Don’t look now, but EVs may be here to stay and Tesla Motors appears to be leading the way…
Tesla Motors recently announced that it had sold 4,750 new units in the first quarter 2013, which exceeded their target of 4,500. Oh and by the way, they achieved the company’s first ever operating profit. This is pretty incredible news. Despite the potential demise of rival Fisker and disappointing sales for the Nissan Leaf and Chevy Volt, it seems that Tesla is bucking the trend, and starting to look like they are for real, and more importantly here to stay.
Tesla continues to announce new programs that seem to be having a positive impact on removing barriers to would be EV customers. For example, they also recently announced a multi-year lease option as well as a no hassle, unconditional 8 year battery warranty. And with Tesla’s more than adequate battery range (more than 200 miles for the 60 KW and 265 miles for their 85KW), what other objections could a prospective buyer still have?
The car is quite elegant, powerful and desirable to say the least. And, even the auto critics have been kind, as the Model S received Motor Trend’s Car of the Year for 2013. Perhaps the only still unresolved issue that comes up is the awkward trade in process as Tesla really doesn’t have a traditional network of dealers equipped to take trade-ins. They do have a partnership with Auto Nation, but to date, most Tesla buyers have complained this process is not realistic as the trade in values offered are not reasonable.
Despite subpar sales from other EV makers, their sales are finally starting to show some signs of improving. Although Fisker appears to be doomed, Nissan announced a price reduction in the Leaf recently, and improved sales rapidly followed. BMW, Mercedes, VW, Ford and others are getting ready to launch new EVs that should add to the competition as well. As buyers become more educated about the virtues and debunk the myths about EVs, we could see a real revolution in this market.
Granted, EVs by experts’ accounts are still decades away from outpacing internal combustion engines (if ever), but it does appear finally that this time around, they are not going away as they have in the past. The irony is that the one company that appears to be stealing the show isn’t really a traditional “car” company, but looks more like a high tech instead.
Another interesting fact is that EVs seem to be going more mainstream. In the past, it seemed anyone driving an EV was a “Hollywood type” or “tree-hugger”. Certainly those convinced that climate change is real are some of Tesla’s biggest fans. But consider that the argument for EVs can also be a nationalist one as well, especially for Americans.
Tesla truly is the only purely American car company assembling all of its cars in the USA. And, remember if an American buys a Tesla, chances are 100% of the “fuel” used to power that car is derived from US made electricity using most likely US mined natural or renewable resources, whether it be coal, natural gas, nuclear, wind, solar or hydro power. That means essentially this is truly an American car using American energy to power it for the lifetime of the car. Sounds pretty patriotic.
And, in countries like India and China, the EV revolution could catch on much easier. Many auto buyers are consumers that previously have never owned a car. So, there are not as many pre-conceived notions of what a car should be. Plus, many drivers are nearly 100% urban drivers and do not have the ‘range anxiety” issues nearly as bad as most Americans.
In America, the EV culture is slowly creeping across all party lines. This bi-partisan movement seems apparent when you consider which states offer rebates to consumers for purchasing an EV. Most people are aware there is a $7,500 Federal tax rebate for the citizen who buys an EV…And of course states like California, Illinois and Colorado offer additional rebates. But, did you know which state offers the largest rebate? Would you believe West Virginia? Yes, that’s right West Virginia offers an additional $7,500 tax credit to a new EV buyer. And other seemingly “red states” do as well. Georgia and Utah also offer sizable rebates. This seems logical once you consider that West Virginia stands to sell more coal if the demand for US electricity jumps thanks to thousands of new EV owners.
Tesla started from scratch with a totally new design and business model. So far, it seems like they are getting it right. After watching the new documentary on National Geographic Channel recently recounting the decade of the 80s and being touted as “the decade that made us”, I am reminded of another unconventional entrepreneur and technology company that started a bit slow, and then eventually exploded with growth to now become, only a few decades later, the world’s largest market cap company, Apple.
Could Tesla become the next Apple? Stranger things have happened…and if you talk to the roughly 10,000 Tesla owners they all seem to have the same passion as the early Mac disciples. It is these early adopters that could make believers of the masses…and we all know in our new connected world, things can go viral pretty fast.
Time will tell, but it doesn’t sound that crazy at all when you consider the humble beginnings of Apple and compare them to the Tesla story so far. Tesla’s biggest problem might not be finding new customers, but building cars fast enough.