The Best Thing For Tesla? More Electric-Car Competition
By Jonathan Welsh
Wall Street Journal
Tesla Motors Inc., the electric-car maker once written off by industry experts, is making its mark on the car market, attracting increasing attention from analysts and investors–and appears to be in for the long haul.
During an investors call on second-quarter results, company chief executive Elon Musk mentioned an auto-industry research company that predicted Tesla would turn out a maximum of 3,000 cars and was essentially doomed to fail. However, the company has delivered more than 13,000 of its Model S sedans to customers in North America so far.
For consumers, even those who cannot afford the $63,570 sticker price of the Model S, Tesla’s success means electric cars could reach the mainstream sooner than many people expected. It may happen faster if Tesla gets a little more competition.
During today’s call, Musk said he is glad BMW is getting into the electric-car market, but that there is “room for improvement” in the BMW i3.
There are several factors pointing to quicker-than-expected acceptance of electric cars in general and Teslas in particular. Among the most striking was the top score of 99 points of a possible 100 that the magazine Consumer Reports gave the Model S following a long-term road test.
Unlike glossy car-enthusiast magazines, Consumer Reports is known for unemotional, no-nonsense evaluations of vehicles that focus on practicality and ease of use as well as performance. Reviewers said they didn’t alter their scoring because the Tesla is battery powered. They also said the basic car’s range of just over 200 miles represents a sweet spot where so-called “range anxiety” fades.
Tesla’s appeal is likely to force other car makers with electric models, including BMW, Chevrolet, Honda and Nissan, to increase their vehicles’ battery range and continue lowering their prices to make them more attractive to real-world car shoppers. And having more Nissan Leafs and Chevy Volts on the road is likely to help Tesla.
Chevrolet’s recent $5,000 price cut on its Volt plug-in hybrid could indicate a lack of enthusiasm for electric cars. But it could also be seen as a sign that such vehicles have finally arrived in the consumer mainstream.
While the Model S’s unique looks, technology and performance will continue to attract early adopters and well-to-do technophiles, what draws most new-car buyers is seeing the latest model in a neighbor’s garage or in a local parking lot.
Tesla’s main goal is to get “more electric cars on the road,” Musk said, so they will seem like transportation instead of novelties.
If rivals step up and raise the level of competition, Musk may get his wish.