https://www.messenger-inquirer.com/features/business/tesla-wants-everyone-to-drive-an-electric-car/article_306c8278-8ff7-11e9-b41a-cfad90a14727.html Tesla wants everyone to drive an electric car 20190616 Faiz Siddiqui
SAN FRANCISCO — Tesla wants everyone on the road to be in an electric car. That futuristic vision may soon become reality — thanks to rivals. The automaker based in Palo Alto, California, is facing a raft of financial and safety issues just as a flood of competitors are hitting the market with their own electric vehicle offerings, posing perhaps the first serious threat to the company’s dominance of the nascent electric vehicle industry. Jaguar and Audi have each debuted well-reviewed luxury electric SUVs in recent months, which have gained traction in countries like Norway that serve as a bellwether for the electric vehicle industry. Chevrolet and Nissan have targeted the mass market with their compact Bolt and Leaf electric vehicles, priced similarly or lower than Tesla’s Model 3, which is intended to be a mass-market vehicle. Analysts and auto industry observers say Tesla’s competition will accelerate as automakers including Volkswagen, Porsche, BMW, Volvo and Mercedes-Benz begin to unveil their premium electric vehicles in coming months, buoyed by the known quantity of their brands, existing manufacturing expertise and huge dealership networks. Meanwhile brands like Kia and Hyundai have introduced compact electric SUVs targeted at a mid-tier market. Tesla is “no longer the nice shiny object and no one else has one like it,” said Rohan G. Williamson, a professor of finance at Georgetown University’s McDonough School of Business. “The competition are experienced auto producers that have already taken care of their overhead and now they can produce cars.” The changing landscape isn’t lost on Tesla chief executive Elon Musk, who at the company’s annual shareholder meeting on Tuesday jabbed at competitors but also acknowledged their progress. Critics viewed Tesla as “the dumbest thing ever” and questioned its prospects for success just a decade and a half ago, he said. “And now, almost every car company has announced electric cars. ... This is a good thing.” But the rise in competition comes as Tesla is facing deepening concerns about its overall financial health and strategy. It returned to losses in its most recent quarterly results, and analysts expect the company may fall short of even modest vehicle production goals for the year. Tesla has struggled over the past year with production and delivery issues. An over reliance on car-making robots last year sparked costly delays of what Musk called Tesla’s “manufacturing hell,” and the company also conducted mass layoffs. Its Model 3 starts at roughly $40,000 — although customers can still special order a bare-bones version for $35,000, Tesla said. The company launched that cheaper version earlier this year but pulled it from its website after just a few weeks. Traditional auto manufacturers based in Detroit and around the world, meanwhile, have numerous factories that generally run smoothly and are primed to produce new vehicles. They sport vast dealer networks and huge marketing teams that know how to appeal to consumers and convince them to try out and buy a new car. Certified mechanics around the country are in place to work on those vehicles. Plus, those companies have brand recognition and trust built over decades of vehicle sales. Tesla was forced to raise more than $2 billion in capital in May, shortly after which Musk sent an email to staff members warning them the company would run out of cash in 10 months if it didn’t substantially cut costs. That helped send Tesla’s share prices down to a three-year low earlier this month, slashing the company’s valuation roughly in half. Share prices have since recovered slightly, in part due to a leaked email from Musk that said the company’s orders could result in a sales and deliveries record. Meanwhile, demand from Chinese and European consumers hasn’t materialized as planned, and a U.S. federal tax credit toward the purchase of an electric vehicle will be slashed to $1,875 beginning July 1, from $7,500. That credit will disappear beginning in January. That can affect purchase decisions for customers like St. Cloud, Minn., resident Jill DeLong. The 38-year-old software development manager had planned to buy a Tesla Model 3 but passed after finding out the back seat wouldn’t fit her child’s car seat. If “this is supposed to be the middle-America vehicle, why is it not made for middle-American needs? Like kids?” she said. Tesla is also placing a risky bet by expanding in China, analysts say. It’s spending billions there to build another “Gigafactory,” which will eventually assemble vehicles and build batteries. But opening a factory there could open the company to copycat competitors, analysts say. And with a trade war brewing between China and the United States, Tesla could be caught in the crosshairs. Musk was asked at the shareholder meeting why Tesla was investing in only one China factory that could produce up to 500,000 vehicles annually, when demand for electric vehicles in that country — the world’s largest market for electric vehicles — is so much higher. “We can’t spend money too fast,” Musk joked. “We’ll run out of it.” The company has been plagued by concerns about Musk, too, who continues to display erratic behavior via tweets and public statements, with sniping at competitors, the media and government regulators. Tesla is “on borrowed time,” said Jeffrey Sonnenfeld, a senior associate dean at the Yale University School of Management who has studied CEOs and major companies. Musk needs to relinquish some control, he says, “otherwise you could go the way of the Tucker car or the Delorean.” Tesla has been dominant in the electric vehicle market for years. It introduced its luxury Model S sedan seven years ago, helping change the perception of electric cars as sluggish vehicles that would only appeal to the environmentally conscious. Tesla followed with its Model X SUV a few years later before the Model 3 finally hit the road two years ago. Musk said on Tuesday that the company’s lower-priced Model 3 is outselling all of its U.S. competitors combined. According to InsideEVs, which tracks U.S. electric vehicle sales, Tesla sold 13,950 Model 3 units in May, dwarfing sales of its next closest electric vehicle competitor, the Chevrolet Bolt, at 1,396 cars sold. Nissan’s Leaf sold 1,216 units. Analysts said the major automakers face less pressure than Tesla as they build up and begin sales of their electric vehicle fleets, relying on their core gas-powered models to pad profits if necessary while absorbing losses on the electric vehicle side. But as Tesla’s business expands and vehicle production scales into the hundreds of thousands, the costs will grow too and could wear out investors’ patience. Still, even the more established automakers have faced problems. Audi’s e-tron was recalled this month over fears of battery fires. Jaguar’s I-PACE faced a recall over an issue with its braking system. That doesn’t bother Dennis Clark, 39, a former Tesla Model S owner. The Medina, Wash., car collector said he is on the waiting list for a version of that Audi, along with a few other electric vehicles. Clark, who works for a hedge fund, said he got rid of his two Tesla Model S sedans over reliability and quality concerns. It took too long to get replacement parts or repairs — something he expects to be solved by buying an electric vehicle from a traditional brand with a better service network. “My car was spending more time in the service center than with me on the road,” he said. [© messenger-inquirer.com] For EVLN EV-newswire posts use: http://evdl.org/archive/ {brucedp.neocities.org} -- Sent from: http://electric-vehicle-discussion-list.413529.n4.nabble.com/ _______________________________________________ UNSUBSCRIBE: http://www.evdl.org/help/index.html#usub http://lists.evdl.org/listinfo.cgi/ev-evdl.org Please discuss EV drag racing at NEDRA (http://groups.yahoo.com/group/NEDRA)
