Why Tesla is in driver’s seat of electric car industry
It was nearly a year ago when Elon Musk, basking in the adulation of several dozen screaming fans, took the stage in Southern California to unveil his company’s newest electric car, the sleek Tesla Model 3 sedan.
“You will not be able to buy a better car for $35,000,” he promised, “even with no options.”
It was a bold assertion coming from an entrepreneur whose company leads a still-fledgling industry with consistently sluggish sales. Gas prices remain so low, the network of charging stations so sparse and the price of electric cars so high that even with government rebates, few Americans feel the need to switch to zero-emission vehicles.
Even in California, where the plan is to put 1.5 million electric or hydrogen-powered vehicles on the road by 2025, only about 71,000 of them are being sold every year. That’s far short of the annual sales goal of 175,000 cars, even though the state is home to about half of all electric vehicles registered in the country.
Something has to change, and chances are, that change will start with Tesla.
The California company has a following as rabid as that of any Hollywood star, driven by the popularity of its luxury Model S sedans and Model X sport-utility vehicles. But it’s the new Model 3, Tesla’s first mass market electric car, that is likely to be a litmus test for the future viability of the industry.
The Model 3 will get more than 200 miles on single charge, fit five adults comfortably, go zero to 60 mph in less than 6 seconds and come with Tesla’s autonomous driving feature, Autopilot. It also just looks really cool.
After Musk’s speech last year, more than 370,000 people were so excited that they put down $1,000 deposits to get first dibs on a Model 3. For comparison, consider that only 84,275 electric vehicles were sold all of last year in the United States, according to the Electric Drive Transportation Association.
If the sedan proves to be a hit, then it’s likely to solidify Tesla – and California – as a leading maker of electric cars. Last week, the company announced that it would soon pause production at its massive plant in Fremont to add capacity for building the new Model 3.
Work on prototypes will start this month and could be unveiled soon. By 2018, the company expects to be churning out some 500,000 of the sedans a year, in addition to the Model S and Model X. To do that, Telsa expects to add more than 3,200 employees to its current workforce of more than 6,000 in Fremont.
That’s on top of the employees it has elsewhere in California, and at its Gigafactory battery plant outside Sparks, Nev.
Tesla, in short order, has become a successful, next-generation manufacturing company, along the lines of what President Donald Trump has said he wants to create in the United States. Concerns remain about how Tesla treats its workers – some have complained they aren’t paid enough and that efforts to unionize have been thwarted – but, on balance, what Musk is doing is a model worth replicating.
That, too, is a boon for California.
If the Model 3 ends up being a dud, then the industry could shift to companies such as General Motors, which sells the Chevy Bolt EV, and international automakers such as Nissan, which makes the Leaf. Other companies, including Ford, Toyota and Volvo, are entering the market, too, banking on the coming era of electric autonomous vehicles operated by Uber, Lyft and Google.
Questions remain about how the electric car industry will take shape under a Trump administration that’s openly skeptical of how man-made carbon emissions affect climate change. But for now, California and Tesla have the fast track on building the nation’s next transportation network. Now is not the time to let off the gas.
This story was originally published February 11, 2017 at 7:00 AM with the headline "Why Tesla is in driver’s seat of electric car industry."