wonderful reviews, there’s a thread of thinking that says Tesla’s accomplishments will trickle down. In other words, the 200-mile range of the Model S will soon be available in a $50,000 car, then in a $30,000 car, then in a $20,000 car. That’s the way it worked for such features as electronic stability control and navigation. It might also have been what Elon Musk was thinking when he boldly predicted last year that half of all cars on the road would be pure electric in 15 years.
As we’ve said many times, however, the successes of electronics don’t apply to battery chemistry. There is no Moore’s Law for chemical storage. Moore’s Law is about manufacturing -- pushing the state of the art by reducing the feature sizes of microelectronic devices. Batteries, on the other hand, pose a science challenge. Making them better is more like curing cancer.
That’s not to say we won’t get there. To date, however, it has never happened as fast as the optimists predicted. You can look back at any newspaper, any magazine (including Design News), over the last 20 years and find scads of articles that predicted some new battery chemistry would be ready to power electric cars in five years. But, too often, the well-meaning claims dissolved into a tale of technical and economic woe after those five years passed. Meanwhile, the standby chemistries (lithium-ion and nickel-metal hydride, for example) were inching along with slow, hard-earned gains.
Like it or not, we‘re going to continue to need those gains. To appeal to the mainstream of the automotive market, EV makers will need better batteries. They’ll have to find batteries that balance energy and cost in just the right way. The question is whether the twitching investors who are now anxiously jumping aboard the Tesla bandwagon will have the patience to see the plan come to fruition.
In that sense, not much has changed. The truth is, it’s still about the battery.
Apresher i agree with you that Tesla has done a wonderfull job in development of this car but obviously $90,000 car is not affordable by everyone because its a luxury car , The most important thing done by Telsa will be to reduce the charges without having impact on battery and milage covered .
Chuck, Excellent article. But Tesla has still accomplished something very noteworthy, gaining this much attention to their technology. A more practical goal will probably be to move their price targets down to the $70,000 level and continue their quest. But I agree, ultimately battery performance will be the most important factor. Thanks.
When it comes to energy savings in the automobile industry I believe that the Mercedes BlueEfficiancy tech is the best which focus not only the fuel consumption but also aerodynamics, weight, and much more. They were the first to introduce the eco start/stop function for the vehicle.
Cabe, I will be right after you to buy the $20K car if taxes not matter for me,
Normally tax rate will be 350% and the India it will be within 350% to 450% of the original price of the vehicle. I believe that government should provide a tax reduction at least for the hybrid vehicles in order to promote those over the gasoline vehicles.
Back in the '90's the GM EV1 was by all rights a very good EV and loved by all who were able to get a lease for one. Fast forward 20 years or so and here we have another arguably better but still really expensive EV. One thing that can be said for the Teslas is they're less likely to be recalled and crushed.
Just because you can make something really well for a lot of money doesn't mean it will be a success as a retail product. In this case even if the car were free, the cost of the battery alone exceeds what most people pay for an ICE car. The question is if their business model can outlive the development cycle of a cost effective battery. There's only so many of these cars they're going to sell before they've saturated the $100K a copy EV car market.
The car doesn't offer anything revolutionary that is worth trickling down to the masses. All are hampered by the same limitation noted in the title of the article.
Someone is going to earn themselves a Nobel in chemistry for the eventual breakthrough.
Or maybe physics, if that person comes up with something REALLY revolutionary.
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