Is Tesla here to stay?

Elon Musk is desperate to create something lasting with Tesla and provided he can continue to tackle 'range anxiety' while producing an attractive EV that's priced under $40k, he will.

Climate Progress

Tesla Motors and Elon Musk have been in the news a lot lately, receiving coverage of their recent successes – Climate Progress certainly included.

Musk took a serious gamble to start an American electric car company, kept it going with help from almost half a billion in Energy Department loans, and has seen Tesla rise from shaky uncertainty into a profitable luxury electric automaker whose products earn the highest ratings from Motor Trend and Consumer Reports.

But should clean tech outlets and those watching for advancements in zero-emission transportation hold Tesla aloft as the next big thing? Some conservative outlets have abandoned their attacks on Tesla or ignored its successes.

Yet there are understandable criticisms of the company’s business model. ‘Range anxiety’ is a concern for many. And no matter how highly rated it may be, the vast majority of people will never be able to afford the Model S, currently priced between $60,000-90,000. The profit that Tesla reported in the first quarter of this year was not achieved entirely through selling cars, but through selling $68 million in Zero-Emissions credits through California state law.

Is Tesla here to stay? And should it be the poster car that so many have recently lauded as a sign of a new gasoline-free transportation system?

One hurdle for Tesla is range. It excels as a city car. But unlike new car companies that can rely on existing gas stations to give drivers peace of mind when it comes time for refueling, a Model S is tethered to the network of charging stations on a long road trip. Tesla essentially has to build the recharging infrastructure more quickly than their cars can drive – which is what Musk said Tesla is trying to do.

A company press release announced last week that this year it will vastly expand the supercharger network its cars use to refuel – for free. This year, the network will “connect most of the major metro areas in the US and Canada,” and a year from now, the company says the network will stretch across the continent. The chargers themselves have been upgraded to allow for a full three hours of driving in less than a half hour.

What this means is that in 2014, a Tesla owner will be able to drive from coast to coast and all places in between, for free, stopping every three hours for a 20-30 minute pit stop. As the nation decarbonises and states increase the portion of their electric grid sourced from clean energy (through renewable energy standards), the net carbon pollution from Tesla vehicles will drop steadily over time.

This network would be very helpful for Tesla drivers, and only Tesla drivers. What happens to the rest of the population that may see the supercharger network, gets over ‘range anxiety’ but comes face to face with a new level of sticker shock? Why not just get a relatively cheaper gasoline hybrid like the Prius or even a plug-in hybrid like the Chevy Volt?

Musk sees this as a concern too, and appears to be moving to meet that challenge. He told Bloomberg: “What the world really needs is a great, affordable electric car. I’m not going to let anything go, no matter what people offer, until I complete that mission.” He said the idea was to have the car ready in three to four years, with a price below $40,000, and a range of 200 miles per charge.

Those watching Tesla’s stock price spike should be comforted by long-term investments in charging stations and Musk’s commitment to making new kinds of electric cars the more people can afford. A Tesla version of a Smart Car would be a sight to see. Those watching Tesla make profits from California Zero-Emissions credits might keep in mind that a nascent technology like the electric car industry is not only competing with established gasoline-powered vehicle infrastructures. The industry is also, at least implicitly, trying to cut the amount of oil required to move people around, along with the emissions the current system generates.

Musk certainly wants to make money, and create something lasting in America. He also sees climate change as a “catastrophic” threat, explaining to the Climate Leadership Gala last month:

If you were to ask any scientist, ‘Are you absolutely certain about anything,’ they would say, ‘Well, no. There’s a .001 percent chance it could be different.’ So it’s better to actually say, ‘Look, how certain are you that it is not catastrophic?’ And then you’ll get the correct answer.

He then advocated for a carbon tax, and after an applause, said “It’s funny, when I was talking to Congress about this I didn’t nearly get that much applause.”

This article was originally published by Climate Progress. Republished with permission.

InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles